108: How to Sell a Business the Smart Way with David Barnett

David Barnett, author of "How To Sell My Own Business" talks to us about the process and specific things he does to sell a business, so you can avoid the pitfalls of dealing with an inexperienced broker and also save yourself the typical 10-12 percent commission brokers usually take when you sell your business. https://www.youtube.com/watch?v=vRbbBRxeo_c Display TranscriptRobert Plank: Today's guest is David Barnett. He's the author of How to Sell My Own Business, a Guide to Selling Your Own Business Privately and Not Pay a Broker's Commission. David, welcome to the show. David Barnett: Thanks, Robert, for having me. It's great to be on with you today. Robert Plank: I'm happy to be talking to you. How to sell your own business, how do you do it? David Barnett: The book comes about because of my experience as a business broker. I spent 4 years working full time as a business broker helping people sell businesses and acting as an intermediary. I learned a lot along the way. 1 of the things, of course, that I learned is the majority of business owners would like to sell their business 1 day, but don't want to pay the huge fee associated with using a qualified business broker. When I left that industry, for a couple of reasons, I started thinking about my time as a broker. I realized, "You know what? There's a market and an opportunity to help people do this themselves without using a broker, which is what the majority of business owners want to do anyway." Robert Plank: That makes a lot of sense. Is it true? Somewhere I've heard some kind of statistic that 95% of the wealth is created by someone selling a business? Is that right? David Barnett: I'm not sure about that, but I know that over 80% of businesses that change hands do so privately, without the use of a broker. People are out there doing these deals anyway. What I kept coming across, as a broker and then later just working as a consultant helping people buy and sell businesses on their own, is that there's a lot of bad advice out there and a lot of people out there who don't quite know what they're doing. 1 of the things that I used to say to people when I was a broker is, "Hey, I'm an expert. I can help you do this successfully." because it is a complex operation. In my book, How to Sell My Own Business, I don't tell you everything you need to know to sell your own business. I tell you the process and I tell you what specific things that brokers normally do that the business owner does need professional advice to get done. You can get those things done on a fee-based service. What most brokers do is they'll say, "Look, I'll sell your business for you and I'll package it up and present it to buyers and I'm going to charge you 10 or 12% of whatever we end up getting for you." You can get those expert tasks done sometimes for a couple thousand dollars each. If you're willing to pay as you go through the process and hire experts like you would hire a lawyer, or an accountant, you can end up at the end of the day pocketing all the proceeds of the sale and just having some expenses along the way as long as you know the process and you know how to get from start to finish. Robert Plank: Instead of having someone do an all in 1 deal for you, you might have to do a little bit of hands on stuff yourself, a little bit of managing, but that way you just pay a flat fee instead of this percentage of what could be a huge amount of money. David Barnett: Yeah. When I was a broker, I sold a couple million dollar businesses and had to present people with some commission invoices for, in 1 case, it was $98,000. That's a really big pill to swallow. Robert Plank: Yeah, times 12%. David Barnett: Yeah, my bill was $98,000. Why did I have to charge that kind of money when...