I’ve been looking at a lot of business broker websites recently. One really stood out.
The website highlighted the broker’s great success. They claim an almost 90% sell rate on their listings, compared to an industry average “below 30%.” They say they sell more of their listings than anyone else in their region.
It was a compelling sales message, and certainly would have been a draw for me if I owned a business in their area, so I read further. After a little more sales pitch on their process and experience, they went on to list the criteria for the businesses they will work with, and their success rate started to make a little more sense.
Businesses they work with must:
- Have revenue over $500,000
- Be profitable.
- Be priced based on a reasonable multiple of the average of three years documented profits
If this is what your business looks like, they have a 90% success rate selling it for you. At this point it would be easy to poke a little fun.
- Chef has highest rating in the world! – (only cooks for his mother)
- Doctor boasts healthiest clients in town! – (only accepts tri-athlete patients)
- Fastest barber in town! -- (bald clients only)
Pick the easy ones and it's not hard to be successful right? But that’s not where my head went when I saw their site, at least not the only place. Instead I thought of the business owner I talked with the other day. I thought of the shocked look on her face when she realized that the business she had built over the last 10 years had no transferable value. The business was un-sellable – and she didn’t know why.
“What should I have done differently?”
“Why doesn’t my business have more value?”
“Why won’t the broker try to sell it for me?”
If you’re a business owner and you wonder what it takes to make your business sell-able, it might be worth running your results and expectations against the criteria listed by the brokerage with the “incredible” success rate.
- How big is your business?
- Do you show a consistent profit?
- How are you setting your purchase price expectations?
Could success in selling a business have less to do with the broker and more to do with the business?