So you feel now is the right time to sell your business. You started your business from the ground up and made it a huge success. But now you feel ready to sell it and enter a new venture in your life.
You might feel that you are quite capable of selling your business yourself, and you probably are. But hiring a professional business broker can simplify things a great deal which eventually saves you money as well as fetches you a higher selling price.
Choosing the right business broker is more complicated than it sounds like. You might sniff out the broker beforehand and research them on the internet. You might even check out the references provided. You can even ensure that you are not dealing with someone whose office is in a garage. And it still won’t be enough in choosing the right business broker. A wrong broker can get you the running around for six months without any proper leads, whereas the right one can get you six attractive offers in a month.
So how can you dodge the bogus brokers and save yourself valuable time? What are the right questions to ask and how to spot the red flags?
You would want a time tested broker to sell your business. Selling a business is not the same as selling a house or a property, where customers just walk in for an open house. Selling a business takes meticulous research and numerous contacts which can only come with experience.
Searching for business brokers on Google and checking out the references will not be enough to sniff out the right broker. You need to ensure that the broker is the right match for your business. To start with, you should ensure that the broker has experience with the industry your business is related to, be it a restaurant, an online firm, or a lifestyle store.
Every industry has its prerequisites concerned with the intricacies of the business, and thus requires the right database of requirements and knowledge. Any broker who claims that they can sell any kind of business should be avoided at all costs.
The Right Size
Choose a broker who’s size fits right with your business otherwise you might not get the attention you need. It is also not necessary that brokers that handle larger deals will be perfect for you. If they handle a business worth $20 million while yours is worth $300 thousand, chances are that you won’t be getting the right amount of attention.
Get a Detailed Picture
Make sure that you get a clear picture of the entire process, right from the beginning. Ask questions about the details of the process, like the steps they plan to take to ensure that your business is valued correctly or how they plan to get the right buyer for your business.
Another important detail to ask is how the broker plans to keep you notified about the prospective buyers and offer aspects of the sale. Ask them if they are going to handle your account personally or refer it to another associate. Ideally, they should give you weekly reports and updates regarding the sale.
Business brokers almost always charge a commission based on the sale value of your business, which they collect post the sale. In case a broker asks for money before the sale happens, that is a big red flag. It is not a common protocol to charge any fee before the sale is finalized.
Even though most business brokers charge a standard fee, the percentage can be negotiated slightly, if the situation warrants it. In case you are a perfect seller with a highly profitable business, or you can refer a perfect buyer to them, chances are that they won’t have to do much work towards the sale. In such a case there might be room for negotiation and you should ask them about it.
In most cases, the sale of a business can take a long time. At times it can take up to two years, but most often it takes about nine months to a year to sell a business.
Customarily brokers ask the sellers to sign an exclusivity contract. However, that does not mean that you should commit yourself for the entirety of the time it takes to sell your business. Mention a period that you feel comfortable with according to the status of your business. You can always have the option to renew the contract after the initial period is over in case you are happy with the efforts of the broker.
While you don’t necessarily need to marry your broker, you would want a certain amount of compatibility with the person and the firm. You should be able to work together as a team and similarly see the opportunities. After all, it is your business that you wish to sell. Trust your guts because that’s what got you where you are.