How a Broker Can Help a Shop Owner Sell the Business during COVID-19
6/22/2020…The economic impacts of the unprecedented COVID-19 pandemic are still being felt, measured, and predicted. It is indeed a critical time for the automotive and tire service industry. More than ever, for those considering the sale of their business, the reliance upon the expertise and integrity of a business broker is of paramount importance.
A broker is there to help a business owner with the sale of their business. Of course, there are a few ways in which this can be accomplished and there are pros and cons that come with each of the options.
During times of economic crises, it is a challenge to know how to provide a seller with the best opportunities. However, there are, in fact, hundreds of eager buyers with cash at the ready to snap up the opportunities that are sure to come onto the market.
Important elements of the sales process to keep in mind are:
Be flexible with buyers
Business sellers are more nervous than ever about how their sale will go and the price that they will be able to get for their business. As a business broker leveraging the experience, in-depth knowledge, and extensive contact network I’ve achieved in over 40 years in the tire and automotive aftermarket industry, I can offer assurances that I have been through drastic fluctuations in the market and have been able to assist my clients.
BusinessesForSale.com recently conducted a survey that found that 65% of buyers on the site had more than $50,000 to use as their deposit. This is great news for small businesses. However, the same survey also found that 75% of buyers were expecting the asking prices for businesses to come down. So, a broker must carefully discuss with the seller that there may need to be flexibility on the asking price should they want to make a sale now.
The buyers are there but only 20% intend to use solely their cash reserves to finance their purchase. So, what financing options will the seller be willing to offer?
While there are buyers ready and waiting, getting them through the negotiations will be more important than ever. Be ready to be flexible on some terms that you thought were non-negotiables before the pandemic.
Sell a plan for the future
Any buyer that is looking to invest at the moment will be hoping to get a good deal now for the potential pay-off when the markets return to some form of normalcy. Be clear about what it is that the buyer will be getting in the future.
How has the business made adjustments for future trading online or where can these additions easily be made should the buyer be able to inject the right capital? A clear focus on where the business can grow will be the only way to get the sale over the line in times such as these.
Interest rates in the US are at historic lows and this is giving potential buyers who have cash reserves incentives to invest in businesses. A seller needs to give them a reason to believe that, in the future, the business you are selling will have been worth more than leaving their money in the bank.
Patience is still a virtue
Despite the reassuring advice, there is still a lot to be said for trying to avoid knee jerk reaction sales if the seller is hoping to get a high asking price for their business. This is a tricky time for small business owners, though.
In the meantime, they may be able to qualify for relief from government programs to keep going until the storm has passed. All businesses, of course, must react to the economy and this has put many in a difficult position.
Looking at ways the business will be able to get through this economic hardship can also be information used to reassure potential buyers. Where can the business cut costs? How can it prove that it is a service or product of value to its customers?
Promote the business
Using online marketplaces, which a broker can facilitate, to promote the sale of a business is now, more than ever, an intelligent route to take. The cost is relatively low but, more importantly, users are able to access the thousands of buyers searching for an investment during this time.
Keeping things online is also the perfect way to reach buyers while still maintaining social distance!
“Seeing a critical need and filling it” with expertise and integrity has been the hallmark of my career. In a highly competitive and unique industry such as the tire and automotive aftermarket, successful business brokerage transactions require the broker attributes I possess:
- Unquestionable ethics
- Ability to achieve positive results and maintain excellent customer relations through disciplined account management
- Experience in the buying and selling of numerous businesses and real estate transactions over a 40-year entrepreneurial career
- The attributes of a seasoned team player in all phases of strategic marketing and business development.