How Do You Know Just Who To Choose?: On Choosing the Right Business Broker to Sell Your Business
Imagine it this way.
Who would you rather trust?
If you are ready to open up a lemonade stand (hear us out…) and are looking for the perfect business partner to join you at the end of the block, are you going to ask your organic lemon supplier if they are interested in the job or would you ask that friend of your friend who as soon as they touch something business increases ten-fold.
No matter how much knowledge an organic lemon farmer is going to have about lemons and how much knowledge this farmer could pass on to your customers and lend to the credibility of your business, you should be picking up the phone to try and get in touch with that friend of a friend. When someone is good at business, they’ll be able to sell lemonade or sports cars. Ultimately, what you’ve found is talent. When you found that kind of talent, you don’t want to let it go.
The same thing applies to when you’re thinking about the principle behind who to work with when you’re ready to sell your business. An individual who has actually run a successful business in the past will be able to relate to you better and have a pulse on the hard-to-explain-yet-important-to-know details than a broker who is not only a stranger to your world but who has a background in corporate America or real estate.
Chris Spenner says, “Entrepreneurs hold a special bond with other entrepreneurs. They both know and understand the blood, sweat, and tears that go into running a business. That is why we hold such a strong bond with our clients—because we are also entrepreneurs.”
Perhaps you are intrigued by the affordability of a listing fee. Paying $500 bucks may seem like a bargain deal, but think about how far $500 would take you if you were going to be the one to market a business? That 500 bucks will need to be used to create the right materials to share with possible buyers, value the business at its appropriate value, and what else? Chances are, that money won’t be enough to get you out the door.
If you’re looking for someone who truly understands what’s at stake when it comes to selling a business successfully, you should be looking at a range that is between $2,500 and $4,000. This price range will certainly depend on how small or large your business is and how intricate you are hoping the listing to be.
“Some of these brokers out there are people who came from corporate America, who worked in banks, as accountants, or in commercial real estate. They don’t have a clue about what the business owner has gone through,” Spenner details. “They are just trying to get a listing.”
You know you’re smarter than that.
The good news is when you work alongside another entrepreneur, you’ll know you’ve found your right match. Why? “Over the past year, we have worked with several clients who were working with other business brokers in St. Louis. Within the first 5 minutes of talking, they know we understand exactly what they are wanting and thinking.
When you know, you know. Don’t ignore what your gut is telling you.
“The person looking to sell their business, they want to work with a business broker who would think like a person in their own position.”
Ultimately, businessmen and women are seeking out someone who has an experience that matches their own. Or, they’re looking for someone who may be able to balance out the skills they may be personally lacking. They want a broker to have experience in all facets of the business—an awareness of management, the importance of marketing, the details of accounting, the success of HR, and an understanding of finance, among other things. If someone has previous business experience, they will more than likely have had time to become both familiar and strategic in all of these categories.
Another question you should ask those who may be interested in the job: how connected are you? It’s appropriate…and important. Who do you know? Who knows you? Is this individual connected to a network of buyers, or buyers who do indeed know other buyers? Like business networks, there are also buyers networks. Is this individual in touch with groups and other individuals?
“So many of these brokerages,” Spenner says, “get a listing. They slap it on the internet, and they hope a fish comes along and will take a nibble.”
This kind of scenario may be what you are dealing with when it comes to a broker who doesn’t have a clue or doesn’t have any connections. The added strength and necessary benefit of working with someone who is a part of a larger network (and who knows how to network beyond their own realm) can offer an individual who is trying to sell their business an authentic sense of security.
Obviously, prior experience can be a hands-down advantage. Spenner says, “When a seller knows that you have been through the process yourself, it lets our clients know that they will be guided through the process in the correct way.”
As you continue to consider the sale of your business, are you still under the impression that a free business listing or a listing for $500 will get you very far? Chances are that fee you’ve paid will land you right on bizbuysell.com or bizbroker.net.
When you link up with someone who has been a former business owner, they know the value and the ethics that are at the heart of hard work. Doing something right and doing something well takes time. Success isn’t about a flash-in-the-pan deal. While other people may be clocking out, a business owner who knows what it takes will continue working to make sure everything is attended to. This dedication to quality takes time, but we all know…those people…they actually make something happen.