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Year: 2019

6 Tips for Choosing a Good Business Broker

Posted on December 6, 2019 in Uncategorized

Do you want to avoid hiring a bad business broker? Actually, you should ask some important questions in order to make sure that you don’t end up hiring an inexperienced professional. Given below are some red flags that you may want to watch out for. Read on to know more.

1. Experience Counts

Actually, you should go with a professional who has a proven resume. You can contact the International Business Brokers Association to know more about the credentials of a good broker. Aside from this, if a professional wants to be an IBBA-sanctioned Certified Business Intermediary (CBI), they have to record years of experience on the job in addition to hours of classroom hours.

2. Beware of Generalists

If you think you can read up on a good broker on Google, you are right. But it’s not enough. What you need to do is make sure that your professional is the best fit for your organization. If you are just starting out, you should look for a professional who has tons of experience working for the type of business you operate. Working with a generalist is not a good idea.

3. Size Matters

It’s also important to know if the broker can handle the large transactions. For instance, if they usually handle deals of $10 million and your deal is just $3 million, you won’t get the attention you deserve, according to experts.

4. Negotiate the Fee

Usually, brokers charge a commission for their services. So, if a professional asks you for an upfront payment, know that it’s a red flag. While the average commission charged by brokers is 10%, you can negotiate it. For instance, if you know someone that will prove good for your business, you should negotiate for a lower rate.

5. Avoid Overcommitting

You will have a long relationship with the professional. On average, the broker may take between 9 and 12 months to sell a business. The broker may assemble a solid marketing package from time to time.

While the broker may ask you to sign an exclusive contract, you don’t have to sign the contract for a year or longer. The minimum length of the contract should be 6 months. Some people negotiate a 90-day contract and get it renewed for another 90 days. It’s easy to decide whether a professional is good or bad in 3 months.

6. Trust Your Gut

Although you don’t need to have the broker meet your mother, you have to go with a professional who you can trust. What you need to do is work with the professional as a team and try to make a great chemistry. If you are not sure about a broker, you should trust your gut. By trusting your instinct, you will have a higher chance of hiring a trust worthy professional.

So, these are a few considerations that you should make when hiring a good business broker for your business needs. Hopefully, your business will have a great broker down the road.

Role Of Business Brokers In Selling A Business

Posted on December 4, 2019 in Uncategorized

Role of business brokers in selling a business is more important than buying a business. However, there are people who do not understand the importance of the role of business brokers when they decide to sell their business. Irony is that some people are happy with giving more time to the selection of a coffee machine rather than to choosing the right business broker. This is a big mistake on their part and can result in not only the loss of money and time but also sometimes resulting in inability to find any buyers.

Here are some points to consider when you choose the business broker for selling your business. However, it is not possible to get a broker who has all the qualifications yet you must look for experience, knowledge, reliability and compatibility with you.

Reliability:
Reliability is essential because the role of business broker in selling a business is very important. How can you judge whether a particular business is reliable or not? The best method is to contact the references given by the business broker. They are in the best position to tell about how the business broker performed the deal. Ask them whether they are satisfied with the role of business broker or not. Also, make sure that the business broker you are going to hire has the capability of taking the transaction to the end and can follow up.

These references can also give you indications regarding the price they got for selling their business. Could they get the price they were expecting? Also, ask them about the consistency of the business broker with the plan charted out in beginning. They can also tell about the level of knowledge the broker has and his capability of providing the right advice. One very important question that you can ask is if need be would they like to hire the same broker again or not. The answer to this question can help you in taking decision quickly regarding hiring the business broker for selling the business.

If the business broker you are going to hire for selling the business belongs to the association of brokers then this is a point in his favor adding to his reliability. This is because the Associations such as International Business Brokers Association apply very strict ethical rules. Similarly, you can gauge the level of the knowledge by asking some questions. The business broker should not only have completed formal education to perform his job perfectly, but also need to keep himself informed about the changes in the particular industry.

Finally, a tip regarding experience of the business broker you are going to hire. If the business broker has ever owned a business then he is a better choice than the others who never run any business.

5 Red Flags in Choosing a Business Broker

Posted on December 2, 2019 in Uncategorized

When selecting a broker to sell your business, be aware of the following tips…

The broker wants a significant or total fee paid upfront.

Many brokers have begun taking upfront fees, but generally the total fee is a combination of an upfront fee and commission paid upon sale of the business. An unreliable broker meets with you, runs some quick numbers, tells you that you can get your price or even more for your business, and then asks for a check to get started. In many cases, business owners are so relieved that they’ve found a broker and elated that they’ll write a check on the spot, without checking any references.

During your first meeting, the broker says he or she can get your asking price or higher.

Be wary of too much optimism. The key to selling is that the price be reasonable. According to Tom West of Business Brokerage Press in Concord, Mass., most owners over value their businesses. An unreliable broker might suggest after a brief meeting with you that he or she can get you your asking price or higher for your business.

The broker doesn’t have a Web site.

Most likely, if the broker doesn’t have a site, he or she is behind the times. The Internet is a powerful marketing tool for business brokers, according to Cooper. Is the site well-written? That’s another way to gauge a broker’s competence, he adds.

The broker doesn’t seem well grounded in business valuation.

Your broker should be able to explain business valuation to you clearly and if he or she can’t, then how can he or she explain to a buyer what your business is worth? Make sure your broker is confident in this area.

The broker is not licensed to sell or lease real estate in your state.

Ninety-two percent of business brokers have a real estate license, according to an annual survey of business brokers West conducted. Even if your business doesn’t include real estate, make sure your broker carries the license. Also be aware that if a broker holds a real estate license doesn’t mean he or she should be selling commercial or residential real estate too. A good broker will hold the licenses but be focused on selling businesses.

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