People living in Australia, Europe and America will likely have come across the Gumtree marketplace. But do you really know how good it is when it comes to selling a business on Gumtree? It is a fact that there are many things to consider when selling a business on Gumtree.
As such, in this article, we will explore Gumtree, particularly what you need to know if you want to sell a small business on Gumtree.
In short, Gumtree gives businesses an affordable platform to advertise. It is a great business tool to use.
The history of Gumtree is interesting. First, it functioned as a local classified’s Ad and community site in London. Then it enabled Australians, South Africans, and New Zealanders to help them find employment or meet new people. Then, it evolved as a popular marketplace.
The site Gumtree has a vast and active audience. To clarify, it can connect you to your ideal target audience. Hence, from parents and families to Generation for Good (Gen Z and second-handers) and from home movers to homemakers. In short, so simply and cost-effectively, it connects your business to people looking for your goods and services.
Gumtree has grown immensely in Australia in the last 10 years. But the question arises is it the right place to sell your business? Remember, a business is a valuable asset of your portfolio, and a business sale is more complex, so you must have the knowledge, time, and discretion.
Before moving further, we must first understand the concept of Gumtree in detail to understand the shortfalls of their marketplace, so let’s get started.
What Is Gumtree?
One of the UK’s largest websites for classified Ads is Gumtree or Gumtree.com. In early 2000 Michael Pennington and Simon Crookall developed the site Gumtree. It also has different branches in different countries. Gumtree is a platform that offers a place for people to connect.
Furthermore, it is for everyone with many different offerings like job openings, looking for services, items for sale, lifestyle blogs, etc.
The company eBay classified ads group bought and rebranded Gumtree in 2005. Since then, users can also use this platform to find and advertise rooms, flats, and houses together with anything you can imagine of.
Most of the classified Ads are free for the advertiser or can be paid depending on the geographical market and product category.
But, what about selling your small business through Gumtree? That’s not a simple question, but something worth digging into…
What Does It Mean To Sell Your Small Business?
Selling a small business is a challenging task. It is a complex venture that involves so many considerations.
The profit you will get will depend on the reason and timing of the sale. Moreover, it also depends on the structure and strength of the business operations, as we noted in our previous article ‘What Business Buyers Look For In An Australian Small Business‘.
The sale of the business will require a lot of your time. But after selling the company, you still may need to develop innovative ways to handle the profit. For example, a strategy to invest in real estate.
Below are some key points to consider when selling your small business.
- The first step in any small business is to identify why you are selling.
- You must prepare for the sale at least a year in advance. Hence, in this way, you can improve your financial records and customer base, etc. At least you can understand your business proposition better.
- Determine your business value so that you can price it appropriately.
- Try to organize your financial statements as well as your tax returns.
- Check the pros and cons of selling your small business in various scenarios.
Business selling is about more than finding a buyer. Instead, it is about taking the proper steps to transfer company ownership, its assets and/or shares, successfully. It might take months or years to sell a business, screen potential buyers, and complete all the legal processes.
Below is the chart by MidStreet Mergers and Acquisitions that shows as businesses worth more in the price, they take longer to sell.
|
Sale Price |
Average Days To Sell |
|
$300,000 – $600,000 |
245 |
|
$600,000 – $1,000,000 |
294 |
|
$1,000,000 – $1,600,000 |
299 |
|
$1,600,000 – $2,500,000 |
303 |
|
$2,500,000 – $5,000,000 |
301 |
Before selling your small business, you must also evaluate the value of your business by considering the following things.
- Current assets and liabilities.
- The business must have a current revenue stream.
- Projected profitability of the business.
- Monitor current market trends and economic projections, etc.
More specifically, here are a few things to consider when you are selling a business, especially on Gumtree.
13 Things To Consider When Selling A Business On Gumtree
Below are some essential things to consider when selling a business on Gumtree.
1. Determine Your Business Value
It would help if you determined your business value before selling it on Gumtree. Gather and analyze all the information, including the assets and liabilities. Thus, it will help you analyze whether you will profit by selling it on Gumtree.
Otherwise, the Gumtree market is likely to confuse and distract you.
2. Create A Detailed Business Listing
Post an Ad listing on Gumtree with as much detail as possible. Try to provide a detailed description and several clear and high-quality pictures of the business you are trying to sell.
Be professional in every possible way! Remember, professional businesses value more compared to aggressive owner manager defending his/her business.
3. Set A Realistic Asking Price
First, research the market and see what other similar businesses claim they are worth. Then set a realistic asking price for buyers, especially if you are serious about selling your business.
Remember, to be serious. If you are not, don’t advertise, as advertising your business for sale only to get a feeling about the market, can destroy your business, especially if your employees, clients and contractors come to know about it.
So, being realistic about your sale price, is important for a transaction. The final outcome you are after!
4. Preparing For Due Diligence
Preparing for due diligence is identifying the problems before placing your business in the market. Hence, in this way, you can attract a sophisticated buyer on Gumtree.
Remember, any serious buyer will do due diligence before purchasing your business. Things can go ugly soon after if and when they find out that you were hiding something.
So, just be honest. Front of the expertise of the Accountants and Lawyers who involve during a due diligence process, you really wouldn’t be able to play any tricks.
5. Screen Potential Buyers
Always screen potential buyers before selling them anything on Gumtree. You must see that the information they are providing is correct.
Another thing is they will always communicate with you on the Gumtree platform. These communications are useful to understand genuine potential buyers from time wasters.
Once you build a rapport, you can always exchange numbers and have an over-phone conversation to further validate their potential as a buyer, before meeting them in person.
Once you meet them or are confident, then you can disclose your financials and anything else which they require for due diligence.
6. Scam Prevention
When selling anything online, beware of scammers. Scammers will make up stories to trick you so that you will give them your details or money. If a buyer responds to your business listing and asks you to email them more details without agreeing to have a conversation over the phone or in person, it is undoubtedly a scammer.
You can contact Gumtree with information about the Ad, ad number, and email address of the person who has contacted you if you believe it, is a scam.
Remember, faceless individuals and companies who are interested in purchasing your business is most likely a scam. Just be mindful!
7. Negotiating The Deal
Before finalizing the deal, you may need to provide the potential purchaser with more details about your cash flow, assets and liabilities, and profit and loss, and anything else you would like the purchaser to know about your business for sale.
Be open to sharing information and be honest. Otherwise, you cannot negotiate a fair price with the buyer. Remember, both you and the purchase both must win the whole process to continue till the settlement. Not only you!
8. Finalizing The Sale
If you find your potential buyer for your business and want to be safe, finalize the sale following your and their solicitor’s and accountant’s advice and guidance.
Remember, selling a business is never easy as selling an item on Gumtree. More involved in business tractions and experts involved too.
Secondly, once all the paperwork is completed, get paid by bank deposits or other payment methods outside of Gumtree.
Remember, in this case, Gumtree is just the platform that connects you with the buyer. Gumtree receives their advertising fee for their service, and their responsibility ends right there. It is up to you to do the due diligence and legals and to make sure the transaction happens as it is intended to.
We will discuss legal considerations a little later in this list.
9. Security And Privacy Considerations
Using Gumtree, you can give less information about the business you got for sale. In short, you can communicate with buyers within Gumtree messages because of security and privacy considerations.
For example, you can inform the exact business name and address to a selected bunch of inquirers but not to everyone. In that way, the public doesn’t know that your business is actually available for sale.
Remember, as noted above, Gumtree is a popular place among scammers, marketeers and many third parties who find opportunities to earn an easy buck. That’s why when you try to sell something very valuable, such as a business, you should be very careful not to give away too much about what you try to sell.
10. Legal Considerations
Gumtree has its own terms of use. You should abbey them.
As a seller, you are responsible for all information you submit to Gumtree and not to mislead anyone. In addition, you should not violate any local rules, laws, or policies applicable when selling a business.
11. Type of Payment
Some of the payment methods available on Gumtree include debit/credit cards, PayPal, cash, bank transfer, cheque, Western Union and MoneyGram, etc. However, this may not be applicable to you as during a business sale; the buyer has to pay you through the bank at the settlement.
Remember, a business sale transaction is a legal transaction that needs to involve lawyers and accountants, so if any buyer promising a fancy PayPal or PayId transaction is likely a scammer.
As noted earlier, during a business sale, the role of Gumtree advertisement is only to link you with a potential buyer, but nothing else. The rest, for example, the mode of the settlement, will be guided by your and the buyer’s accountants or lawyers.
12. Organize Shipping For Any Inventory And Stocks
If your sale involves inventory, you can ship them to the buyer through fright. Instead, they can collect them as a local pick-up too.
Regardless, to avoid any conflict, it you would be ideal, if the purchaser visits you to assess, inspect and value the inventory or stock that come with your business sale. Remember, they need to be happy about the value you put on the outstanding stocks and inventory.
Once that is all agreed, you can organize nationwide shipping in parallel to your business settlement. Of course, your solicitor will advise the process these need to happen.
13. Communication
When buyers show interest in your business available for sale, they can reach you via the Gumtree private message system, it is best to reply to every message as soon as you can to lessen the risk of losing the potential business purchaser.
Once, you are confident the enquirer is not a scam, exchange your mobile numbers and have a conversation over the phone. You can also try to meet them at a public place to discuss further.
Regardless, make sure to check their existence by googling their full name or by visiting their LinkedIn profile to make sure the person you are chatting with is real. Once that is confirmed, then exchange the numbers to talk further. Once the rapport is built and you are confident, then you can share the confidential documents of your business, such as Business Statements.
Remember, sometimes selling a business via Gumtree is a good idea, but sometimes it is not.
Let’s look at the circumstances when you could consider selling the business via Gumtree.
When Selling Your Small Business On Gumtree A Good Idea?
One of the best tools for any small business to sell online can be Gumtree. With increasing popularity in online trade, Gumtree is more accessible for people to access different products and services, and businesses too.
Due to high advertising costs, many businesses need help to run full-scale digital campaigns. Thus, this is where Gumtree comes in. There are 5 million unique monthly visitors ready to purchase the products and services on Gumtree. Gumtree also invests more than 1 Million in SEO, driving traffic to their listers.
It is a good idea to sell your small business on Gumtree; if your business is available for sale, sell the below items across a range of categories.
- Food (e.g. restaurants)
- Home and Garden (e.g. hardware store)
- Blue color services (e.g. cleaning businesses)
- Cars and Vehicles (e.g. car dealerships)
- Real Estate (e.g. handyman service business)
As evident above, simple businesses that require sweat (i.e. blue color businesses) are the best fit to sell through via marketplaces like Gumtree. Selling your business on Gumtree is a worth considering sales option.
However, remember, there are circumstances where you should think twice before trying to sell a business via Gumtree.
Let’s look at them now…
When Selling Your Small Business On Gumtree A Bad Idea?
Gumtree is an excellent online classified-type website, as noted earlier. Moreover, it is a great conduit for selling items. It is also good to promote small businesses. But is selling your small business on Gumtree always a good idea?
It is not!
Indeed, this is a very different question because a business sale is more complex than you might think. To sell a business, you must have knowledge and enough time. On top of that, you have to make sure to avoid any scammers who try to steal information about your business and most likely, some money too. Just be mindful!
Remember, your company may consist of tangible and intangible assets. Most likely some goodwill too.
Tangible assets are easy to identify, like equipment and EG plant. On the contrary, intangible assets are complex and not easy to consider (e.g. goodwill). But they are the most valuable part of the business-like reputation, location, systems, and customer base.
Buyers feel more challenged to pay for intangible assets because their real value is open for debate. Therefore, selling a business with a considerable intangible value on Gumtree is not a wise idea.
Another thing is that the business must price realistically to meet the market requirements. If you haven’t done that reasonably, you might get ‘bullied’ by random inquirers.
You must also check that you have the time to sell your business; otherwise, hiring a professional business broker could be better. These people will save time and deal with all the matters. A well-presented small business will sell quicker in the market and for a better price too.
Instead, you could contact acclaimed business investors in Australia to see if they are interested in buying off the market.
For example, if your business is an Australia-based online business or South Australia (Adelaide) based brick-and-water business investors like Dr Yasoba Atukorale might be interested in coming up with a deal.
But if you still wish to stick with Gumtree, avoid common mistakes and stay organized when selling a small business there.
Remember, asking for the wrong price can cost you, so choose wisely. Your small business plan must have forecasted scenarios and financial projections to avoid any hassle in the future. That’s what the purchase is most interested in establishing.
11 Tips For Effectively Selling Your Small Business On Gumtree
Gumtree is one of the best online-selling sites you could consider in advertising your small business. However, to get the best price and quickest sale, you must be familiar with the below tips on how to sell on Gumtree.
Read on for some tips for effectively selling your small business on Gumtree.
1. Sensibly Price Your Item
When selling on Gumtree, one of the essential things is to price your item sensibly. Make sure that its price is realistic so that it can attract buyers. Similarly, you must ensure you get a fair price for your item.
Remember, both you and the purchaser should win. Not only you!
2. Creating A Proper Title
Buyers will first see the title when searching for something on Gumtree. There are no exceptions for business sales.
Therefore, your title must be catchy, attractive, and descriptive. An excellent title has the type of business you are trying to sell, location as well as key features.
Here is an example – ‘20 Year Old Car Washing Business in Eastern Adelaide Available For Sale’
3. Item Description
When the buyer clicks your ad, they will see the description. This is where you will give the buyer all the relevant details about your business.
Remember to include general information such as business history, gross revenue, your reason for sale, what comes with the sale, and the support likely the new owner receives etc.
Remember, it is still too early to disclose the exact business name or address. You better validate genuine buyers via chat before disclosing such information.
4. Featured Listing
Gumtree gives you the option of a featured listing, meaning your Ad will be at the top of the search results. That means it is more likely to be seen by more buyers in your specific category. Hence, in return, you will get more enquiries.
5. Clear Pictures
Try to take as many photos as possible in bright light and from different angles of your business premises without disclosing your business name. The pictures should be clear and well-lit.
Again, the intention is not to give clues about your business name or exact location.
In some instances, you are best off by adding stock images, instead of real pictures of your business.
For example, if you are selling a laundry business, just provide stock images of a laundry business. Simple!
6. Regularly Re-list Your Items
Your post will remain online for 30 days then it will expire. However, you can repost the listing so that the advertisement remains online.
Gumtree search results show the newer listing first, and the older listing will go to page 2. Therefore, it becomes harder for you to sell. So, eventually, you are better off deleting your old advertisement and reposting a new one.
Always create a new listing and delete the previous one.
Tip: Just like a property that was sold often has a lower value, a business that was sold often can push its value down too.
7. Realistic Pricing And Market Research
Remember not to get caught up with lowballs when you try to sell your business. On the contrary, you have to accept a lower price for your business, if the market thinks it doesn’t value what you think it is. Therefore, always be realistic with your pricing and always do market research. Just don’t turn around legitimate buyers, simply by being too greedy!
8. Recently Sold History
If you turn on your recently sold history on Gumtree, the buyers will think you are a genuine seller. Hence, this will also show all your successful transactions.
Remember, now you are trying to sell something very valuable, your business, and your history in Gumtree records will definitely play a role. It will essentially tell the potential buyers how reliable a person you are…
In other words, if you have a lower reliability score in the Gumtree profile, most likely, you are wasting time by trying to sell your business through the same profile. In that case, you are better off creating a new profile for the purpose of selling your business there.
9. Be Flexible
Sometimes buyers ask for a price that is different from your asking price. If you feel your business is worth it, get it done. Make it your day by agreeing to a low offer so you can move on to do better things life offers.
To sum up, be flexible, so it will save you time and helps you move on quickly.
10. Be Responsive And Courteous
Try to respond to buyers’ queries as quickly as possible. Otherwise, you will lose your sale as buyers will move somewhere else.
Always try to be polite when communicating with buyers. Thus, it helps to show that you are a serious seller!
11. Be Patient
You have to be patient when selling on Gumtree. It’s reasonable to expect sales to take some time. Remember, the table I presented early in this article.
Don’t forget; Gumtree offers its service for free or something for a nominal charge compared to what you try to sell there (i.e. your business).
Cost Of Advertising Your Small Business For Sale On Gumtree
Whether you are a small or medium-sized enterprise (SME) or any other brand wanting to run data-driven display campaigns to reach audiences, Gumtree is a good platform.
You can connect with a massive audience, as Gumtree has 9.2M unique users, 62M monthly visits, and 770M page views.
There are different options and pricing plans for advertisements according to the category.
If you have a business listing, then pay-as-you-go advertising is the best. Similarly, if you have regular requirements to advertise, then pro-account subscriptions would work too.
Paid And Unpaid Ads
Paid ads on Gumtree are more visible, while unpaid ads are less visible. Unpaid ads also have limited features. The paid Ad costs depend on the category, type of Ad and location, etc.
Generally, paid ad cost on Gumtree is around $3 to $60 Australian dollars.
The pricing on Gumtree depends on the country, city, and the listed product category. The desired volume of Ad views also determines the price.
Advertisers can pay $250 for 25,000 views on Australian platforms. Similarly, for 300,000 views, they will pay $3,000. In comparison, Gumtree offers you a bargain in allowing you to advertise your business available for sale.
Conclusion
Gumtree is a good platform to sell your business to identify potential buyers. It is a more convenient way to sell a business of up to a few hundred thousand value business easily; however, if you think your business value in millions, you are better off by avoiding Gumtree altogether.
Nevertheless, you shouldn’t forget millions of people use Gumtree daily, and most have a successful experience.
While Gumtree doesn’t sell anything directly, the site is developing new ways to educate its customers. They will help them understand best practices for safety, payments, and protecting personal information. Moreover, they also provide extensive online tips and information to guide you in using their platform efficiently.
Make sure to read the tips we provided in this article to get the best experience as you prepare to sell your business on Gumtree. If you are an Australian business, investors such as Dr Yasoba Atukorale, would come in handy if you want to get a feeling of how much your business is really worth.
Thanks for reading!
