Business Broker

At some point in your entrepreneurial career, there may come a time where you have to make the decision to sell your business… Now, depending on the status of your business, this can be a tough decision or an easy one but nonetheless, it’s something you’ve made up in your mind that you have to do.

You may have tried all the different ways to improve your business but it still didn’t work, leaving you with no other choice but to sell… Selling can be hard because it’s something you’ve worked so hard for but once you’ve made the decision to sell, you then have to decide how you want to sell your business: do you want to sell it on your own or should you hire a business broker to handle all the logistics of selling your business? Decisions, decisions…

Well, you definitely can sell your business on your own, after all, it’s your business, right? But the issue that most business owners run into when selling on their own is that that they either don’t have the time and proper contacts that’s required for a successful and fair sell or they just don’t have the knowledge on where to even begin to sell their business.

Those two reasons alone are ideal reasons to hire a business broker… and you don’t just want to hire some random business broker, you want to find the right business broker for your business. In order for you to find the right business broker for your business, you’ll need to do a little research on them first. First, get a list of brokers in the area of your business, at least two or three, and then start doing your research on them.

By doing your research on them, that really means contacting them and asking them very important questions that will help you determine whether or not that broker is right for your business. Just think about it… not hiring the right broker can be that thin line between selling your business at a price you feel your business is worth and not selling your business at all. These are the important questions you need to ask a broker before making a final decision on them.

Question 1: Do you have enough experience selling businesses in my industry?

Finding out if a broker has experience selling a business in your industry is a very important question to ask upfront… the answer to this question will essentially save you lots of time and will quickly let you know if you even need to continue with your questions. The reason this question is so important is that every business is different. The way you would sell a fashion boutique isn’t going to be the same as selling an online store. So when talking to various business brokers, when you ask them this question, they should be able to give you an answer really quick as well as a rough estimate on the number of businesses they’ve helped that are similar to your business.

Question 2: As of right now, how many listings are you working with?

A broker’s answer to this question is a direct indicator of how much time they will have to dedicate to your business. Ideally, you’d want a broker who has, at most, seven listings… if a broker has more than seven, they’re more than likely not going to be able to give your business the attention or time that’s necessary to successfully sell your business.

Question 3: In selling businesses, how do you value them?

How a broker values a business is going to let you know the amount of experience they have in selling businesses. When you ask a broker about how they value a business, their response should be asking you some questions about your business. Why? Because there are several different factors to consider and calculate when valuing a business… they can’t just say “the way I value a business is by taking your business’ net income and multiplying it by two”…

According to accountingtools.com, there are three standard/typical formulas to determine a business’ value and when you calculate a value from each formula, you’ll get different valuations for each one. Your broker should look at all formulas and determine the best price for you. Every business is different and if a broker answers your question with some type of generic formula, then you need not ask them any further questions and look at your other options.

Question 4: How many buyers do you have that are actually qualified to buy my business?

You have to look at a broker and their potential buyer for your business like how they build friendships. There’s no way for a person to have hundreds of friends and actually have genuine relationships with them… the same theory applies to business brokers. There’s no way a business broker can possibly have thousands of potential qualified buyers for your business.

For a person to buy a business, that’s a huge undertaking. If a person is going to buy a business, they’re not just going to buy it from anybody… they’re going to want to buy it from someone they trust and at least have some type of good relationship with. So, if a broker tells you that they have thousands of potential buyers for you… it’s more than likely too good to be true. Look for honesty in these brokers.