SMALL BUSINESS BROKERS

Using small business brokers to help you find the business of your dreams is one choice that might pay you to think about.

Before you do this however, you will have probably already made some decision regarding the industry that you think would likely match your experience or skills. Having some idea of what you want will help when approaching a small business broker.

Another way to look at it would be to decide on the area where you would like to own a business. Within that area you could then decide on the industry of your choice.

Keeping your ear to the ground and spreading the word of your interest in buying a business will also likely yield results.

You can of course hire small business brokers at any stage of the game, but before doing so it makes it a lot easier if you have at least some idea of the type of business that you are after.

Let’s talk about business brokers and when I would suggest that it will be worth your while to consider hiring one.

When to Use a Business Broker

• If you have never started, bought or owned a business before, it can often be worth the cost to use a business broker. A good broker can be of great assistance and help prevent you making a serious buying mistake
• Where you want to buy into an industry that you are not familiar with, a business broker can be of assistance.
• Sometimes, even where you have decided on the business and are now in the final stages of the negotiations, it will often pay to hire a broker to help you finalize the purchase.

What can Small Business Brokers do for you?

There are brokers and there are brokers! A good broker will provide the following services:-

1. By talking to you, your business background, interests and skills are understood and used by the broker to help find the best business for you.
2. Although you might have decided on the type of business that you are after, experienced small business brokers could possibly suggest other businesses in other industries that could be more suitable.
3. A broker will have many businesses on the books that have all been screened for value and price. This can help you make a better decision with your final choice.
4. Once you have made your choice, your broker comes into his own with the negotiations. A good broker will be fully involved in the sales agreement and help keep everyone on the straight and narrow.
5. A further role of small business brokers is to ensure that all the necessary paperwork is completed and submitted. This will cover the relevant laws, regulations, licenses, permits and financing. Doing this properly can save you a lot of time and possibly money.

Before we move on, it will probably be advisable to talk a bit about the costs of hiring a business broker.

Brokers are generally hired by business sellers to sell their businesses and are paid by the seller.

When you hire a broker however to select a business for you to buy, he will charge you between 5% and 10% of the final purchase price. This fee is, of course, variable depending on when you first get the broker involved in your purchase. The later in the deal, the lower the cost.

When you decide to retain a business broker, settle the terms and the commission you will pay before they start work on your behalf. Negotiate the best deal you can get, usually a combination of upfront and commission fees. Don’t pay anything until you have had the chance to check out the broker, you get scam artists here as well.

Now that we know what you should expect from a good business broker, let’s take a look at the kind of broker you will need.

What to look for in a Broker.

You do not want a real-estate agent, but a specialist who helps when buying business, so check them out first before deciding on the right one for you. Interview a few brokers, don’t be shy and ask for references. Check the Better Business Bureau for any complaints that might be lodged against them.

Lists of brokers can be found in the Yellow Pages, on the internet and advertised in business magazines and journals. The International Business Brokers Association (IBBA), the worlds largest, has lists of accredited business brokers.

You should be looking for small business brokers who have sold and still sell businesses in your line of interest.

Look out for the following qualities in the broker you wish to select. Don’t be afraid to ask brokers questions about themselves and their business.

• Choose a broker with experience, 3 to 5 years, in the buying and selling of businesses. Experience and time are needed to become a good business broker. They must be competent in accounting, land, building and small business valuation, know the legal side of the business and be good salespeople. That is why most small business brokers are in their 40’s and 50’s! Ask about accreditation and trade association membership.
• Does he/she buy and sell businesses only, if they also sell real estate move on. You need a specialist. Although most business brokers are licensed real estate agents, the good ones don’t sell real estate, they specialize in handling business buys and sells. Select a licensed business broker whose license is current.
• Visit the broker’s office, does it appear adequate? Have they a Web site, if not drop them. If they have, check it out. Is it professional and relevant?
• Do you feel happy with putting your trust in the broker? Do you like him/her? Does it appear that they can find what you want in a reasonable time span?
• Are their printed marketing materials for the businesses on sale well written and contain information that is meaningful?

Finally remember that you are in the market to buy a suitable business and any small business brokers you hire are there to help you succeed. Make sure they do.

Good small business brokers will do this for you without hype or promising the earth.

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