You have two options when you are selling your business. You can either do it yourself or hire a business broker. Lack of time, connections, and objectivity to negotiate a sale renders most business owners incapable of selling their business independently.
And then there is the stress of securing payment. With everything on your shoulders, it can be hard to focus on finding the right buyer and valuing your business.
That’s where a business broker comes in to rescue you. They’ll handle everything from qualifying buyers to valuing your business. In exchange, they’ll charge a small percentage as their commission.
But wait, you can’t just hire anyone to sell your business. Therefore, we have shared our list of questions before hiring. Lloyds Brokers can surely help you.
What to Ask a Business Broker
Using third-party services to sell your business is a good decision only when you hire the right business broker. You need someone who can properly represent your business. And to find that certain someone, here is our list of questions.
Q1: What’s your experience selling business within my industry or niche?
Selling a factory is different from selling a website, and there is no one-size-fits-all solution. Successful business brokers have spent at least ten years in your industry. They have qualified buyers in their back pockets and can easily value your business. So don’t hesitate in asking about their experience. Because hiring the wrong person or agency can cost you millions of dollars.
Q2: Do you work from home or office?
There is nothing wrong with working from home. Many companies are working online. However, when a business broker works from home, it shows you this job is not their full-time occupation and is more of a side hustle. The last thing you want is someone not giving your business the time it deserves.
Plus, brokers who sell businesses as a side hustle aren’t much experienced or motivated to find the right buyers.
Q3: What is your business valuation strategy?
Asking a business broker how they value a company will give you an idea of their expertise in your niche. If they give you a cookie-cutter response without pitching a counter-question, turn around and run.
The key to value a business lies in the financials. So an appropriate response will be counter questions related to your business. Some brokers will not answer this question; instead, ask for your company’s financial records, including market worth, market share, and any patents that you may have.
Look for brokers who ask the right questions rather than those who respond promptly.
Q4: What is your strategy for maintaining confidentiality?
Keeping your sale confidential saves you from a lot of trouble and potential damage to your reputation. You don’t want your customers to know that you are selling your business, which might harm your sales.
Plus, your aim is to prevent your competitors from catching wind of your sale. Therefore, you should inquire about the policies your broker will use to prevent information leakage.
An experienced broker will stir up interest by sharing teaser information. Once a potential buyer expresses an interest in the opportunity, the broker will evaluate the financials of the interested party before scheduling a meeting. This evaluation will save you time and unnecessary trouble leaving your office and leaving work behind.
Q5: Can you value my business for $1 million?
An experienced broker knows how to value a business that triggers a quick sale. Remember, your broker doesn’t get paid until the business is sold. Therefore, business brokers have one goal in mind – Sell at the highest price possible.
Hence, a business broker won’t put an unrealistic price tag on your business. Therefore, the valuation process requires financial documents and market information. Otherwise, your business price will either be too high or too low.
Q6: How many listings do you have at the moment?
Knowing how many listings your business broker has at the momentum gives you a good idea of how much importance your business will get. Moreover, if an individual broker has more than five listings, look elsewhere. “Throw it against the wall and see if it sticks” doesn’t work with selling businesses.
An experienced business broker is easy to find. But finding someone who knows how the acquisition market works is the real challenge. Anyone with more than 15 years of experience in an industry will be a business broker on the side. However, the questions we shared above will help you funnel the best from the worst.