What Can a Business Broker Do for You?
Are you thinking about selling your business? Wondering what a business broker can do to help?
If you’re thinking about selling your business, you may be tempted to go through the process alone. However, working with a business sale broker can be a great help and can make the entire process much easier overall.
If you want to learn more about how they can help you sell your business, read on. Here’s what a broker can do for you.
1. Valuate Your Business
One of the main things that a business broker can do for you is that they can evaluate your business and determine how much it’s worth.
Valuating a business is easier said than done because a lot of things go into determining its value. A broker will take all necessary factors into account including cash flow, business location, competition, and a business’ unique value proposition.
As a seller, a business broker can help you determine the highest amount that you’ll be able to get for your business and can then help you do everything you can to find a buyer who will pay that price.
2. Help Sell a Business With Confidentiality
When working with a broker, it’s important to remember that confidentiality will be taken very seriously.
When customers, employees, and competitors learn that your business is being sold, it could cause problems and lead to a reduction in profitability. A broker can work to help you sell your business but they can do it in a covert and confidential way that won’t affect its operation.
If you’re not using a broker, maintaining this confidentiality while attempting to find buyers can be much more difficult.
3. Market Your Business For Sale
One of the best things about working with a broker is that they’ll have a strong network and will know how to help market your business listing effectively.
A broker will have a strong network and will have access to a wide range of potential buyers. They can market your business sale to this network and to a variety of people who could be interested in your business.
A great broker will understand the market for your business and will know where to look to find potential buyers. They can help you to find more buyers than you would be able to find on your own and can make it more likely that you’ll find a buyer who will pay a high price.
4. Qualify Buyers
Another thing that a business broker can do is qualify buyers.
When selling a business, not just any buyer will do. Many people who show interest in buying a business aren’t serious about it or can’t get the necessary funds to complete the purchase.
Fortunately, a broker can help qualify a business buyer based on their professional experience as well as on their finances. A broker will help make sure that any buyers who show interest in your business are serious and realistic about what owning the business will entail.
A broker can help find a great buyer by ensuring that they have a true desire to buy a business, understand the ins and outs of business ownership, and are motivated.
5. Provide Expert Guidance
One of the best things that a broker brings to the table when working with a seller is years of experience and expertise. A business broker will have been through the process of helping buyers sell a business many times and have explored many strategies for finding a suitable buyer.
The experience that a broker has can be very helpful, especially since many people who sell businesses will be doing it for the very first time. By relying on this extensive knowledge and expertise of a broker, you’ll have an easier time selling your business than you would have otherwise.
6. Help Buyers Finance a Purchase
Another thing that brokers do is help buyers secure financing. A broker can help ensure that the buyer has everything they need to buy a business successfully.
This can benefit sellers as well since it will make it more likely that a buyer will be found who will be able to successfully purchase your business. It can also help a business to sell more quickly.
If seller financing is offered, the broker can help to sort out the details with the buyer and seller. Setting up seller financing and working out the specifics can be tricky, so working with a broker can be useful.
7. Help With Legal Requirements
One of the best things that a business broker can do for you is that they can help you to navigate all of the legal requirements of selling a business. They can also help you collect any necessary documents you’ll need during the sales process.
A broker can help you price your business and negotiate with buyers and structure a deal. They can also help you to take care of all the necessary paperwork and ensure that you don’t miss anything important.
Dealing with all of the legal ins and outs of turning over a business to a new owner can be complicated and can be frustrating to deal with on your own. Working with a business broker can help reduce your stress and can help you to sell your business with minimal headaches.
Making the Decision to Work With a Business Broker
If you’re thinking about selling your business, you should consider working with a business broker. They can help you sell your business effectively and will give you the best chance of getting a great price for it.
Are you ready to sell your business? Contact us today to learn more about how we can help.
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Selling Your Business For The Best Price
Selling your business? You’re not alone. Over 10,000 businesses are sold every year, and that number is only rising! Selling your business can be stressful, and finding the right price to sell it for is even worse.
Luckily, with the right tools, you can sell your business quickly and for the right price. Let’s talk about that.
How To Sell Your Business For The Best Price: Create A Checklist
Having a “sell your business checklist” should be your first priority. You basically want to crunch the numbers, look for hidden factors that can increase your sale, and determine how you’re going to sell it.
Consider All Factors
There are so many moving parts in a business, and there’s no one-size-fits-all way to determine what makes a company valuable. Brand loyalty, ad success, business location, scale, employee satisfaction, employee efficiency, the company’s assets, and its liabilities. Those are a small few.
Do the math and trying to value a business is tricky but it’s important to determine your selling price. Try to consider any unique factors to your business as well.
Determine Your Minimum And Ideal Price
Once you have a checklist and you’ve considered all the factors that should go into your price, you should have an ideal price tag as well as a minimum that you’ll accept. To create an example, we’ll say that after you’ve determined your business’ assets, liabilities, and prospects, you think that the ideal selling price would be close to $300,000.
If that’s the case, maybe you’re getting close to retirement, you have your social security coming to you along with your retirement account, and you’re looking to get the business off your hands so you can get to what you want to do. You don’t want to involve yourself for 2 or 3 more years just to get that extra bit out for your ideal price.
In that case, your absolute, bare minimum with no wiggle room at all could be something like $200,000. This makes sure that you walk away with enough to keep yourself going, maybe invest it into something else like a rental property, clear all your debts, and you’re good to go!
Now, you want to avoid that bare minimum as much as possible, there’s no doubt about it. $100,000 is a big difference, and you earned that money by running a successful business all this time. So, in the event someone offers you close to that low range, you let them know your bare minimum is something like $275,000! Keep your low figure in your head.
Figure Out Your Options For Buyers
You can take out ads in the newspaper or post “for sale” signs at your location. You can also sell your business online by posting them to business sale websites. There’s a lot more you can do, but the most important thing is to maximize the number of potential buyers you can find, as this will ultimately get you the best price.
Once You Have A Buyer, Make An Offer!
They may make the first offer. It’s your job to counter it if you have your prices in mind. Sticking with the $200,000 to $300,000 example, let’s say they offer you $225,000 for your business in cash. You might be happy with that but now you’re guaranteed a minimum payout of that. Keep the offer on the table at all costs.
If this event pops up, do everything you can to avoid burning that bridge. However, you can still negotiate. You can say: “You know, I ran through the numbers, this business has all of these great amenities to offer, we already have great employees and management, and our customers are very loyal. I definitely think this business is worth $320,000.”
You’re going high, sure. That leaves the space in the middle wide open to meet. While that’s a good opener for a negotiation to begin, it doesn’t mean it even has a shot at working. As we said, don’t burn the bridge. You want anything that’s above your minimum to stay on the table.
If they aren’t budging on a dime, say to them that you’re going to keep their information and that you’ll update them as soon as possible. If you get a better offer, great. If you don’t, you’re still ahead of your minimum.
What If I Can’t Sell Above My Minimum?
If you find yourself in a situation where you think you aren’t going to get a fair deal, have your business evaluated and let any potential buyers know exactly what your company is worth.
From there, you have a firm figure that you can use to your advantage along with any other selling points you have in your business. Think of it as if you’re selling your home. “The house was valued at $300,000 on Zillow, but it comes with a pool, central air, and all of these amenities not taken into account.”
What If I Can’t Find A Buyer?
If you’re expecting to put your business on sale on Craigslist and get a bite the next day, you’re in for a surprise. If you’ve exhausted everything you can think of and aren’t having any luck, it’s time to call in the professionals. Hiring a business broker to sell your business is like hiring a realtor to sell your house. It may cost a fee in the end but it’ll likely make you more money and do it in half the time!
Get The Best Bang For Your Buck!
If you’re looking to sell your business, you don’t have to do it alone. Hiring a broker will create more interest among potential buyers, sell the business quicker, and ultimately put more money in your pocket. If you’re interested, be sure to check out our seller’s tutorial to learn more!
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Why Use a Business Broker to Sell a Small Business?
According to experts, up to 90% of people fail to sell their businesses. Many business owners often ask themselves, “How to sell my business?” They end up debating whether to do this endeavor on their own or to use a broker.
People sell their businesses for multiple reasons, such as losing profit, wanting to do something else, wanting more time to themselves, or other reasons that aren’t listed. If you fail to sell your business, you may be stuck with debt or something you don’t want. It’s a challenging process, which is why using a broker plays a crucial role; continue reading to learn why you should get one.
Pricing
A knowledgeable business broker can assist you in obtaining the highest possible price. They know the market price structure and can provide important insight into how to price a small business.
If you overprice your business, the majority of prospective buyers will never ask about it. If you undervalue your business, you will not get what it is worth.
Save Time
A competent broker will free up time for you to operate your business and enjoy your personal life. It’s advantageous to have an expert on your side.
Apart from operating your small business, you have a lot of other responsibilities. Why not delegate the hard work to a business broker while you enjoy your time away from your company?
Confidentiality
A reputable business broker would ensure that a non-disclosure agreement or NDA is completed before disclosing anything about your company or even knowing its name. They may assist in explaining why a potential buyer will only get a limited amount of information before making an offer.
A seasoned business broker will weed out bidders who are just seeking information. They will spend time educating genuine buyers about the value of the business.
High-Quality Resources
Professional business brokers have access to resources and industry experts. They would know which SBA banks are lending due to their expertise.
They are acquainted with knowledgeable lawyers that can assist in crafting contracts or ending the sale of a business. They also offer a list of excellent accountants that are familiar with business finances.
Negotiation
Why waste time arguing back and forth when an expert can represent you to get your desired price. By using a business broker, you can remove the worry and personal aspects of the situation.
Marketing
A competent business broker will spend time developing a concise and effective business review (CBR or CIM) that summarizes all of your company’s critical information. A well-crafted presentation will assist the buyer in understanding the advantages of acquisition.
They’ll be able to provide an excellent overview with their acquisition advisers. A strong CBR is an effective instrument for assisting in the sale of your business.
Supportive Financial Representatives
A business broker can collaborate with you or your accountant to explain and clarify your company’s financial situation. This is often referred to as normalizing financial statements, and when presented properly, can help potential buyers understanding your business’s actual financial performance.
Tools
An expert broker will invest in and have access to various tools to help sell your business. They will have access to forms, databases of potential buyers, excellent websites, and much more. Before choosing a broker for the job, it’s advisable to ask them about the tools and techniques they will use to sell your business.
Brokers may use their years of expertise to look around corners and predict possible transaction difficulties in advance. They are intimately acquainted with each stage of the company’s selling process and will offer valuable guidance.
Sell Your Business Checklist: What to Prepare With Your Broker?
Approximately 20%-30% of small businesses listed for sale are successfully sold. In order to be better prepared, here are some items that are required to sell your business:
Required Records & Important Information Before Going To Market!
Prepare the following things before placing the company on the market:
- Three years worth of federal tax returns
- Three years worth of profit and loss statement and a balance sheet
- Three years worth of monthly bank statements
Ensure that you are aware of the proper yearly adjusted net income (cash flow, SDC) for the past three years. Serious buyers will want to know this information early on in the purchasing process, as well as how you obtained it from your tax returns and financial statements.
Obtains a Third-Party Business Valuation
Obtaining a competent company appraisal/valuation from a third party is essential for the selling process. 70% of all small businesses never sell because of the excessive asking price or poor deal structure.
The third-party valuation will be used by a variety of people throughout the selling process:
- Potential business buyers
- Lenders/financing companies for the buyer
- Other advisors/parties to the transaction
Prepare Your Team of Advisors, Attorney, and Accountants
A critical component of being prepared to sell a small business is having a reliable team of experts. This is not the time for your advisers to be on vacation. Make sure you have lined up expert advisers for the length of your transaction.
Database of All Potential Buyers
Maintain a folder or online database of all contacts, notes, and documentation. You want to ensure that you have backup purchasers if your initial one pulls out during the selling process. Maintain all escrow information, purchase agreements, signed non-disclosure papers, contact information for CPAs, attorneys, and other relevant information in this folder throughout the selling process.
Create a Business Profile
Buyers will need a great deal of information about the company being sold. Rather than having to describe the company to many buyers, create a one-page description of the business.
Here is the following information that should be in your one-page description:
- Business’s history
- The date it was founded
- Number of employees
- Significant characteristics
- Recommendation and strategies to run the business
- Geographic location
- Competition
- The reason for selling
- Amount of training provided following the sale
Non-Disclosure Agreements
Before disclosing any information, have all prospective buyers sign and date a Non-Disclosure/Confidentiality Agreement. Let them know the critical nature of maintaining the confidentiality of the company’s transaction and the legal consequences of failing to do so.
Gain Maximum Exposure
The most critical factor in this process is to ensure that large numbers of qualified buyers are aware that the business is for sale. You should expect to invest between $400 and $1,000 in advertising and marketing to reach an adequate amount of buyers.
Sell Your Business Tips: Finding a Reliable Broker
Many states require a broker to be a licensed real estate agent to sell their business. You can verify if an agent is properly licensed by doing a check on your state’s database. You should also make sure that the expert you choose has the experience and is sensitive to your requirements.
Finding a reliable broker can be challenging, but we are here to help. Contact Fusion Business Services to help sell your business today.
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