FSBO Business Opportunities – The Pros and Cons

Jan 9, 2012

Just like in the real estate business, it would seem that FSBO business opportunities would be preferable to working with an agent or broker. In reality, FSBO opportunities only work well in situations where the buyer is already familiar with the industry, the business and financing.  For example, if you owned a few dry cleaning shops already, and wanted to expand and buy another one, then it would make sense to look for FSBO opportunities.  First of all; they’re likely to have a lower purchase price than those being sold by a broker, and secondly the transaction may go a lot faster.

Working directly with the seller is what makes FSBO opportunities so desirable for entrepreneurs, as it cuts out the need for a three-way conversation.  Of course, this doesn’t mean that either party should go without legal counsel, financial advisors or accountants.  The financial information provided by the seller still must be verified, and every contract should be reviewed by an attorney that specializes in business law.   Inaccurate information can be very costly in any business transaction, so it’s always easier to work with professionals in the legal and financial communities.

While there are many advantages to turnkey FSBO opportunities, it may be better to work with a broker for a more complex acquisition.  For example, if you really want to make an acquisition but the price is too high, a broker can help tremendously with negotiation.  Sellers are rarely as bold with their price negotiations when dealing with an educated and savvy business broker.  By doing their due diligence about the company before you make a bid, a broker will help you avoid costly mistakes and come to the negotiation table armed with information that can be used to reduce the asking price.

Just having a broker available to do the research will save you countless hours and ensure a smooth transition.  There are plenty of FSBO opportunities out there today, and there is nothing wrong going after them on your own, but many buyers decide to bring in their own buyers’ agent to help complete the sale.

If you consider yourself an excellent negotiator and you know your industry well, it may be tempting to go after FSBO opportunities without the help of a broker, but not everyone feels that confident about their ability to purchase a business.   Whether you decide to use a business broker or not, it is easy to find out about businesses for sale by owner by simply checking the listings on BizSale.com.