I bought my own business a year and a half ago with no prior business experience. In that time I have barely taken a wage, worked crazy hours and struggled with staff.
As yet another key member of the team resigns I have decided to sell. The constant stress and battles of balancing work and personal life have become too much for me.
My question is how do I go about selling (as only determination got me through the buying phase), and what are the chances of selling a business that brings in little to no money?
There is plenty trade to be had, but my lack of business knowledge has failed me.
It takes a lot of courage to know when it’s time to quit, and to know why the business hasn’t worked so good for you!
You are also not alone. Many people start their own business for a better balance of work and personal life only to find that it turns into a nightmare because they lack the business skills to build a sustainable venture that then gives them that freedom.
Most businesses are valued on a multiple of earnings (profit). At worst this is less than one and at best around six to eight, depending on the industry you are in.
Andrew Kent, our selling your business expert, says the key thing with micro-businesses like the one you describe is that in many respects you are selling someone a job.
So the problem you had was that you have essentially purchased a job that you were not skilled to do. When it comes to selling this business on, you need to consider all of the reasons you purchased it and try and promote it based on these things, rather than its poor financial performance while under your care.
The next question is how to sell it and where to promote it. If the business is a going concern, that is has several employees and some structure and track record behind them, you could promote it on sites like www.bizexchange.com.au. Kent set that site up several years ago. However when you are essentially selling a job, you will do better on SEEK. Both cost around $100.
In terms of the price point, I suggest you look at the opportunity cost you are saving someone if they were to set up from scratch, put some value on the brand, the plant and equipment, and importantly the customer list and brand recall.
You also need to take into account what franchisors are charging for territories in your industry, so pitch it a little below them.
Your Aunty B.
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