Sell

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11 minutes

How to sell your small business without a broker

Sara Miteva
Business broker consults his client about selling his small business
Table of contents:

So, you’ve decided to sell your small business. This could be for any number of reasons—new interests, partnership differences, another project, all are valid reasons for sale.

Using a broker sounds ideal—but in most cases, it’s far from it

Let’s face it—you’ve worked hard for years to set up the business. You want to make sure you’re happy with the final sale—both when it comes to the sale price and the buyer. 

Long gone are the days where a broker was your only option—and rightly so. 

Let’s take a look at your options.

Key takeaways: Brokers don’t always ensure the best deal—or even a sale, for that matter. They charge high fees regardless of whether your business sells, and they’re often not working with your best interests in mind. Luckily for you, you’ve got options.

Selling through personal connections can get you a quick sale to a trustworthy buyer, but finding someone in your network who wants to buy can often be impossible. Marketplaces are also an option, but you’ll likely spend months going back and forth with people who have no intention of making an offer. OpenStore can buy your business in a matter of weeks, and their pricing technology ensures an accurate price for your business. It looks at traditional data and subjective data to build an offer that reflects the time and energy you’ve put into building a business. No hidden fees, no paperwork, and no need to hire a legal team: OpenStore’s team of experts handles it all and keeps your business running smoothly following the sale. Interested? Read on for the details.

How does a broker work?

Brokers specialize in marketing—and eventually selling—your small business. They aid in selling your small business by qualifying buyers and connecting you with interested parties.

The brokers rely on web traffic to their websites to attract buyers. Their success depends on their web traffic and ability to attract buyers. 

Obviously, they don’t do this for free, and selling through a broker by no means ensures that the process will go quickly or smoothly. 

What are the disadvantages of selling with a broker?

Business brokers charge a fee

One of the primary drawbacks of selling through a broker is that a brokerage fee can range from 10% to 15% of the total buying price. When selling a business that you've worked hard to create and manage, this is a significant sum. 

Plus, you pay a brokerage fee regardless of if you end up selling via the broker! Even if you decide not to use a broker any more and find a buyer later yourself, you still need to pay the fee months after you’ve parted ways with the broker.

Business brokers view your business in numbers

The broker often won’t understand the emotional ties you have to your business. In addition to revenues and profit, your business is likely something you’ve built from the ground up. 

Brokers use overly simplistic valuation methods that just apply a blanket 2-5x multiple to your profit. Here’s what Cindy Hao, head of pricing at OpenStore—had to say about a broker’s approach to selling your business:

“The broker works towards the largest payout with disregard for probability of close. Your business can be listed for months and you can waste hours on calls, compiling information, and answering questions for potential buyers who might never submit an offer. Some businesses OpenStore transact with have been waiting for offers from brokers for months and months.”

Business brokers might not be on your side

Brokers have spent years working with buyers in the sector, and often build close working relationships. You might not get the highest possible sale price when it comes to negotiating. 

This is especially true when it comes to a distressed sale. You’re panicking and ready to take the first reasonable offer—the broker knows this. They always want to make the biggest profit from your sale, and the bigger your sale price—the bigger their payout. However, they may not always approach it with this mentality.

It might benefit the broker more to keep buyers happy—get them a good deal now in exchange for a bigger payout in the future. It’s by no means certain, but it’s definitely something to consider when working with a broker.

Business brokers aren’t always industry experts

Finding a broker with good qualifications and experience can be difficult and time-consuming. Sellers are frequently forced to select a broker who does not tick all of their boxes. 

If an expert broker has the contacts you need to locate a buyer, for example, their fees will almost certainly be higher. They may also have more personal ties to the buyers they recommend. 

Working with a low-quality, inexperienced broker might result in issues down the road. In order to be compensated, low-quality brokers concentrate on selling the firm as fast as possible. 

Trying to find a broker can lead to sellers making unsatisfactory trade-offs—be it on price, quality, or experience.

Furthermore, brokers often focus on Fulfillment by Amazon (FBA) stores—as we heard from Cindy:

“Shopify stores typically fall to the wayside. If you’re selling a Shopify store, this is a huge consideration and hefty roadblock. Unless you are a FBA business, you are not a high priority listing for the broker.”

Put simply, if you’re a Shopify store—you’re out of luck. That being said, there are plenty of ways to sell your Shopify store that don’t involve a broker.

The disadvantages of using a broker to sell your business:

  • Business brokers charge a fee. The fee can range between 10-15%.
  • Business brokers view your business in numbers. The valuation method used is overly simplistic and doesn’t give your business the credit it deserves.
  • Business brokers might not be on your side. There’s no guarantee that brokers are looking out for your interests or they are only after their commission.
  • Business brokers aren’t always experts. Low-quality brokers might have difficulty finding buyers and might not get the best deal.
  • Business brokers focus on Fulfillment by Amazon stores. If that’s not you, you’re likely not a priority listing for brokers.

Why choose an alternative to selling with a business broker

A business broker is no longer essential for selling your business—you can easily do their tasks or outsource them. 

There’s easy access to information online

You can do your own market research and find out what’s best for your business. You can easily connect with people from all over the world who might be interested in buying your business. You don’t need the help of a broker for this. 

You can market your own business

Marketing the business has traditionally been one of the key roles of brokers, but you’re now able to market your business independently via: 

  • social media (Facebook, LinkedIn, Reddit, Twitter),
  • email/newsletters,
  • Google Ads,
  • Slack groups,
  • forums and other online communities.

Many of these are free, so you won’t even need a big budget—just time. 

You can bring in legal and accounting help

It’s often cheaper and easier to hire external professionals who will manage financial statements, customer lists, due diligence—and all the other areas you aren’t 100% sure on.

Make sure you hire accountants and attorneys so you always know that your contracts are in order. This also avoids any bias from the broker—an outsourced accountant or lawyer works for the seller, not the buyer.

Why choosing an alternative to a broker is easier than people think

  • There’s ample information online. You can do market research & more without a broker.
  • You can market your own business. Social media and online communities are great places to market your business without the help of a broker.
  • You can bring in legal and accounting help. Hiring experts like these is often cheaper than hiring a broker.

Are there other options for selling a small business?

Yes, there absolutely are—let’s consider your options.

Sell your small business with OpenStore in weeks

Selling your small business with OpenStore is one of the easiest ways to sell your business without a broker. 

OpenStore, unlike traditional sales approaches, employs a scientific pricing methodology to guarantee that offers are fair and consistent. The pricing team consists of data scientists and machine-learning engineers who collaborate with financial specialists to provide the best offers possible. Here’s how it works:

“OpenStore's pricing technology provides objective business valuations based on both traditional data–such as financial records, Shopify sales data, and Facebook and Google Ads data–and more subjective data–such as your product’s popularity.

The team can turn around offers, perform due diligence, and close agreements in a matter of weeks using unique pricing technology and processes. This guarantees that you’ll save time and avoid delays, while still getting the best deal for your business.” Cindy Hao, head of pricing at OpenStore

The pros of selling with OpenStore: 

+ The process is very fast and easy—it’s complete in just a few weeks.

+ All paperwork is prepared for you—you’ll only need to provide the necessary data. 

+ OpenStore takes the responsibility to maintain your business as it appreciates your emotional connection to it.

Cons:

- For now, only supports asset sale.

- For now, it only supports the sales of Shopify businesses.

Don’t just take it from us—here’s what a seller who sold with OpenStore had to say about the process:

"With you guys, it's quick and easy. The brokers get paid for basically doing nothing. The reason why a lot of ecommerce sellers go with brokers is because brokers are what they've heard. If they knew about OpenStore, they would submit and see." 

OpenStore’s fresh take on business valuation and sale ensures you get the best deal for your business. The OpenStore team quickly and easily helps you navigate your sale, and ensure all documentation is complete to regulation.

Sell your small business through personal connections

Using your personal network to find a buyer helps ensure a fast and easy agreement for a DIY business sale. Similarly to OpenStore, you’ll have no intermediaries, so you won’t have to pay any sales fees. 

However, you still might need some lawyers and accountants as you won’t have any support throughout the process. Moreover, you won’t have too many buyer options—you’re limited to friends and acquaintances that may not even be interested in buying or running a business. 

Pros of selling through personal connections:

+ You don’t need to pay any fees because you don’t have any intermediaries.

+ You can easily negotiate to get a great deal with someone you know.

Cons:

- There won’t be many buyer options as it’s limited to people you know.

- There’s no support throughout the process as there aren’t intermediaries.

- It requires escrow to make sure all obligations are fulfilled.

Sell your small business on a marketplace

Our final option is to sell your business on a small business marketplace. Thousands of potential consumers, some of whom will have already purchased enterprises on internet marketplaces, will be able to see your listing. 

Marketplaces are typically regulated to avoid unlawful activity. They also enable you to reach a larger number of potential consumers.

Here are some online marketplaces you can use: 

  • Shopify Exchange is a place where you can sell your Shopify store if you meet all the requirements, like having a premium Shopify account. 
  • Flippa is an auction-based marketplace that functions similarly to the Shopify marketplace.
  • Empire Flippers is an online marketplace for e-commerce, affiliate, SaaS, FBA, and other types of businesses. 
  • Investors Club is a members-only marketplace and has fewer listings than the other marketplaces mentioned, mostly focusing on high-quality ones. 

Finding a buyer through a marketplace may require a major time commitment on your part. You could receive hundreds of calls from potential buyers, only to discover that the majority of them aren't interested in moving ahead.

The marketplace can often be highly competitive and you don’t receive support with the listing. It can be a disheartening process that can lead you to lower the price of your business in the hopes it attracts more buyers. This is a dangerous game—you don’t want to regret your final decision. 

You also want to check all the terms these marketplaces offer—especially when it comes to fees. Some charge a fixed fee—like a listing fee—and others charge a percentage fee, which can often vary from 5% to 15% of the final sale price. 

You don’t want a broker disguised as a marketplace, otherwise, you’re back in the same boat—giving a large portion of your profits to a third party when it’s really not necessary.

The pros of selling on a marketplace:

+ It’s free to list your business.

+ You can attract a large number of interested parties.

Cons:

- The landscape is highly-competitive.

- You get no support when preparing your listing.

- It can take months to find a buyer.

- You’ll need a lot of time to find the right buyer.

- You might end up selling for a lower price than you expected.

- You will pay a fee, just like with brokers.

Should you sell your business with a broker?

In our opinion—definitely not. A broker can’t access the real worth of your business and will often focus on commission over seller satisfaction. Moreover, they might not always be on your side and low-quality brokers might not get you the best deal out there. 

So, if you’re thinking about hiring a broker, think again. It’s not your best option, nor is it your only option.

If you’re looking for a quick and easy sale that ensures you get a great deal, take a look at OpenStore. You can watch the business you built go from strength to strength with OpenStore’s experienced store managers and marketers—all while you relax and enjoy increased profits from business sales.

Looking to sell without a broker?

Get your free business valuation with OpenStore in 24 hours. OpenStore can buy your business in under a week, and keep it growing even after you move on to your next big adventure.