How to Find a Business Broker for your Small Business
How to Find a Business Broker for your Small Business
Setting up a small business is a big deal, and running it is no easy task. But selling it doesn’t have to be the same!
Your business would be no less than a labour of love, and it is only fair that you get the best price when you sell it. Now, there are two ways you could go about this. The first way is to get the word out in your own network and database. This method may sound like a very simple and cost-effective method- why appoint a business broker, when you could handle it yourself? The issues you may not consider though, could end up costing you far more in the long run. Issues with confidentiality, your clients/customers, suppliers, competitors and community will all be aware of a potential sale and this could cause damage to your business. You also face a lot of time lost by dealing with potential leads that are not suitable or genuine buyers and of course, your database or audience reach may simply not be large enough to catch the attention of a suitable buyer. The second way, and the most effective, is to go via a small business broker. There are ample benefits going with a broker, such as:
- Access to useful market insights, including recent sales
- Wider reach, to interested buyers beyond your network
- Implementing the right sales and exit strategy
- Selection & negotiation for the best deal among multiple offers
- Guidance on the documentation needed to sell
and much more!
While these would sound exciting (as they most certainly are!), you could enjoy all these advantages only if you choose the right broker. Now, every broker will have a different forte and it is important to work with the right broker. With so many brokers and broking agencies in the market, we hope that the guidelines below will help you make a good choice.
1. Do a thorough background check
Like with any business transaction, it is good to do a background check when partnering with a small business broker. Ensure you are looking through their agent profiles to learn more about their background as well as the agency history and website. These are basic checks that ensure both credibility and accountability for the broker and their agency, to ensure they’re professional and have market wisdom to back them. It is also recommended you consider looking out for a fully licensed small business broker, rather than a broker who has only completed their Agents Rep certificate. A fully licensed business broker has undergone far more studying to be accredited and typically holds many more years’ experience as a practising business broker, it is best to approach another broker who is more professional and forthcoming in this regard.
2. Check past selling experience
As mentioned earlier, there are several brokers and agencies out there to choose from and it’s important to select a broker who has represented a larger number of businesses across a diverse number of industries. This ensures they have more experience, larger database of potential buyers and a greater level of success rate.
3. Look at the fee structure
It helps to be aware about the break-up and components included in your brokerage fees apart from commission. If there is a promotion or marketing component, then be clear about what it includes and what costs are upfront and after sale. Be wary of brokers who don’t provide you with marketing packages with breakdowns of where your campaigns will run. Each agency and broker will have their own commission fees and structure, don’t choose a broker based on who has the cheapest fee, remember the aim is to appoint a broker who can give you the best sale result- you tend to get what you pay for.
4. Request an appraisal
This is where it can get interesting, asking a prospective broker for an appraisal of your business, and their rationale behind it can be helpful in filtering out the good from the not so good. There would be many small business brokers who might give higher valuations, as a means to convince you to go with them. However, a genuine broker is likely to give you a more realistic pricing range, along with market trends and prevailing economic conditions.
5. Look for Chemistry
At the end of the day, no two businesses are the same and when choosing a business broker, it can be hard to navigate which decision to make as there are no real platforms to assess market values as there is in property sales. It’s therefore crucial you meet with your perspective brokers and determine whether you feel a good connection or chemistry when you meet them. Trusting your business broker is key as their feedback and your business campaign will be in their hands. You need to ensure you choose a small business broker whom you have confidence in trust in, this will allow you to be guided by the market feedback and allow you to attract as many potential buyers as possible and reach a higher sale price.
No matter what the reason for selling – retirement, relocation, interest in another opportunity or any other reason, our small business brokers are adept at scouting for, and connecting you with credible buyers. At Absolute Business Brokers, we strive to deliver a smooth experience, right from the listing all the way to the completion of the sale process. Feel free to reach out to us for a free and confidential consultation and business appraisal.