A Recent Biz Buy Sell Survey found big differences between what the Broker and Seller think about the sales process. Is that a realistic picture of the selling process? The Restaurant Brokers say, "Yes."
Biz Buy Sell, the online marketing engine just completed a new survey of brokers and sellers. The results are not surprising to the restaurant brokers as it seems to underscore that brokers and sellers are not always on the same page. The survey found that 41% of sellers say their top priority in selling the business is to find "a good buyer fit (focused on the future success of the business)." 41% of Brokers surveyed say their top priority for their seller is "getting the best price." So which is most important? Getting the right price or getting the right buyer?
In this restaurant broker's opinion, it isn't an either - or scenario. Ideally, the restaurant broker and seller forge a relationship and have a common understanding of both the transaction value (pricing and sales price) and the appropriate buyer fit before the marketing begins. One of our favorite questions to ask a seller is, "tell me who the ideal person is for your business?" We also often volunteer our impression of that "right fit." For example, some concepts are ideally suited for a chef husband and wife team while others need someone with a corporate background that understands numbers and enjoys dealing with a franchise. Will they both pay the same for the business? Maybe, but of competing offers are on the table, your broker should be able to break down both the quantitative and emotional reasons for choosing one over another.
What is the value of hiring a business broker (or restaurant broker)? The Bizbuysell survey asked this question and the responses are very different between the seller and the broker. According to this survey, "brokers are more than twice as likely as owners to believe the primary value of using their services during a business sale is their "effectiveness in getting the owner more money." Sellers, on the other hand, put more emphasis on brokers' networks, with nearly half (47 percent) listing it as the main driver for using a business broker." In this case, these restaurant brokers agree with the seller. Our role is to drive traffic and bring our database and network to the table for a deal.
What does that mean? Brokers are being hired by the seller for their network and database of buyers but believe they are being hired to get the owner the highest price. Could this affect negotiations? Absolutely. A broker may dismiss a buyer that doesn't immediately qualify for the purchase without considering that if he's the "right buyer" a seller might entertain something less than the asking price or consider owner financing.
The survey continued with the finding that a reason for selling is often not fully understood between the seller and the broker. While retirement topped the list for both parties, sellers also admitted that at least 28% of the time, another venture was the reason to list the business. That's much higher than the estimate by brokers who stated that another venture was only 12% of the reason for selling.
Why don't businesses sell? A majority (54%) of the sellers surveyed believe said that less than half of the interested buyers were qualified to buy. By a four to one margin, business owners over brokers believed there was a lack of qualified buyers. 62% of the brokers surveyed said that over half of the potential buyers are qualified. From the restaurant broker's perspective, this means that communication about qualified buyers is not flowing from the broker to the business owner. Our best practice is to qualify every buyer before having conversations with the seller and explain that process up front. It's best for the seller, who knows that only qualified buyers are getting details for their business and it's best for the restaurant brokers, who know they are spending their most valuable commodity (time) with the most qualified buyers.
To finance or not finance? The area of owner financing was another key difference between the business owner and broker's understanding based on the Bizbuysell survey results. Nearly 75% of the brokers surveyed (74 percent) believe seller financing is either "essential or important" while just 58 percent of owners agreed. In this broker's opinion, a decision on owner financing doesn't have to be set in stone at the time of listing. We encourage buyers to bring all deals to the table and negotiate the terms based on the right fit for both parties. Circumstances change over the life of a listing. A seller committed and ready to go at the time of listing may have second thoughts three months later and be willing to hold out for his asking price. On the other hand, he may accept a job or need to sell more quickly based on another life change. That's what we believe our role is as the intermediary in the transaction - to get the deal to the closing table.
All in all, it seems as though brokers and their sellers need to have some important conversations up front about the selling process. Having both parties on the same page can make the difference between transactions that close quickly and with the right buyer versus those that don’t.
Statistics in this article were quoted from the article, "Survey Reveals Gap Between Small Business Owner Expectations, Actual Selling Process" published on June 26, 2015.
BizBuySell is the Internet's largest business for sale marketplace. Since 1996, BizBuySell has offered tools that make it easy for business owners and brokers to sell a business, and potential buyers to find the business of their dreams. BizBuySell currently has an inventory of approximately 45,000 businesses - spanning 80 countries - for sale at any one time and receives more than 1.4 million monthly visits. The site also features an extensive franchise directory as well as an easy-to-use business valuation tool. Please visit www.bizbuysell.comfor more information.
About We Sell Restaurants
We Sell Restaurants is the nation's largest restaurant brokerage firm with offices in Georgia, Florida, South Carolina, Tennesee and Colorado. For immediate access to our listings, visit us online at www.wesellrestaurants.com