How to Work With a Small Business Broker in St. Louis
There are plenty of reasons a small business owner in St. Louis would choose to sell their business.
The market may be in your favor, and you’re ready to make a profit by selling. It could be time to move on to the next thing or just time for you to end this professional chapter. Finding the right buyer can be difficult regardless of why you’re selling.
When you’re ready to sell, working with a small business broker is always a good idea. Having extra help from an expert who knows the ins and outs of the local market can be a huge help.
If you’re considering hiring a business broker, you’ll want to ensure you get the most out of your arrangement. Here’s what you need to know to have the best experience possible with your broker.
Understand How Payment Works
Every business broker handles payment in their own way.
Some require money to be paid upfront, others collect money once the sale has gone through, and some do a combination of the two or something new entirely. Regardless of how the broker handles getting their payment, ensure you understand payment terms before agreeing to work with them.
Most business owners expect brokers to take a small commission from the sale. The issues start to arise when they’re unclear about how much the broker plans on taking or when it’ll happen.
It isn’t unusual to see some brokers request anywhere from 8% to 15% in commission. In addition, some brokers charge monthly or progress fees on top of that commission.
Make sure that payment is discussed and understood early in the process. This way, everyone involved can avoid unpleasant surprises.
Come Prepared
When working with a business broker, there’s no such thing as giving them too much information. The more information you can provide the broker about your business, the easier job they’ll have finding the right buyer.
Take the time to prepare for your first few meetings by gathering all the documents and files they’ll need to sort through. Going as far back as possible can help give them insight into your business, but generally, a good rule of thumb is to have documents going back at least three years.
Bring documents around money like profit/loss statements, balance sheets, and information about cash flow. They’ll play a significant role in your business valuation. However, they’re far from the only helpful documents your broker will need.
Any paperwork you can bring that explains your business plan or executive summary can benefit your broker. It’ll teach them essential details about your business and could help them form their marketing plans and sales pitches.
Agreements with vendors, suppliers, and employees can also be beneficial. This can educate your broker on any legal obligations with employees and entities.
Be Prompt
Things move fast in the business world. The last thing you or your broker would want is to miss out on something because you didn’t notice a missed call or sent email.
Remember, you’re far from the only small business owner that wants to sell their company. You can have a lot of competition in your local market or industry, and they could snatch up your buyer if you aren’t careful.
Make it a point to check your phone and email throughout the day. Answer questions your broker may have as quickly as possible, and don’t be afraid to let them weigh in on some of your decisions.
Develop a Communication Cadence
Some business owners want weekly updates from their brokers to see how things are progressing. Others only want to hear from their broker when they think they’ve found the right buyer. Regardless of your choice, talk to your broker about how often you wish to communicate.
Both you and your broker are busy professionals. Coming up with a communication schedule is an easy way to ensure you get the information you need at the right time.
When thinking about how often you want to be in contact, also think about how you want to be contacted. For example, some people prefer to talk on the phone. Others only want things in writing and prefer texting or emails.
Have the Right Expectations
Brokers may be a great asset, but there are some things even the best brokers can’t do.
It can take time to sell a business, and as recession fears loom, it may take even longer. Your broker may be able to find a buyer, but they won’t be able to help you make thousands in profit if your business is underwater.
A lot of the tension that happens between brokers and business owners comes from having misaligned expectations. This is why both parties must be as open and honest as possible.
Be as upfront as possible with your broker. Talk to them about your expectations around how long it’ll take to find a buyer, the broker’s involvement, and how much you think you’ll get for the business.
This allows you to be transparent about what you want. The broker may change some expectations, but that can be good. You’ll want to work with someone realistic who also understands what you want.
Find the Right Small Business Broker for You
A broker is a must when you’re trying to sell your business. If you follow the tips in this post, you’ll be setting yourself up for success with your small business broker.
Are you ready to work with brokers that understand the right way to sell in St. Louis? We’re dedicated to helping you find the right buyer. Contact us today to discuss the best way to market and sell your business.