Why You Need A Business Broker
If you’re ready to make the plunge into entrepreneurship, the best person to help you navigate the process is a business broker.
If you’re ready to make the plunge into entrepreneurship, the world is full of apparently helpful advice from colleagues, friends, and random strangers. But the best person to help you navigate the process of purchasing a business is a business broker.
Why Do I Need a Business Broker?
If you’ve been calling businesses for sale, you might have been told there’s already a broker involved. Brokers don’t represent the seller or buyer; they represent the sale itself. But a broker whom you hire is someone who has a relationship with you. When there’s already a broker involved who works for the seller, they are biased toward the seller. You need a broker who can help you walk through the process. You need someone who is invested in you.
Should I Work With a Broker Who Matches Me With Their Own Listing?
Some buyers worry that it’s a bad idea to have a broker match them with the broker’s listing. If the broker knows you and your goals, there’s no risk here. Brokers represent the transaction, so as long as both parties feel comfortable, it’s fine. In fact, having just one broker can sometimes make the process smoother.
How Do I Choose a Business Broker?
A qualified and experienced business broker is hard to come by. There are many dabblers in the industry, as well as people whose expertise is in a different industry from your own. If you want to buy a business, you absolutely need someone on your side who knows what they are doing. Make sure your broker is actually a broker. Ask them for references, and for details about their experience. Are they new to industry? Or have they seen numerous transactions to completion? Trust but verify their claims.
Shop around so you can find the most experienced and qualified broker for your needs. They should have deep industry connections, and significant experience in your niche. Some other hallmarks of an expert broker include:
- A clear plan for helping you buy a business.
- A list of possible candidates, or at least an idea of how you’ll choose candidates.
- A willingness to interview you. Good brokers want to know you’re serious, so they’ll ask you lots of pointed questions. This is a positive sign.
- Name recognition in the industry. Do your accountant, lawyer, and bank contacts know this person? Or do they know people who do? Businesses are bought and sold based on relationships, so the more positive relationships a broker has, the better.
Choosing a broker is like any other relationship. This relationship can be fulfilling and helpful, but it can also turn into a nightmare if you don’t carefully “screen” your partner. So take your time and ensure you’ve found a good match with whom you feel comfortable working. The reward of a successful sale will be well worth the effort of a diligent search.