Are you thinking about acquiring a new business? Maybe you’re considering selling the one you currently own. In either case, the process can be a complex and uncertain endeavor. Don’t go into it blind. Find out why you should consider working with a business broker!
What Are Business Brokers?
Business brokers are specialists that help people acquire or sell businesses. Some states require business brokers to hold a license. They function in much the same way as a real estate broker, except their professional expertise is companies instead of property.
Business brokers are typically paid on commission — the average rate for their services is around 10%. This percentage can vary, of course, depending on the individual brokerage firm or the nature of the business being sold.
Why Use a Business Broker?
There are several reasons why you should use a business broker if you’re looking to buy or sell a business.
1. They’re experts in their field. A good business broker knows his or her clients, as well as current market trends. They have statistics about recent acquisitions and can navigate a deal to get you the best price for a business you’re buying or the highest return on investment for one you’re selling. They will also counsel you on the realistic price points for buying and selling.
2. They know how to advertise. Business brokers understand that marketing is a key part of selling a business. They know how to get your listing in front of potential buyers and utilize the knowledge to make sales. They’ll bring in all the modern tools, including internet ads, print ads, direct mail, and database marketing to help you find the right person to purchase your business. Exposure is essential, and business brokers know how to make it happen.
3. They protect your privacy. Business brokers understand that business owners don’t always want the public, or even their employees, to know that they’re considering selling. An owner looking to sell, even if they’re only curious about the endeavor, has a tendency to cause panic and confusion within a company. To avoid this, brokers take great care to respect the process’ confidentiality from start to finish.
4. They’re professional negotiators. When buying or selling any large asset, such as a company, negotiations are vital. However, negotiating a deal is not always the most pleasant process. Buyers want to purchase at the lowest price and sellers want the opposite. Brokers can be your representative in these situations, removing you from the conflict and discomfort involved with haggling.
5. They know how to protect you. Business brokers are familiar with the legal matters surrounding the buying and selling of companies. They can help you legally navigate the sale or acquisition of your business and avoid complications with proper documentation. This also helps prevent deals from falling through or dragging out.
How Do I Find the Right Broker?
Business brokers can be an indispensable asset to your buying or selling process. However, just as in any profession, there are good brokers and bad ones. Make sure you find the right one to help in your venture by following these two simple tips:
1. Do your research. It’s 2020, which means there are a plethora of online review platforms. If the brokerage firm you’re looking into has been around a while, it’s likely that someone has left public feedback. Look for red flags, such as several one-star reviews. If they have several reviews, a perfect rating can also be suspicious. It’s rare for every single customer to be satisfied with their experience, so finding a brokerage with five hundred reviews that are all five stars is extremely unlikely.
Also, make sure you compare a few different brokers. If they check out during your research stage, then reach out to them for a face-to-face meeting. Make sure you get a good feel for their experience, connections, and training. Then, find out what their brokerage rates are. Do this for at least a few different brokers. This will give you a better feel on what to expect from your business broker and help assure you that you’re making the right decision when you choose which one to work with.
2. Talk to people who’ve used business brokers before. The best reference is experience. Find other business owners who’ve either sold or bought using a business broker. They can tell you how they felt about the process and potentially even point you in the right direction in finding your ideal broker. Then, once you’ve found a broker you feel good about, ask for their references. A good broker will be happy to provide professional references from their experience that you can contact. Doing this helps you both avoid a disastrous brokerage experience as well as further reinforcing your assurance that you’ve made the right decision.
Buying or selling a business can be a daunting task. There’s a labyrinth of moving parts, legal jargon, documentation, and people involved. Navigating it alone, especially for those exploring the venture for the first time, is a frightening proposition, to say the least. A business broker can alleviate the stress involved and help you maneuver the process with confidence.
Are you thinking about buying or selling a business? The brokerage team at Allen Business Advisors can help! Contact us today to see how our business brokers can help you make your business buying or selling journey painless and profitable!