Whether you are trying to buy an existing business, or sell yours, chances are you will want to ensure you have a business broker by your side to give you some help throughout the process.
Similar to the real estate industry, a business broker is paid by the seller. This is definitely something to bear in mind when you are filling the position of buyer. A broker with experience can give you a hand narrowing down your search to only those businesses which meet your criteria. As the seller in this deal, you can use a business broker to streamline everything involved in the process from pricing your company to marketing it to potential buyers.
Given that the process of buying an old business or selling yours is one of the most important decisions you will likely make, it is important to know what you should look out for both good and bad as the buyer and the seller. Knowing these tips will make it easier for you to work with a business broker in a profitable manner.
Buyers: Getting the Most From Your Business Broker
- As the buyer, it is important to remember that your broker is a representative who is there to help you find a fit that suits your needs. The finances are not the only thing you need to look for. You want to ensure that you can actually picture yourself enjoying the new business. You want the business to fit your future exit strategy, your lifestyle, and your personality.
- Remember too that each business that has already been built will have its ups and downs. You want a business broker who communicates with you and does not make promises regarding the income potential of the company because, truth be told, he or she does not care as much about that so much as their commissions. The most successful brokers are those who keep in touch long after your final sale is complete.
- You want to make sure that you are crystal clear on any fees and what they are. The seller will often pay for the broker frees, but you still want to make sure that everything you are being told adheres to the standards of the industry. Never work with a broker who is unlicensed or not very well established.
- You are responsible for due diligence. Your broker may not have all of the answers regarding the state of the business you are purchasing and that means that you should have your CPA help you review the financials for the company, and get a copy of their books. You still have to do some of the homework yourself.
- It is ideal to find a broker who has already made some of the more challenging decisions you are going to make. You want someone who is not just experienced in their trade, but someone who knows the ins and outs of your experience and has walked in similar shoes.
- Make sure you know your comfort zones for your finances and your investment abilities. Nothing will be quite more frustrating to your broker than to find out that you do not have what it takes to invest in the business they have vetted for you for many hours on end.