Small business owners have many benefits from using a business broker. A business broker can often pay for itself, as it can charge a higher price.
Here are four ways a business broker can help your company get a better price.
1. Proper pricing.
Proper pricing is important because business owners need to be trained valuation professionals. Sometimes they underestimate the true value, and a sophisticated buyer will take a “steal of the deal” without even knowing it.
You are not selling real estate. There are many parts to a business you are selling. F&FE (furniture fixtures and equipment), inventory, and goodwill are part of a business. Accounts receivable accounts payable, and accounts receivable are also included. When pricing is determined, all of these factors must be considered. The sum of all these items determines the final price.
A business broker is a professional who has been trained in valuation techniques. They understand how each industry handles each item and can help you to value your company.
You can use some rules to determine a fair market value depending on your industry. In the insurance industry, for example, using a factor called the commission is common practice. It is also common to use an element that measures the profit or revenue to determine the fair price. Every industry is unique.
To accurately value a business, looking at comparable companies sold and the selling prices is important. It isn’t easy to love a trade properly without this crucial information, which isn’t readily available to business owners.
2. A stronger marketing effort.
Sellers often place their business on just one or two websites when they sell. Professional brokers may use up to 300 websites to promote their business and tap into existing buyer lists. This alone can raise the price, especially if there are multiple offers for a business.
A well-trained business broker will be able to target the perfect buyer profile and help you get a better price by going after strategic buyers instead of financial buyers.
3. 3rd-party negotiations.
Third-party negotiations. This removes the emotional element and increases the price. According to one broker, $25k is lost whenever you discuss the price with a buyer.
A business broker will use specific negotiation tactics to ensure sellers get the best price. It is in the best interests of business brokers to obtain the highest selling price.
4. Time is money.
Profit and revenue are key factors in determining a business’s worth. If owners attempt to sell their business, they often must catch up on its profitability and revenue. This lowers the value of the business. The business broker helps the company owner to remain focused on the business and get the best selling price.
Download the free report 7 Essential Points Every Business Owner Should Know Before Selling Their Business.