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Business for sale by owner, or FSBO, is an attempt by a business owner to sell his or her own company. While it is understandable that offers of this kind can easily attract a lot of interest, prospective buyers of FSBO should exercise a significant amount of caution; such an opportunity can often prove to be far more risky than it may appear at first sight. On the other hand, buying an established company can also be a very rewarding endeavor. What can be done to minimize the risk and foster the chance for success?

Buying a FSBO Business – an Opportunity and a Challenge
Even the most inexperienced entrepreneur knows by heart that you should not always trust everything that a seller says. Why would this be different when buying a business for sale by owner? Here are just a few ideas for thought.

First, it is possible that the owner of that business will attempt to overstate his or her business profits. You definitely do not want to pay a lot of money for a business that will keep bleeding “red ink”. Second, when buying a business for sale by owner, he or she, even with the most innocent intentions, might be unaware of a real price of a particular FSBO. Most likely, you would risk overpaying. Third, negotiations are not an easy task. The value of businesses for sale by owner is often highly uncertain – what you might gain or lose depends heavily on your negotiating skills. However, there is an excellent solution to this dilemma.

Middlemen and Businesses for Sale By Owner
When buying a business for sale by owner, a far safer and more favorable approach is to use the services of an experienced business broker. “Why would you want to use an intermediary?” – I can hear you asking. There are many good answers to this question and you will soon see the arguments about how precisely business brokers can help you buy a FSBO business successfully. For a small price that business brokers charge, there are many advantages that make using their services a very important and wise decision.

Why Do You Need the Services of a Business Broker?
To begin with, a business broker can help you find promising businesses for sale by owners that you might want to invest in. He or she will likely have a number of personal contacts and skills that will prove to be invaluable. In addition, business brokers usually have experience with determining a reasonable price for FSBO businesses and can easily help you estimate the fairness of the initial offer.

Furthermore, as mentioned before, negotiations may prove to be a difficult hurdle for any entrepreneur – an experienced business broker can ease this process, speeding up your purchase of a business for sale by owner significantly.

Finally, a business broker can often have considerable experience in dealing with the type of the FSBO business you are looking forward to buy. If possible, you should look specifically for business brokers who have already dealt with a particular industry or industries you are targeting. In certain cases, it is also advisable to look for a local business broker.

Buy FSBO Businesses Responsibly – Ask for Certifications & Qualifications
The industry certifications of a business broker are very important when making an important decision to purchase one or several businesses for sale by owner, as a considerable amount of experience is necessary to achieve success in this field.

Certification serves as one of the possible ways to measure the reliability and trustworthiness of a particular business broker. The International Association of Business Brokers offers certification opportunities for business brokers – for instance, they can become Certified Business Intermediaries® or Merger & Acquisition Master Intermediaries, obtaining these designations to demonstrate their knowledge and experience. It is also highly advisable to check if a particular business broker has at least one of the following designations, certifying their expertise in business valuation: Accredited in Business Valuation (ABV), Accredited Senior Appraiser in Business Valuation (ASA-BV), Certified Business Appraiser (CBA), or Certified Valuation Analyst (CVA). Business valuation is highly important when dealing with businesses for sale by owner – so is choosing a competent business broker.

A choice of a business broker can make or break your attempt to buy a business for sale by owner. You are highly encouraged to pay a lot of attention to the experience and references of a particular business broker whose services you are about to use. With this in mind, purchasing a FSBO business can be a very rewarding and lucrative decision.

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