Selling Your Colorado Business? Avoid These Valuation Pitfalls

What is your Colorado business worth? The short answer is, it’s worth what somebody will pay you for it. However, how would you set your ideal price? Deciding the valuation of your business can be overwhelming. You presumably have some extreme feelings about your company and have put resources into it, alongside your hard labor. No matter how you feel about how much your business is worth, purchasers couldn’t care less about you. They need to know the amount they can hope to benefit from owning your business, beginning the day they buy it.

Business owners commit three common errors when estimating the value of a business without hiring a business broker in Colorado, and each of the three depend on “pie in the sky” attitudes:

1. The estimated business valuation depends on YOUR requirements or needs, not the genuine estimate of the business value to an outsider. Because you owe the credit card company $100,000 and you require $400,000 to retire to Tahiti doesn’t mean a purchaser is going to pay that same amount for your business.

2. The price you hope to get when you sell your business depends on a “most ideal situation” that has never happened. Generally as it’s occasionally difficult to value a “fixer upper” home, it might be hard for a potential purchaser to see the quality in a “fixer upper” business. The purchaser might ask why you never tried to run the organization the way it should be keep running in any case. For most purchasers, verifiable execution is an a great deal more imperative pointer than future potential. Business buyers will in rare cases purchase due to potential, however they will pay taking into account the income the business has generated up to the point that they do their due diligence.

3. The cost depends on your feelings or a speculation, and isn’t sensible when contrasted with comparable companies available to be purchased at the same point in time that your company is listed for sale—otherwise known as “comparables.” On the off chance that your flower shop is seen to be valued at five or ten times higher than all the comparative florists in the same general area where you’ve listed your business for sale, purchasers will essentially disregard your asking price or discover it insultingly irrational.

Buyers are getting more savvy. They’re hoping to make a respectable and predictable return on their investment for buying your business, and most genuine purchasers have gotten their due diligence done. Be mindful so as not to affront purchasers by demanding an absurd cost and outlandish terms. Once a potential buyer sees your crazy asking price and marks your business a flop, you’ll have a massively troublesome time inspiring him to take another genuine look.

For a confidential survey of your business value, contact a business valuation expert or business broker in Colorado today.

Selling Your Business in Colorado? The Pros and Cons of Business Brokers

A business broker is a professional who is an expert at business valuation, business marketing, negotiation, and deal structuring. Some business owners choose to hire a business broker in Colorado to list and offer their company for sale, while others choose to go the Do-It-Yourself route. Which way makes most sense in your case? Only you can decide, but here are some factors for you to consider.

So, first, the negatives. The “drawbacks” of utilizing business brokers generally start with the cost involved. Most skilled business brokerages charge an up-front fee for researching your business, placing an expert valuation on it, and creating the professional marketing materials needed to make your business attractive to buyers. They also charge a commission against the eventual sale price of the business. This can add up to tens of thousands or hundreds of thousands of dollars. (But keep in mind, you shouldn’t have to pay a commission unless your business sells.)

But generally speaking, the brokerage earns this money. There is a considerable measure of work included in these sorts of business transactions, and if an intermediary is going to handle everything, he’s going to need some remuneration out of the arrangement. Complicated transactions can take months or years of work to negotiate and arrange. Either the business owner or the business purchaser will be charged by the brokerage for the time and costs involved.

There are several positives in hiring a business broker to list and sell your company.

One: you save time. There are a few decent motivations to utilize business brokers as opposed to taking care of the business deal yourself. One of the best reasons is the time investment involved. Offering a business for sale can take a surprisingly large amount of time on a daily basis. There are numerous bits of paperwork, bookkeeping, tax records, and other financial documents that have to be assembled for the review of a potential buyer as part of their “due diligence” process.

Two: Business dealers can likewise spare you the hassle and time it takes to qualify prospective purchasers. Once it becomes generally known that your business is for sale, “tire kickers” can come out of the woodwork, asking to see your sales figures, inventory, buildings, etc. Your competitors may send in “undercover” spies to do the same thing. A business broker will screen out the “flakes” and pre-qualify anyone who wants to know more. So the only people you spend time with will be legitimate buyers.

Three: Another justifiable motivation to utilize the services of an established business brokerage is having the capacity to benefit from a broker’s experience in creating transactions and/or finding buyers for your type or size of company. In case you’re purchasing a business, you might have as of now purchased a few and have all the experience you require. Nonetheless, offering your business for sale is not as common, so you don’t have the same number of opportunities to figure out how to do the job of a business broker on your own.

If you’re thinking about selling your business in Colorado, it makes sense to contact a business broker. Most will meet with you privately at no charge to answer any questions you may have. Some also offer business valuation services to help you if you want to list your business for sale by owner.

Hiring a Business Broker in Colorado, vs Selling Your Business Yourself

A huge number of companies are listed for sale each year in Colorado. Be that as it may, the vast majority of those transactions are never closed. Will hiring a business broker expand your chances of successfully selling your Colorado business at the price and terms you want? What advantages do you get from procuring an expert to deal with the listing and showing of your business to potential buyers? Also, is the expense justified, despite all the trouble?

In the same way as other business choices, it’s a cost/benefit examination. Business brokers regularly charge an expense of 10% to 12% of the deal cost or $15,000 to $20,000, whichever is more. So if your deal cost is under $200,000, it may not make financial sense to involve a business brokerage.

Another factor to consider. What is your time worth? Does it make sense to try to do a complicated transaction yourself? As a business owner, you might have a lot on your plate! Too much to invest energy promoting the company to buyers. What’s more, regardless of the fact that you have time, where will you discover those purchasers? Do you know how to depict your business precisely (and legitimately) in an ad? Do you know where to run that promotion? Do you know how to set up a website? It is safe to say that you are readied to answer all the telephone calls from potential purchasers? Is it accurate to say that you are great at arranging deals, talking about financing, and explaining your business value to a potential buyer?

Including a decent business broker in the deal can give you a chance to focus on maintaining and growing the business while you are attempting to offer it in its best light to buyers. Also, this is vital in light of the fact that you don’t need your business to fizzle while you’re investing energy finding a purchaser and then negotiating back and forth to craft a deal that works well enough for both parties that it can be successfully closed. You need to offer a fruitful, dynamic, fiscally sound business available to be purchased.

An established Colorado business broker can likewise give advertising power and build the pool of potential purchasers. A business intermediary can manage you through the whole process, handle troublesome research material, and screen potential purchasers. For some business sellers, that is a savings of time and hassle worth paying for.

Yes, hiring a business broker could be expensive. But how much will it cost you if word gets out that your business is for sale? Shouldn’t something be said about your clients, customers, rivals or suppliers? In some cases competition is the best motivation to procure a business broker to anonymously list your business for sale. Working with an agent permits you to list your business secretly, without uncovering your desire to sell the company, to either employees or competing firms.

Working with a smart business broker can save you a lot of hassles. Rather than accepting the telephone calls from all the “tire kickers,” your broker will handle the calls, qualify purchasers, and have purchasers consent to a confidentiality agreement before uncovering the name and geographic location of your business, so you don’t need to open up to the world about the fact that your business is for sale until it’s a “done deal.”

Do you have the skills to sell your own business? Do you have the time? Do you have the resources that an expert business broker can bring to the table? The only way to find out is to call a qualified Colorado business broker today.