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Why Small Business Owners Are Valuing Their Own Business and Avoiding Business Brokers

Guest post by: Lee Artis

Article Overview: Selling your small business for its true value and at the very best price is definitely challenging, however surprisingly straight forward. More small business owners are becoming aware of just how simple it is to sell their own business without having to share the profits with a business broker. Small business owners should keep track of the true and realistic value of their business periodically, if possible from the day they open their doors for business, so that when the inevitable time to sell comes, they are not caught unawares. Here are 5 reasons why small business owners are valuing their own business and selling fast without a business broker!

Why Small Business Owners Are Valuing Their Own Business and Avoiding Business Brokers

Selling your small business for its true value and at the very best price is definitely challenging, however surprisingly straight forward. More small business owners are becoming aware of just how simple it is to sell their own business without having to share the profits with a business broker.

Small business owners should keep track of the true and realistic value of their business periodically, if possible from the day they open their doors for business, so that when the inevitable time to sell comes, they are not caught unawares.

The most common reason why businesses on the market do not sell is inaccurate valuation, resulting from an incorrect selling price that may either be too high or too low. In determining business value, the mathematical expression of total assets minus total liabilities is only half the whole picture. There are a lot of other variables that must be considered to come up with an acceptable valuation especially to attract potential buyers. The law of supply and demand, market forces, the prevailing economic environment, potential for growth, standing of your small business in the industry and the community, industry performance in general, as well as the goodwill and brand image that your business projects, are all worth taking into account.

More often than ever small business owners are leaning towards valuing their own business and avoiding business brokers for various practical reasons, some of which are:

Reason # 1 - The small business owner knows his/her business best

For all intense and purposes, the business owner, not the business broker, is the most knowledgeable and qualified person of the business even if there are managers to run the day-to-day operation. In most cases the business owner is more familiar with the ins and outs, the ups and downs, and the tiniest detail and broadest aspects of the business. While a business broker is only able to do so much as represent his/her client based on documents, the business owner is better able to present a complete perspective of his/her business based on personal knowledge and firsthand experience and do so with passion.

Reason # 2 - Small business owners can save thousands by avoiding business brokers

Undoubtedly, the cost of a business valuation by business brokers or valuation professionals is an added toll to the business owner and translates to a reduction of the net selling price of the business. Depending on the type of small business to be valued, the degree of complexities of the business, and the purpose for valuation, valuation service fees normally range from $3,000 to $35,000. For instance, a business valuation for an ordinary sale may cost between $3,000 and $10,000 while business valuation for the purpose of litigation or disputes may cost higher. Aside from this basic fee, some valuation professionals or firms also require a success fee for a consummated sale.

Reason # 3 - Confidentiality may be at risk of being compromised

To come up with an accurate business valuation or selling price, a business broker will want to have as much information about your business as possible. If you are not careful about the business broker you hire, they may wittingly or unwittingly pass on sensitive information about your business to competitors or even to potential buyers who can use such information as a leverage to negotiate for a lower price for the business you are selling.

Reason # 4 - Many business owners are wary about lackluster business brokers

Most business brokers merely rely entirely on the information given to them by business owners and sometimes don't investigate further to arrive at a correct valuation result, therefore making it hard to sell. Business owners are often left to chase up information and updates to find out their business sale progress which can be frustrating.

Reason # 5 - In lieu of business brokers, affordable business valuation tools are now readily available

To save on costs, the market as well as the Internet is awash with inexpensive valuation tools such as business valuation kits, tips, or practical guides in software form. These tools provide useful and user-friendly instructions, which you and your business accountant can easily understand.

As the owner of your business, you have the figures, the personal knowledge, and firsthand experience. You have the valuation tools and business accountant. You know where and what to ask. You are aware of a prevailing vibrant economic environment in Australia. The reality is....valuing your own business is not as complicated as you might think and it's definitely an exercise you won't regret.

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Article Tags: business broker, business brokers, business owners, business valuation, selling your small business, small business, small business owners, valuation professionals



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