Is hiring a business broker to sell your business completely necessary, or can you do it yourself? As a person in business, this question will definitely pop up because, naturally, your business mindset is always geared towards making the biggest profit. To determine the worth of hiring a broker, you’ll need to weigh the value they bring against how much they charge. Here are some things to consider as you make your decision.
What To Consider When Deciding Whether To Hire A Business Broker
To make an informed decision, you need to have all the details. As you weigh up whether you should or shouldn’t hire a broker, consider the following:
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What will a business broker do for you?
The benefit of hiring a broker is what they can do for you. The role of a broker is to assist you in the sale of your business. These individuals are trained to understand the current market. They’ll use their connections, experience, and knowledge to ensure that you get a reasonable price for your business. In general, some tasks that business brokers manage include finding buyers, doing a valuation of your business, marketing, and handling the negotiations with potential buyers.
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What fees will they charge you?
As you can imagine, a business broker’s services don’t come for free. They do charge a fee for their services. Typically, brokers would charge around 5-10% of the final sales price of the business. However, in some cases, they may charge you a smaller upfront fee to cover their costs if you choose to withdraw from the sales process.
While it may sound steep to have 10% of your business’s sale price go to a broker, think about the benefits they bring, like the possibility of a higher sale price, better quality investors, and the fact that you don’t need to do all of the paperwork.
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Are They The Right Broker For You?
Every broker might have their way of approaching the sale of your business.
But, some principles should be common amongst all of them. Ideally, the broker you choose to go with should have experience with other businesses in a similar industry, reviews or referrals based on businesses they’ve sold in the past, and they need to be certified to assist you.
Aside from that, they should also be comfortable with answering some simple questions like:
- How long have you been in the game?
- What’s your average transaction turnaround time?
- What marketing strategy would you use for my business?
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What are some situations where you don’t need a broker?
In some cases, you might not need to hire a business broker to sell your business. Some people have experience selling their businesses and don’t necessarily mind the extra work if it saves them money. If this is the case with you, you don’t need to hire a broker.
Or, if you’re selling your business to a family member or a friend, you may already have enough of a relationship with them and them with you and the business to process the sale by yourselves. However, this could put relationships at risk, so we still recommend involving a professional third party.
Is It Worth Hiring A Business Broker?
The answer here comes down to your capacity.
Yes, you can definitely manage the sale of your business alone. But, you need to consider whether you have the capacity and know-how. A business sale includes paperwork, marketing, due diligence, negotiations, and more. To manage all that while still running your business can be challenging.
With a business broker in your corner, you’ll be free to pour time into your business as you prepare it for its valuation and sale while they handle all the tedious work involved in the sale. Going with a business broker would be wise if you had to ask our opinion.
Where To Find A Good Business Broker
For those selling their business, we recommend starting off on the best foot and getting in touch with a good broker as early as possible. A reputable broker to consider when selling your business is Lloyds Business Brokers. With over 40 years of experience and a great track record, Lloyds is one of the best business brokerages in Sydney. They can help you with advice on how to present your business, changes to make, a valuation, and expert guidance to help you sell your business successfully.
Final Thoughts
You’re not just hiring a business broker for their time but also for their knowledge, experience, and their resources. As you focus on getting your business ready to sell, a broker can do all the necessary heavy lifting on other important matters, like creating a marketing strategy, sorting out legal documents, or negotiating with potential investors. In our opinion, the ends justify the means when hiring a business broker.