What is a Business Broker Anyway?
If you're planning to sell your Chicago business, you’ve probably heard about business brokers. But you might not be sure what role a broker plays in the sale of a business, or whether hiring one is worth the expense—particularly if you’re on a tight budget and hoping to maximize the final value of the sale.
If you're planning to sell your Chicago business, you’ve probably heard about business brokers. But you might not be sure what role a broker plays in the sale of a business, or whether hiring one is worth the expense—particularly if you’re on a tight budget and hoping to maximize the final value of the sale. So what is a business broker, and do you really need one to sell your Chicago business? Here’s everything you need to know.
What Do Business Brokers Do?
A business broker is sort of like the general contractor for selling your business; they oversee the entire process, connect you to resources, and offer expert insight. Some critical roles they fill include:
· Marketing your business and developing a list of highly qualified potential buyers.
· Pre-screening buyers to ensure you don’t waste your time on window shoppers.
· Helping you set a fair sale price.
· Overseeing the negotiation and sale process.
· Setting your expectations for the sale, so that you feel neither overwhelmed nor disappointed.
How Business Brokers Increase Sale Value
A broker isn’t just an intermediary. They generate real value by helping you identify areas of improvement, setting a reasonable price, overseeing the negotiation process, and lending credibility to the sale process. Some specific ways a broker may increase the final sale value include:
· Ensuring you can still focus on running your business. This prevents a sudden decline in value, and can help your business remain profitable up to the very end.
· Lending credibility to the sale process by showing the buyer you’re committed to a professional sale.
· Pre-screening buyers so that you don’t waste time with competitors who are only seeking to gain information or window shoppers.
· Discussing strategies to increase value.
· Developing a marketing plan that casts your business in the most favorable light, without being misleading.
How Much Does a Business Broker Cost?
Business brokers usually work on a commission basis, which means their cost will depend on the value of the business. In some cases, you may need to pay an upfront fee, but this should be a small percentage of the commission. The commission incentivizes the broker to successfully sell your company, while the upfront fee disincentivizes them from rushing you into the first sale with the first buyer they find.
Should I Hire a Business Broker?
If you want to sell your business for the highest possible price with the least stress and effort, then you need to hire a business broker. There is virtually no situation in which a business broker does not add significant value—even if you already have a potential buyer. Don’t sell yourself short; talk to a business broker about your options for selling your company, as well as what you can do to increase the odds of a successful sale.