Choosing a business broker

Business brokers are trained professionals who help business owners save time and money when trying to sell their businesses.  They work much like realtors in that they charge a commission which gives them great incentive to get you the best price possible for your business; the more you get, the more they make.  They have a number of avenues by which they will advertise your business, both electronically on websites specifically for selling businesses, as well as the typical forms of print media including posting fliers and sometimes the use of a storefront window capturing the attention of passersby.

 The benefits of using broker services are many.  They save you time by filtering inquiries so that you need only bother with the ones that have serious interest in buying your business.  Brokers plug your offering into their established networks of clients and contacts.  They can appraise your business’ worth and predict what it will sell for.  Brokers keep on top of current trends and how the economy is affecting the market as it relates to selling your business.

Listen to your intuition when deciding on a broker.  Sure, they should have professional experience that makes you feel confident about putting your business in their hands, but you should also feel comfortable on a gut level working with them.  As with getting an insurance quote, it is highly recommended to meet with at least three business brokers before deciding on which one feels right for you and your business needs.  Although your broker should have your best interests in mind, don’t forget that ultimately, you’re the one who calls the shots.

Advantages of Using a Broker to Sell Your Small Business

Although selling a business on your own (FSBO) may be an enticing idea, there are several reasons why it is advisable to enlist the help of a broker to sell you small business. Despite the temptation to save on commissions and fees, ultimately a business broker can significantly accelerate and remove hassle from the selling process.

By paying a broker commission, you are essentially providing incentive for the broker to get the best possible price for the sale of your small business. If you were to choose to do a FSBO, the sale price will often be lower than what a broker could have negotiated, therefore offsetting some of the commission cost. A broker will also have a clear understanding of the market and the value of your business, which again will help you to achieve a better sale price.

Business brokers are skilled at showcasing your business and highlighting its best attributes, therefore attracting buyers. Brokers also maintain an extensive database of buyers and contacts, which greatly aids the search for the right buyer. A good broker will also screen potential buyers in order to ascertain whether they are genuinely interested and qualified or simply wasting your time.  Once buyers are interested, a broker will often generate competition between the buyers in order to accelerate the sale and attain a better price. All of these services speed up the selling process considerably, and eliminate many headaches that you could otherwise be burdened with.

It is extremely important that your employees, competitors and vendors are unaware of the impending sale, although this can be difficult to conceal if you do a FSBO. However, a broker acts as the intermediary in such situations, and therefore enables you to keep the sale confidential. This mediator role also comes into play with regard to buyer/seller relations, as all negotiations pass through and are interpreted by the broker.

Lastly, a broker is highly valuable when it comes to finalizing the sale, as they understand all the nuances and legal requirements that the average seller may not be aware of. A good broker plays a key role in the entire buy/sell process, and is well worth the price.

Getting the advice you need when buying a business

Anyone who wants to buy a business will need some good advice – be it a seasoned investor or a first-time buyer. They will want answers to such questions as, “What is the business worth?” and “When will I start to show cash flow?”  Once the reality of buying a business starts to sink in, additional concerns will arise. However, finding good advice maybe easier than one thinks. 

In any situation, free advice is both available and worthwhile. Even the cost of paying for such advice is nominal and many times well worth it. There are a number of resources available to prospective business owners. Here are some places to start.

Websites - Entreprenuer.com is for entrepreneurs and small business owners. You can meet fellow entrepreneurs, business experts, business owners, investors, and get many of your questions answered through their forums. LittleBizTrader.com also has a small business blog that educates on the buy/sell process.

Local chamber of commerce – As a means for networking and getting answerers to local questions in your area, the chamber of commerce is an excellent resource. Many local business owners are a part of this organization, and you can also obtain a list of reliable business brokers in the area.

Business brokers- are trained professionals who help business owners save time and money when trying to sell their businesses.  They work much like realtors in that they charge a commission which gives them great incentive to get you the best price possible for your business. If you have questions, they got answers.

SBA – The U.S. Small Business Administration is a terrific resource if you wish to buy a business. First, their web site is organized on a state-by-state basis, with listings of companies for sale as well as direct links to every Secretary of State’s office. This information is valuable because you will learn about things like business licenses, taxes, employment regulations, and many other factors necessary to the purchase and successful operation of a business. The SBA also acts as a funding resource.

Lending institutions – Bankers and credit unions are a great resource to find financing for a new venture. They also will give you great insight on whether a venture is worth pursuing. Begin the process of creating a professional relationship with your local broker and you will have a great resource for life.

Professionals - We strongly recommend you consult professional business advisors including business brokers, business attorneys, CPA’s, financial advisors, certified business appraisers, and tax advisors before making any financial or investment decisions. This will save a lot of headaches in the future.