Expert Answers To Common Questions:

1. Do I have to put an asking price on my business?
2. How do I keep the sale of my business confidential?
3. Why should I use a business broker?
4. Should I use a business broker to buy a business?
5. What should I look for in a business broker?
6. How does a business broker get paid?
7. What questions should I ask a business broker?
8. Should I enter an exclusive or non-exclusive agreement?
9. What does a business broker do?

Do I have to put an asking price on my business?

The majority of buyers always want to know what the business’s asking price is. If the price is too high then it is unlikely the business will sell and should it be too low, then the seller did not receive sufficient remuneration for the business. That being said, it isn’t all businesses that come with an asking price. In certain markets, the lack of an asking price can begin a bidding war. Nevertheless, buyers are always aware of the market value before engaging in their bidding war.

How do I keep the sale of my business confidential?

Perhaps the most efficient way to ensure that the sale of your business is kept confidential is to enlist the services of a business brokerage which acts as a third party. Prospective buyers are screened by the business broker and they could sign a confidentiality agreement before they are told which business is up for sale.

Why should I use a business broker?

Using a business broker helps you get the very best price for your business
The sale of your business is completely confidential
Using a business broker can ensure you keep concentrating on running your business
Business brokers are more adept at finding prospective buyers and successfully marketing your business to them
The sale of a business is not always as straightforward as most people believe. Enlisting the services of a business broker can help you handle the paperwork and the details.
The chances of you actually selling your business dramatically improve when you enlist the services of a business broker.

Should I use a business broker to buy a business?

The short answer is yes, you do need a business broker to buy a business. This is for a host of reasons, for one, you gain protection from legal issues when you use a business broker to purchase a business. Additionally, should you have very strict requests on the type of business you want to purchase, a business broker can scour their network to find such a business for you, freeing you from doing tedious work like that.

What should I look for in a business broker?

A good business broker should be the following:
Trustworthy
Given that the business broker will be dealing with quite a lot of confidential information, it makes perfect sense that the one you go with does not reveal any of this information to unauthorised persons. Additionally, it is also important that the conflict of interest between buyer and seller is handled in a prudent manner. This can be done by not revealing what the seller’s bottom line is to potential buyers.
Well connected
It is the duty of a business broker to locate the right business or the right buyer that matches their client’s criteria. A well-connected broker is able to find numerous opportunities from a large pool. It is important to search for brokers that are part of local networking groups, broker associations, chamber of commerce, and more.
Market savvy
A great broker particularly one selling has to be a great marketer, given that they have to be able to market and sell a business to prospective buyers. Being market savvy means being able to have an online presence and actively brand participating in viable social media platforms. They should also be able to develop great marketing materials which can then be presented to potential buyers.
Well organised
Given that a business broker by design wears numerous hats and simultaneously works on various projects, it is important that the one you select is extremely organised. They have to be able to maintain a record of appointments and information ensuring that there is no disappointment when important tasks are handled.
Basic financial and legal knowledge
While you do not expect a business broker to usurp the responsibilities of a financial analyst or a lawyer, they should have at least a basic understanding of financial and legal issues. selling and buying businesses involves being able to understand and address the key issues in these fields. As a minimum, a good business broker has access to individuals with good financial and legal knowledge within their networking cycle.

How does a business broker get paid?

A business broker typically gets paid by earning commissions from completed sales which they facilitate. Apart from that commission they earn, they are also able to work for a retainer’s fee or have an hourly rate. This tends to depend on the brokerage and contract between the client and the broker. The payment could either be a lump sum or installments.

What questions should I ask a business broker?

• You should ask your business broker if they have experience selling a business like yours and how many times has that been the case?
• If they work from an office or from home?
• How do they value a business?
• How do they prevent competitors and the business’s customers from hearing that the business is up for sale?
• How many qualified buyers do they have?
• Is it possible to list the business for an arbitrary price?
• How many business listings do they have at this moment?
• Do they help with the preparation of sales contracts? Or do you need an attorney?

Should I enter an exclusive or non-exclusive agreement?

An exclusive agreement means that you only work with a certain business brokerage for a short amount of time, while a nonexclusive agreement means that there is room for competition which could be seen as a motivating tool for the business brokerage. The agreement you choose simply depends on how quickly you are looking to sell your business.

What does a business broker do?

A business broker can be defined as a trained professional enlisted by people looking to buy or sell businesses. A business broker might have a licence to broker; however, this depends on the jurisdiction they practice and operate in. Business brokers are in the business of estimating the value of a business, advertising it, and also conducting interviews with prospective buyers.