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 healthy patients)
- Fastest barber in town! -- (bald clients only)
It would be easy to poke fun, 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 unsellable – 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 sellable, 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 it be that your success in selling your business might have less to do with your broker and more to do with your business?
Learn to leave.
Mike Finger is the founder of Exit Oasis.