California Business Broker : Seller FAQs
Here is the most frequently asked questions that I receive in person or from our website, California business broker .com from business owners who want to sell their California business.
1. How long does it take to sell a Business?
Every business is different. One item to note is that the majority of businesses listed do not sell. Of the businesses that do sell the average is six to eighteen months. There are many variables that come into play and items that need to be addressed before a business transaction can close. Delays with financing, landlords, contracts, business liens, etc. etc, can make a simple transaction drag on for months.
2. My business is not making money, but has great potential, isn't that worth something?
This question / issue is a conversation that we have almost daily with business owners. Here is our response. Business buyers look for businesses that have potential. Growth potential is great to see. BUT you cannot expect to get paid for it. Buyers will only pay for for "what is. " Put yourself in the buyer's shoes, would you take on that risk? Additionally, banks will not finance potential - they finance based on cash flow and assets.
If you think your business has huge potential, you can always sell it for a modest price and take an earn out.
Click here to learn more about earn outs
3. I have invested this much into the business can't I sell it for this much?
This is another conversation that we have frequently. As business brokers, we frequently hear from struggling business owners. We actually hate being the bearer of any bad new but this is a fact of life in small business.
The short answer is that if a business is not profitable it will be very difficult to sell it. UPDATE: June 2009: Due to the economy, it is virtually impossible to sell a business that is not profitable. You are asking a stranger to switch places with you!
4. What is your commission?
How much is this going to cost me? We charge a performance based fee and there is no fee unless we close your transaction. Business brokers charge a commission that is higher than real estate brokers due to the increased level of difficulty involved. My fee is based on a sliding scale based on the difficulty involved with each individual business. There is no fees for consultations and any commission is agreed upon upfront.
5. Will everyone know that my business is for sale?
Confidentiality is a big issue for business owners.
This is such a big issue that we created a separate page dealing with confidentiality.
6. I have income that is not on the books, will that be a problem?
First of all, we are not the IRS. Cash off the books is pretty common. Non-documented, un-reported income will not stop your business from being sold. It will be unlikely for you to sell your business based on those earnings, however. The onus is on the seller to "prove" earnings. If you want to sell your business in the near future, document everything.
Are you looking for a California Business Broker? Does your business need professional representation? If you would like to know more about what your business is worth or how we can locate a buyer for your business contact me today for a confidential meeting.
Go to the California Business Broker .com contact page.