According to a recent small business profile study, there are 31 million incorporated small businesses in operation, which has created close to 60 million jobs. This applies to small businesses in all industries, from social media marketing and big data to medical clinics and massage therapists. The reality of business is that not all will succeed, and small businesses tend to have turbulent lifespans. Both buying and selling a small business can be a positive strategy depending on the circumstances.
No matter why you'd like to make one of these transactions, working with a business broker can be effective for you. Here's why working with a business broker can help you through it.
What is a business broker and what role do they play in transactions?
A business broker an intermediary that works as a third-party or primary representative for private business buyers or sellers. They provide data, decision assistance, and research at every juncture of the process. Some roles they might fill include assessing and determining the Most Probable Selling Price Valuation (MPSP) of the business, hunt for prospective buyers, market a company that is up for grabs, establish and maintain confidentiality, and structure the best terms of the arrangement.
When you work with a business broker, they'll take a fee for their services. Business brokers generally require a fee of about 10% of whatever transaction is completed. This particularly works favorably for sellers, since a broker is incentivized to get a larger sales price.
How can you work with a business broker the most effectively?
Right now, half of all business owners that sell their company will generally attend to do it by themselves. When you can work with business brokers more effectively, you're likely to get better results and appreciate not having to go it alone. Interview about a half dozen business brokers to make sure you're choosing those that understand your industry. They should also hold Certified Business Intermediary (CBI) designations so you know that they're credible. Have an idea going on what sort of deal structure you're hoping for, and search for the intermediary that you trust to achieve it.
You should also either work with your own set of lawyers or with a business broker that has their own attorneys on-staff that are as transparent as they are detailed.
Work out the details with a qualified business broker by using the tips presented above.