Why You Need a Business Broker
Acquiring or selling a business means a lot of things to consider right out of the gate. How much is the business worth? How can I market my business to prospective buyers? This is where having a business broker comes into play.
A business broker can help you purchase or sell a small business, as well as assist with all the paperwork and processes that come with it. How they help you depends on if you’re the buyer or the seller.
If you’re a prospective buyer or seller looking to utilize a business broker, they can help you figure out how much you should be paying/how much you should get for your business, let you know if you’re qualified to buy, help you negotiate and even help finance your purchase of a business.
Here’s what to look for when searching for a business broker:
On the buyer side, the key is to look for someone who can take a look at all the business opportunities that are out there, and know what strengths and weaknesses you have as a buyer so they can help cater to your business choices; what you’d be better at, and what you know. They should know the market really well and can help you pay the correct price.
On the side of the seller, you want someone who can help you attract the prospective buyers by marketing correctly to a broad audience, instead of just locally.
In general, you should look for someone who you connect well with, that has experience in different types of businesses; that knows the market they're going to be looking at, and that understands the local market. They should understand the basics of operating a business, from financing to marketing, etc. Ask them specific questions about the business or industry you’re in/interested in, along with industry-specific terminology to ensure they know what they’re talking about, before making your selection.
Check into their online presence, even if you heard about them through word of mouth (which is typical for finding a business broker). Check how they market listings, and if they have any testimonials or reviews you can look at. A quick search of their name and their business is the bare minimum you should do when considering a business broker, even if you got their name as a recommendation from someone else. What worked for them might not be the best fit for you, so it’s better to do your due diligence first.
It is important to note that a buyer’s broker can have a consulting fee upfront and that a business broker in general usually works based on commission. According to Exit Promise, “The upfront fees for the required services can range from $2,500 – $25,000+. The broker’s commission can range from 3% to 10% of the total sale price.” It is also recommended that you look into the industry standard for the broker fees and that the seller or the franchiser typically pays the broker’s fees.
The bottom line is, if you’re looking to buy or sell a business, a business broker will help you navigate the process and ensure you find the right business for you or the right person to buy your business, for the right price. `