Avoid Selling Your Gas Station business On Your Own
There has been many business owners who wanted to save on commission by selling their gas station business on their own. Likely their business did not sell or they got into some hot water and it’s then that they sought a business broker to help. This has occurred with gas station owners seeking to sell their gas station.
While a ‘For Sale By Owner’ (FSBO) sounds appealing, for business sales it can be disastrous. Selling a business, and specifically a gas station, requires a specific skill set. To successfully sell one, you need to know business valuation, legalities involved, marketing, business disclosures, listing packaging, negotiating, contracting, etc. If it’s complicated for licensed, skilled professionals, it’s overwhelming for the non-brokers.
Apart from gas station brokering knowledge and skills, there are additional reasons why a gas station FSBO is actually not in the business owner’s best interest in terms of getting their gas station sold and for the best price. You don’t know what you don’t know and that is the main reason that we encourage gas station owners to avoid selling your gas station business on your own.
Here are 10 reasons why we think gas station owners are better off hiring a qualified, experienced gas station broker to avoid selling your gas station business on your own.
Avoid selling your gas station business on your own
Gas station owners are not objective.
How can they be objective? They are far too close to the business and will take buyer’s comments, actions, etc. personally. By viewing a commercial transaction personally, you put yourself in the position of undermining and perhaps killing a deal.
Gas station owners will overestimate the value of their gas station.
Even if a gas station owner has solid financial skills, they will tend to overestimate the value of their business. They will equate their blood, sweat and tears into dollar sign even though that is irrelevant. It does not matter that you worked 16 hour days for 10 years for business value purposes. That’s not what buyers are buying. What matters is the business’ financial performance and you need to understand how to present that information to buyers and lenders in order to sell your business.
Unrealistic pricing is the biggest reason why gas stations do not sell.
Business valuations for gas stations are complicated. They require advanced training and skill development through extensive practice. They involve analyzing all income streams and valuing them separately and then together. The valuation also involves looking at the past 3-5 years of tax returns and current profit & loss statements. Also, the valuation specialist determines the appropriate multiple of earnings based upon the gas station’s financial performance and comparable sales. Gas station owners are not skilled in preparing business valuations and will not know how to organize the financial information so that it accurately reflects market-worth.
Gas station owners are likely to leave money on the negotiating room table.
Gas station owners may not know how to get more money, better terms and to prevent problems from arising down stream from the sale. They may be so focused just on the sale, that they are not familiar with the myriad of ways that a sale can unravel over price and terms at various stages of the contract.
Selling a gas station takes an enormous amount of time.
You will have to figure out what to do, what documents that you need, how to market, where to market, how to manage buyers, how to maintain a confidential sale, how to properly vet buyers, etc. all while trying to run a business. Selling one of your greatest assets is not the time for learning on the job. Rather, it definitely requires the knowledge and skills of a professionally licensed intermediary.
Buyers do not like working directly with sellers.
Buyers prefer working with professional intermediaries. They want professionals supervising and managing the transaction so that they can trust the process. In a typical sale, a great deal of information is relayed between the parties. Buyers want to be able to rely on the information presented and will tend to accept information when presented through a licensed, professional broker.
Sellers may talk too much if doing a FSBO sale.
They are not sure what to disclose, how much to disclose, or they might be nervous about the sales process and chatter away. They may unintentionally undermine the sale by disclosing information prematurely or providing too much information that turns off the buyer or just talk so much that the buyer did not want to continue to engage in the sales process.
Gas station owners may not know all the necessary documents that they must include in a business sale.
They may also be unfamiliar with the purchase agreement and the related terms and concepts regarding a business sale. They may also feel very uncomfortable bringing that lack of knowledge to the bargaining table which places them at a disadvantage with the buyer who might take advantage of their ignorance.
No trusted intermediary if the sale becomes adversarial
If your relationship with the buyer becomes adversarial, you may kill the deal if you are unable to remain diplomatic. During most business sales, buyers and sellers will find conflict points. Having an experienced gas station broker who knows how to remain calm and communicate through common situations, can help defuse the conflict, resolve tensions and get the transaction on track.
Gas station owners may not know how to minimize taxes in a business sale.
Gas station seller who are unfamiliar with the tax implications of their business sale are not in a strong position to sell their business. Prior to selling your gas station, you must be clear about your tax exposure and how much you will likely net. You should also find out from your accountant whether there is anything that can be done prior to sale to reduce the tax burden.
Moreover, a gas station owner should know how to allocate the purchase price in order to minimize their business sale tax. Specific guidance from a gas staton broker on the allocation can save thousands alone and should be reason enough for you to avoid selling your gas station business on your own
Seriously. Don’t go it alone.
Of course we are biased in favor of gas station owners working with qualified gas station business brokers. We have seen business brokers try to sell their own businesses without success. We have also seen them get into trouble doing so. This is why we encourage gas station owners to get in touch with us to find out all the services that we provide to successfully sell California gas stations.
If you would like to learn some of our secrets for a successful gas station sale, check out our Gas Station Broker’s Secrets for Selling Your Gas Station At A Great Price. This is our email and video series that provides guidance to gas station owners to help them become successful gas station sellers.