Selecting A Broker To Sell Your Business - 12 Quick Tips!
1. Know up front what your expectations are in a business broker
who will be selling your business. Make sure you discuss and
convey those expectations to the business broker you select.
Direct and open communications about expectations and other
issues with your business broker is critical in selling your
business.
2. Ask the business broker how they are going to advertise and
get the word out about your business for sale. Make sure they
allocate an adequate budget for advertising and marketing to
sell your business. It takes approximately a budget of
$1000-$3000 in advertising and marketing costs to get successful
exposure in the marketplace and reach the best qualified
business buyers.
3. Have the business broker determine the valuation of your
business before you sign a listing agreement. Ask them about a
cash price vs. a price with terms involved. This is very
important since over 70% of all small businesses never sell -
usually due to - too high of price for the marketplace or
unrealistic terms and conditions on selling the business. There
are many ways to structure a deal - you need a business broker
who can be honest with you and discuss these variances with you.
4. If the sale of your business is confidential - you need to
know how the business broker is going to keep the sale of your
business quiet while still marketing it. Make sure the business
broker is using a professional Confidentiality Agreement form
for your protection and keeps these on file at all times.
5. Make sure the business broker you select has prepared your
business for marketplace - are all the financials and tax
returns in good order and understandable. Do you have all
documents ready for review like your lease agreement, equipment
leases, and contracts with vendors, etc? Time kills deals and if
your business broker doesn't have it together, business buyers
will leave fast for another business for sale!
6. Make sure the business broker you select to sell your
business is comfortable with selling your type, location, and
size of business. It amazes me to see how many owners pick a
business broker quickly out of the yellow pages without doing
much homework on them. This is probably one of the most
important decisions you will make for your business - make sure
you pick the right business broker to sell your business.
7. Returning phone calls in a timely manner is critical! Make
sure the business broker you select is good about getting back
promptly to potential buyers. You would be surprised how many
business brokers delay calling back buyers - remember the sale
of your business is in "competition" with the sale of thousands
of other businesses - you want to make sure your business broker
is responsive in getting back to potential buyers.
8. Time kills deals. Make sure the business broker you select is
responsive in getting things accomplished and moving things
along. Deals tend to go south when parties aren't moving forward
on a deal at all times.
9. Constant and continuous communication with your business
broker is important - make sure you let your business broker
know what your expectations are for letting you know how things
are progressing (i.e. once a week updates, only call when
something is going on etc. - its up to you, however we think it
is important that at least weekly dialogues between seller and
business broker is important so you can see how things are
moving forward). Find out how many buyers have responded, and
any feedback on all buyers who have expressed an interest in
your business for sale.
10. Make sure you pick a business broker who spends the needed
time on your business for sale. Some business brokers take on
too many listings knowing that some may not sell - it's a
numbers game to them. You need someone who understands your
business, what your expectations are, and who can properly get
your business sold!
11. Businesses on average typically take 6 months - 2 years to
sell. If your business broker does his job correctly (and
utilizes the methods within this article) your business should
easily sell within 6 months!
12. The listing agreement/contract should include: length of
time they will be representing you (3-12 months is typical), how
they are going to advertise and market your business for sale
(get the details and budget), how often they should be
contacting you about buyers and deal updates (at least weekly),
what happens when the agreement expires - with all the buyers
who have signed confidentiality agreements during this period,
what happens if you find a buyer - what is the commission then,
will they cooperate with other business brokers/agents on your
listing (this opens the market to more buyers), etc. - get it
all in writing so you both know what the expectations are!