7 Tips For Selecting the Best Small Business Brokers to Sell Your Business

Are you thinking about selling your business? Have you ever gone through the process before? Are you confidant that you can do it yourself? Where would your time be better spent, running your business at peak performance while trying to sell it, or focused on the advertising campaign, networking, negotiating, and coordinating the closure of the sale of your business? Maybe you should consider doing what you do best, running the business, and search out small business brokers and let them do what they do best, sell businesses. If you go that route, here are 7 tips to choosing a business broker that makes sense for you.

1. Don’t get lost in the shuffle

You want your broker to have a proven record and a great reputation but you don’t want the organization to be so big that your deal is passed off to a junior staffer. You want the active involvement of the principals.

2. Do your due diligence

You’re about to engage the services of someone that is going to have a big impact on your financial life. Make sure you are comfortable with the relationship. Check with the International Business Brokers Association and see if your broker is a member in good standing. Follow up on the references provided and determine just how satisfied past clients are. Check with your local better business bureau and see if there are any unresolved complaints.

3. Use a specialist

Real estate agents and other professionals sometimes hold themselves out as business brokers on a part time basis. You want someone who makes their entire living selling businesses full time. Preferably somebody who has experience in your particular industry and someone who can point to successful sales they have made for your competitors.

4. Avoid heavy up front fee structures

Typically a business broker will charge between 10% and 15% of the sale price as a fee. While it is customary for them to ask for some up front fees to initiate the process, avoid those brokers who are looking for greater than a third. Also make sure that the up front fee is deductible from the sales fee when the business sells. Following this advice will save you from having to invest a ton of cash before you actually sell the business.

5. Only contract for the business selling services

Smaller business brokers will offer accounting and legal services that you will need during closing for an additional fee and these services are typically outsourced by the broker. It may be to your advantage to contract for those services directly leaving the broker with only the requirement to focus on the selling process and not generating add on fees.

6. Share your expectations

Before you select a broker you should have at least a general idea of what you want to accomplish by selling your business. You should have a rough valuation number and you should know if you want a cash sale or stock. Share this with the broker and see if he agrees with your plan. While there probably will be differences in valuation, your broker should be in tune with the rest of your objectives. If he’s reluctant or believes that it will be difficult to achieve your goals, find another broker.

7. Keep the whole process confidential

The last thing you want to do is let the word that you are seeking a business broker or that you are in negotiations with a buyer leak out. Once it becomes common knowledge that you are selling, your relationships with your employees, customers, vendors and bankers could be adversely affected. Have an exit plan for after the sale that includes sharing the news with all those listed above.

Using business brokers to help sell a business is usually the smart route to take for any business of substance. You want your organization to have as much “curb appeal” as possible during the process and that means you should be focusing your time on optimizing the business not chasing down buyers.

Best Business Bank Account

Most people that have a business need a business bank account. You may be wondering with all the choices between banks which account is best for you. Some offer services that you need while other services are only “nice to have”, you may be looking for a free business checking account or a full service operating line of credit.

Regardless of what type of account you are looking for we know fore sure that banks love small businesses. Just look at the kinds of offers they have

  • Free for the first year
  • 0 rate APR on credit transfers
  • Free checking account

The reason many of these offers are only introductory offers is because banks are aware that if a small business owner begins working with 1 bank then they are unlikely to switch when they begin to grow. Even IBM had to open a business bank account when it was very small!

what bank account will be best for you, consider…

  1. Are you always carrying a positive balance. If you are always going to be carrying a positive balance than look for banks where you will be able to get a high interest rate on your deposit
  2. Are you often requiring a line of credit to make payroll? If this is the case look into accounts which have the lowest interest rate and no overdraft penalty.
  3. If you make a lot of cash withdrawals be sure to drive around your area and identify where the bank machines are for that bank.
  4. Online banking is becoming a default free option on most business banks but make sure that the bank you are going with offers a free online banking option as this is the best way to keep your costs down.
  5. Business advice – Some banks pride themselves on being partners in your business and will offer free business consultation. Depending on you and your business this may be useful. However, if you run a high tech niche business don’t expect your banker to be able to help forecast cash flow demand through product development. Don’t forget they work for the bank!
  6. Most likely you will want a credit card for your business and it makes sense to attach it to your business bank account. Make sure to understand the terms of the credit card and take that into consideration when selecting a bank. Some banks will give credit cards terrible terms and conditions because they know the entrepreneur will be putting more emphasis on the bank account compared to the credit card.

Small Business Marketing Book Review – People and Your Business

What if somebody told you one critical key to business success was to practice the principle of the Golden Rule in your business? The idea seems to somehow run counter to so much of what we’ve been taught about business, doesn’t it? Yet, what if that same source convinced you through case-study after case-study that application of the Golden Rule in business actually leads to success?

Let us introduce Frederick Reichheld and his book The Loyalty Effect. While not a small business marketer, but rather an expert business consultant, what Reichheld teaches us about loyalty is worthwhile reading for any small business owner or manager.

Did we say “worthwhile”? Scratch that; pencil in the phrase “urgently essential”, instead. This book is that vital to a small company.

The Loyalty Effect focuses on three groups of people critical to business success: Customers, Employees, and Investors. For most small business, the investor is the owner, so for our brief review in this article we will focus on Customers and Employees.

Reichheld is a definite advocate of customer retention. He convincingly demonstrates time and again that small percentage increases in customer retention have huge impacts on profits. This read will be a just-right fit for those of you having problems focusing on the right customers. If you will take the time to trudge through this book, and really understand most of its principles (we found Chapter 8 to be the toughest) then not only will the marketing of your business improve, but so will your profits.

Isn’t that the reason for all this focus on marketing, anyway?

And Reichheld really opened our eyes to how important employees are in retaining customers. If a company treats their employees right, those employees become more efficient and productive in their daily tasks. Profits go up, retention increases.

Reichheld stresses again and again that a company’s prime mission needs to be creating customer value. Most of you in small business realize this, but it’s reaffirming to see hard-and-fast facts to back up what many of us intuitively know. Customers don’t come to a small business looking to boost our profits; they arrive seeking value. If we consistently create value, profit will come.

Another key point for small business owners is the importance of leadership. If you need to go down to the bookstore and browse through The Loyalty Effect before you buy it, flip over to page 246. Reichheld has studied several large and successful businesses, and concludes here that most of them had leaders with an “intuitive grasp” of how important loyalty is. This is critical for business success, regardless of business size. While not written to be a rah-rah inspirational book, Reichheld’s arguments and his examination of the role strong leaders play in forming great companies reinforces just how important to the bottom line it is for a small business owner to be a good leader.

So much of Reichheld’s book seemed familiar; akin to common sense…after we read it. Treat employees well and they’ll perform well for you; we’ll that’s pretty basic, now isn’t it? But we tend to forget, we tend to think we need to cut corners or just “improve efficiency” and that’ll lead to greater profits. In the short term it very well may, but Reichheld argues effectively that in the long run it’s only by creating value for our customer that we build profitable businesses.

Remember, People is the third element–along with Brand and Package–of any small business marketing success story. Taking a week or so and reading Frederick Reichheld over lunch or before lights out at night is a great way to hone your “people productivity”.

© 2006 Marketing Hawks

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