Business Broker Qualities To Look For
When it comes to finding a good business broker, sometimes it can be hard to know who to trust. Just like any industry, the business brokerage industry has its share of bad actors who give the profession a negative image. That’s why it is extremely important that you know what qualities to look for in a good business broker.
There are certain things you should be able to expect from a business broker who is “worth his salt”. If you don’t see any of these in the broker that you are meeting with you should politely part ways with them and go on about your business. This list is not exhaustive by any means, but it should give you a great place to start.
Business Broker Best Qualities
1. A good business broker should have the heart of a teacher – If a business broker is serious about earning your business then they must be patient enough to explain themselves well and answer your questions in clear, and easy-to-understand language. If they are impatient or refuse to be transparent with you about how they plan to market and sell your business, then let that serve as a red flag.
2. A good business broker doesn’t charge upfront fees – If a broker is good, then they should be confident in their ability to earn their money. Their success should be tied to yours. If you don’t get paid, then they shouldn’t either. Unfortunately, the initiative to sell your business goes out the door with them once they collect an upfront payment from you.
3. A good business broker tells you what you need to hear not what you want to hear – All of us like to have our ego stroked. It’s a part of being human. When it comes to finding a good business broker, however, beware of the “silver tongues” that will tell you whatever you want to hear. It’s very easy to inflate the value of a business to induce an owner to want to sell their business. A good broker, however, is not in the business to list businesses, he’s in it to sell businesses. There is a huge difference. If a broker does a valuation that you think is too low it’s okay to say so but in the end trust that they are trying to tell you what the market is saying not what you want to hear.
4. A good business broker is a good communicator – Nothing is more unnerving than to have a high-level fiduciary relationship with someone that you never hear from or who never returns your phone calls. Everyone gets busy but if a broker can’t return a phone call or an email within 24 to 48 hours, then you may have the wrong person representing you.
5. Finally, a good business broker is in it for the long run – When you forge a relationship with a good business broker, his goal should be to earn your business and your friendship. He should strive to earn your good opinion and keep it not just through the day of closing but long after the transaction is done. He knows that his integrity and hard work make it very likely that you will tell your friends and family about him and the job he did for you.
Business Broker Common Sense Basics
In addition to the qualities listed above, there are some common sense things to remember when considering which business broker to hire. Business brokerage requires a high level of experience and expertise in many areas. This means that the ideal business broker is not a specialist but a generalist. He or she is not going to have a Ph.D. in accounting or marketing but they are going to have a very practical understanding of how these areas intersect with the day-to-day management of a business.
Business brokers should also have some experience running a small business. It can be very difficult to work with a broker who has never had any experience with the day-to-day demands of managing a business. Theory is great but theory plus practice is better. Business brokerage is not a theoretical exercise but a relational business that relies on common sense and practical knowledge on the part of its practitioners.
Business Brokerage Is Built On Trust
The last bit of wisdom to remember when considering a business broker is that business brokerage, like any other relational business, is built on trust. When you meet a business broker for the first time you have to ask yourself do you trust this person? Have they with their actions and not just their words earned your trust? If there is anything untoward or out of place about this potential broker or his or her plan for marketing your business, then you have an obligation to yourself and your business to walk away.
There is no such thing as a shortcut when it comes to buying and selling businesses. It takes time and a lot of hard work, much of which you may never see. If a broker is selling you something that sounds too good to be true, it probably is. Your instincts should serve you well here. If you are like many business owners, you didn’t grow your business by being naïve. You worked hard and you used your intuition about which direction was good and which was not. If this is an area where you struggle, then bring a trusted employee, partner, or spouse to your meeting. Discuss with them after your meeting what you both saw and heard. Compare mental notes that you took and discuss the read that you both got on the broker you met. It is much harder to sell a bill of goods to a couple of people than someone flying solo.
In summary, if your potential broker is a good teacher, if they don’t pressure you for upfront money, if they shoot straight with you, communicate well, and are in it for the long run, then chances are you’ve found a good broker. A reliable broker who earns and keeps your trust is worth every penny that he earns and will be an investment that pays great dividends for years to come.
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This page is a part of our Business Brokerage Resource Library