10 Tips On How Select The Right Business Broker
Published on 01/01/2015
1. Compatibility between a Business Broker and your business
The first thing to look for in an ideal business broker is the industry he/she is working in. One of the similarities that you should share with your business broker is the industry. Broker who is fully compatible with your industry has an advantage of quickly identifying the target buyers and tailor the ads and the marketing campaign accordingly. This will result in quick sales with fair value obtained from sales.
2. Identify a qualified and experience business broker
You wouldn’t just fall in love with your girlfriend; you will fall in love with her attributes and vice versa. Similarly, a business broker needs to have a few qualities in order to be beneficial for you and your business.
Your business requires a business broker who is experienced and qualified to do the job. You can judge a qualification of a business broker by checking whether he is a part of any broker association or institute.
3. Importance of business size
Make sure that the broker you select caters to the same business size as yours. If your business is smaller than what the broker usually deals with, you are going to be less of a priority to him/her.
4. Transparency equals effectiveness and efficiency
With business brokers, keep everything lucid i.e. crystal clear. Just as a girlfriend requires everything on a table or in other words an honest relationship, your business requires the broker to keep everything transparent so that you have an idea about the process he/she is going to follow and the total cost that you are going to incur. Make sure that there are no hidden costs. Read the contract terms and conditions carefully. Also investigate the process by asking him important questions about the procedures he/she is going to follow for the valuation of business, finding buyers, representing your business and preparing it for the actual sale.
5. Over committing – a curse in disguise
Whether it’s a personal relationship or a professional relationship, you should never over commit. Over committing can lead to false expectations and will harm the relationship. In order to make sure that the broker doesn’t over commit, just get follow up on the schedule he provides you with. As far as you are concerned, don’t form a contract with your broker for a very long time. Sign a short term contract to evaluate his/her performance. If it’s up to the mark, extend the contract. You don’t get married right after meeting a beautiful partner, you get married after you fall in love!
Before committing yourself, get multiple offers and compare several business brokers’ proposals and quotes.
6. Observe and analyze the strategy
Keep an eye on the marketing strategy of your selected business broker. Make sure that it identifies the right prospects and caters to serious buyers only. The marketing plan, on the other hand, should consist of material that can convince them to buy your business.
7. The benefits of secrecy
In personal relationships, some partners prefer to keep their relationship a secret until the right time comes. You might consider doing that for your business sale if there are competitors who can steal your buyers. Form a confidentiality agreement with your broker to make sure that the sale isn’t announced until it’s been complete.
8. Good representation should lead to Good sale
Your business broker should not just represent your business. While good representation may seem sexy, a good sale is even sexier! Try finding a broker who has good representation skills as well as sales skills. Make sure that you ask the broker for references, testimonials and other items that will help prove his credibility. Hearing about a broker’s performance from a person he/she has previously worked with, gives an idea about his credibility.
9. A few quick guidelines
An effective business broker will be able to tell you what they can deliver. If a broker is unable to highlight the milestones and the ultimate goal, he/she isn’t competent enough. You wouldn’t ask your friend to deliver flowers to your girlfriend. You will do it yourself. Similarly, the broker shouldn’t handover his duty to an assistant or an accountant or any other employee, he/she should carry out the process completely on his/her own.
Find out if the broker carries any specific kind of insurance. Some brokers have insurance covers in case they are unable to provide adequate services. Also, figure out the medium and frequency of communication between you and the broker. Ask him how he will keep you informed and updated regarding the whole process. Communication is the key to a healthy relationship whether it’s between two lovers or a business broker and a business seller!
10. Trust Your Gut
In the end, you always opt for a spouse or life partner, that your heart tells you to choose. Gut feelings are usually the most reliable one. While choosing a business broker, keep your gut feeling under consideration and make sure that your comfort level with the potential broker is high.
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