Do I really need small business brokers to help me?
Let us begin the discussion this way: Now that you have decided that the path you want to take is to buy or sell your business. Is it really beneficial having a small business broker help out? My advise -- although a bit biased -- is for you to secure the services of a good small business broker. There are 2 kinds of business brokers -- the sell-side brokers and the buy-side brokers. Having a business broker who works with the seller would still be an advantage to you if you are planning to buy a business. If you ever ask yourself “why should I use a business broker?” this article will answer the question and set your mind free.
For proper understanding of what business brokers do, we use this illustration
“The broker is sort of like a clamp that holds things together as the business buyer and seller progress through the business transaction”.
Here are reasons why you should use a business broker for buying or selling of a business:
A business broker helps create a healthy relationship between the buyer and the seller. This is because of the simple fact that this type of profession requires both parties should personally meet. Even if the small business broker is getting paid by the seller, the one buying the business will have to meet with the same broker so that they are able to determine whether the buyer is compatible/agreeable to the business he is interested in. This creates a healthy relationship between the buyer and the seller.
A broker has the knowledge and experience of selling businesses. Having this on your team will increase the chances of getting the most value for your business and making it to a closing. They are mostly specialized set of people who devote their time on smooth business transaction, so you’re rest assured that your business is in the right hand.
Marketing Plan Preparation
A small business broker is a skillful person who knows how things work in business selling. Part of his task is to prepare a professional marketing plan for the business entity in question. Although preparing a sales prospectus takes time, you can be sure that your broker will provide you the said document. In addition to this, he will have to structure the deal and assist until the completion of the required paperwork.
Realistic Valuation of the Business
Most business owners feel their businesses are worth a lot more than what the market dictates. When one markets at a price that is too high, they risk losing many qualified buyers. This will also increase the time it takes to sell their business. In some cases, an owner will price their business too low forfeiting dollars on their selling price. An experienced business broker will perform a market valuation so the asking price is realistic.
We already know that most business owners are very concerned about confidentiality in a transaction. They do not want their employees, customers, vendors, and competitors to know they are up for sale. An experienced business broker is accustomed to taking all precautions in keeping the sale confidential.
Selling a business is a heavy decision many entrepreneurs make in their lifetime. Their companies in most cases, represent the bulk of their net worth, as well as, the majority of their retirement savings. Is it really something they should risk by trying to sell on their own?
Thus, you need the assistance and service of a small business broker.