How Successful are Business Brokers at Selling Businesses? How to sell a small business

[@lorenzomuhammad1715]

I work as a business broker in Australia. I am absolutely amazed with these statistics. I’ve just started in my 3rd year as a broker. (Yeh, started doing it just as Covid hit the world) and I’ve managed to operate as a Franchisee of a bigger group much more successfully than I thought having heard these statistics. Unfortunately all that you guys say it exactly spot on. This conversation cast a realistic outlook on business brokers and businesses that want to sell. Since starting as a broker I have taken on 40 Listings and Sold 23. Substantially higher than the 4%-20% that you quoted, and still I wouldn’t say I’m lighting the world on fire in the income department. I had the benefit that I operate in an industry I have a lot of experience and network in, but still it’s difficult to make this a full time thing for the hours and headaches it takes. Thanks gentleman for your real talk on this. It’s actually motivated me

[@DavidCBarnett]

Thanks W for the feedback. This is a tough business. So many opportunities for deals to fail. 23 closeds over 3 years is impressive. Many brokers do just a few if they're lucky.

[@SterlingSellsHomes]

Wow that was amazing to listen to you guys. I’m just getting started with my education in this field and I am very excited to continue this journey. Thank you for the great content

[@DavidCBarnett]

Our pleasure!

[@hennyvanderpluijm6132]

What you guys are overlooking is that the broker first has to spend hours if not days of work BEFORE he can determine IF a certain business is sellable or not. And yes, universally 9 out of 10 is not sellable. But these hours have to be paid for one way or the other. The approach by most business brokers is to acquire as much engagement fees as possible. This in turn leads to an even bigger discrepancy between the promises to the business owner and the actual realization of the sale. This can only be remedied by offering education about selling businesses and charge for that.

[@DavidCBarnett]

Great points Henny.

[@victor7530]

Thank you David. I think it is a good thing if a broker is honest about the prospects of selling a business. This would help to build their credibility and perceived expertise. And of course, any business is sellable but not necessarily at the price someone wants. By the way, have you considered doing a quick summary of the points covered so far in a video, maybe a quarter of the way through or something? It might help. Also, splitting the video into two parts might make it more 'digestible'. Thank you again for your dedication to sharing your knowledge and experience .

[@DavidCBarnett]

Thanks Victor. Sometimes the longer ones are easier to digest via audio. All the video audio tracks are available via iTunes under the David C Barnett Small Business &Deal Making podcast. or on Soundcloud here: soundcloud.com/dbarnettmoncton

[@PercussusResurgo]

Victor HAVEN It was a a great discussion but I would question your comment that every business is sellable at the right price. The reality is that this is often not the case. That is a key factor in the in the stats mentioned that only 4%-20% listed businesses actually sell. If the owner does not yet know that a trusted advisor may be needed to tell him/her and explain why and then help them adjust to that reality. Then of course they can look at alternative exit strategies such selling the assets or customer base and winding it down or fundamentally change their business practices or structure so it is sellable at a later date.

[@holycow3355]

The bottom line is too many businesses for sale, too few genuine (& financial) buyers, plenty of disgruntled workers, dreamers & tire kickers though !

[@DavidCBarnett]

The market is just incredibly inefficient which is what makes it exciting for people who will invest the time and energy to go hunting for what they want.

[@MsDjacobs]

Another great video! We tell potential sellers that clients are trying to buy predictable cash flows, and the business is just a means to that end. Every once in awhile a company has some strategic assets that are more valuable than the company's cash flows, but it is rare to discover those types of assets. Thanks again for your videos, I learn something on each one.

[@DavidCBarnett]

Great David. I'm glad to help. It's why I created the channel.

[@mlmiles1]

Does the difficulty that sellers are having selling their businesses mean that the multiples of EBITDA should be even lower than 4x?

[@DavidCBarnett]

4X EBITDA is a really high valuation for a small business. The problems are over-pricing, businesses that have too much 'owner' in them, when they're poorly presented and other problems. It's hard to tell as there is no reporting. I see a lot of broker-prepared packages with errors in them for example.

[@RomilCPatel]

What are other ways of exiting Main Street businesses apart from using business brokers?

[@DavidCBarnett]

80% of businesses are sold without brokers. This is the smallest slice of the market. Most identify buyers themselves from within their industry or the owner's social network.

[@cosmeticsurgeonuk]

Really interesting discussion. Thank you for sharing.

[@DavidCBarnett]

Thanks Vasu. Glad you enjoyed it.

[@alexrozenbom3430]

Another great video. Thanks, Dave.

[@DavidCBarnett]

Thanks Alex!

[@juliah4117]

The point made 26 min onwards is SPOT ON

[@DavidCBarnett]

Thanks for watching. Don't forget to like and share it so the KZbin algorithm knows it's a good video. It helps others find it.

[@peterchang452]

Very helpful video

[@DavidCBarnett]

Thanks Peter

[@flyingbears5635]

I used 3 brokers to sell my restaurant business but non of them can sell. For the whole 6 months, all of them brought only 1 potential buyer! 2 of the business brokers required 1800 dollars upfront for advertising etc. Will never use brokers ever again. Waist of time and money!

[@DavidCBarnett]

Sorry to hear you're having trouble. If you want some help, you can find out how I help people sell their own business over at www.HowToSellMyOwnBusiness.com I've helped several people in your situation, either to set them on the right track to selling or to show them why buyers aren't coming forth.

[@mcashnv]

More likely is that you had an undesirable business that was un-sellable by any broker. Many brokers will take any listing, regardless of the quality of the business, with the hope that a few of these "dogs" will find a buyer. I know many brokers who sell over 75% of their listings year over year. Do some research.

[@carlosotero772]

Whoaaaa great insight

[@DavidCBarnett]

Thanks Carlos.

[@juliah4117]

Agents generally over evaluate the sellers business but still get their fees !!! Buyers struggle to come to a reasonable deal as the seller has inflated expectations and will now struggle to come down significantly in the agents valuation.

[@DavidCBarnett]

I see this time and time again.

[@vincentmurphy9252]

no sound

[@DavidCBarnett]

Maybe your headphones are plugged in or something?

[@vincentmurphy9252]

Working ! Thanks David

[@BusinessBrokerMarcBate]

Hello, David Barnett, can we do a collaboration? This is Marc Bate, I'm one of LINK Alabang Business PH, like your YT channel,

[@DavidCBarnett]

go to my blog at www.DavidCBarnett.com and find my email. Send me a message about what you have in mind. Cheers