Sell A Business Yourself Or Use A Business Broker?
Every economy is backed by the strong support of the commercial activity that takes place in its trade circles. New Zealand is no different. It is easiest to start a business here than in any other part of the world. According to a 2014 report, 97% of all businesses in the country fall in the SME category and approximately 70% of these are single-worker companies. The nation has seen a flurry of small businesses in the last decade, and the failures have been less pronounced than the successes. According to estimates, 50% of the ventures with 10-19 employees are running profitably even after 10 years of their establishment. The economic conditions have also been conducive for the trade sector with an expected 2.9% growth in 2018 and 2.7% in 2019. The environment is ideal for entrepreneurs to put up their businesses for sale in New Zealand and reap the benefits of high return on investment.
Many baby boomers are looking to sell their businesses to the young and passionate millennials to head towards a comfortable retired life. The decision of selling a company is not easy when one has nurtured its growth from the time of its foundation. However, there comes a time in an entrepreneur’s life when he wishes to live a carefree life and embark on a new journey. The dilemma that grips most business owners is whether they should sell a business by themselves or hire a broker for the job. The recent shift towards a free market economy has increased the confidence of investors in the commercial sector with more and more individuals yearning to transform their ideas into dream enterprises. Most of them prefer to purchase an existing business for sale to avoid the high upfront cost of setting up a business and the advantage of leveraging the existing customer base. Since it is the most significant and crucial deal of an entrepreneur’s life, the path to finding the right buyer must be trodden carefully.
Although a broker may help you find an appropriate suitor and assist in the process of documentation, he will come at a hefty price which can be avoided with a little common sense. There is an increasing preference for using a DIY online platform to promote a business for sale in Wellington as it is the most cost-effective and effortless way to get the deal through. These websites are visited by thousands of potential buyers every day and do not charge any commission. They help the seller to create an enticing advertisement which attracts qualified leads and procures the price quoted by the owner. That is why it makes more sense to sell your business without taking help from a broker. Here are a few reasons that will help you in making an informed decision.
1. You Know Your Business Better
Nobody knows the business better than the owner. They are aware of all the financial data and the trading activity that has been going on during the years of its successful operation. The seller is the best persons to answer the questions of the prospective buyers related to any aspect of the functioning of the company. Brokers may have the figures, but they will not be aware of the nitty-gritty of the organisation. That is why the two parties have to be constantly in touch to crack a profitable deal. This type of sale is different from real estate transactions where the owner comes into the picture much later, and the whole process is run by the broker.
2. Unprofessional Brokers
Many unqualified and incompetent brokers hoodwink the buyers and fail to find a buyer even after a long time. Also, many real estate brokers switch to this profession when their industry is going through a rough phase. There have been many instances where brokers have misled people because of lack of experience in business buying and selling. Also, some of them are clever enough to include hidden costs within the fine details of their agreement to fleece the sellers. Therefore trusting them with your most vital transaction can be a risky affair.
3. Networking Is No More A Forte
The business brokers have become less useful in the digital era where all the information is available online. Earlier, sellers used to depend on them as they had a wide network of buyers and sellers, but the tables have turned with time. Most brokers would put up your business on an online business listing platform and wait for the responses. However, this task can be easily performed by the entrepreneurs themselves. The lines have blurred, and it is easier than ever to sell a business online without any third party help.
4. Interested In Bigger Deals
Most brokers are in the field for the sake of their commission. The bigger the price tag of the business for sale, the higher is the profit generated. Thus they are more inclined towards selling the big companies that are valued above $100,000. The rest of the sales are usually neglected and do not get much attention even though the bulk of the enterprises operating in the country are small businesses. Sometimes when they agree to list a small firm, they usually increase their charge to 20% from the usual 10%. This leaves the owner with a significant amount being lost as broker commission.
5. Not Receive the Best Price
Though brokers would assure sellers that they will go for a high-yielding deal, there are chances that they may settle for a price which is lesser than what your business is worth. This often happens when the business has been on the market for a while. They would prefer to have some commission than nothing at all and move on to their next assignment. In such circumstances, the broker may push the seller to come down on the price for a quick sale. Thus the seller ends up losing money through a bad deal in addition to paying commission to the broker.
Even if you are a first time seller with limited experience in cracking a deal, it is better to follow your instincts and get your business listed yourself. It will save you the energy spent in finding a reputable broker and paying him considerable fees. So if you have a business for sale in New Zealand, get set to receive the right price for it with a business listing website.