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Using a business broker

Should you use a broker when selling your business?
Short answer: Not at the start.
Long answer: It depends on your reasons for selling, your market segment, and your ability to negotiate the sale.

A business broker is much like a real estate agent. They always have the best interest of the seller in mind. This is simply because they are paid on commission, and the higher the price the higher the commission. But that's not the whole story. Business brokers have become big business, and the competition is fierce. Because of this the right buyer often becomes the one who wants to buy the business the fastest. This isn't good for the buyer or the seller.

The biggest problem is they take an average of about ten percent of the sale on small businesses. If you're selling your business for $300,000, that is a sizable chunk of money to be paying the broker. If the business is selling for more than one million dollars, you can usually negotiate this fee down.

The selling proposition of the business broker is that he can bring you potential buyers, and help with the transaction. But with a decent marketing campaign you can find the buyers yourself quite easily, and any good business attorney can draw up the contract.

When you need a business broker.
There is a time for a business broker, and that is when all else fails. If you can't find a buyer for your company, a business broker can often find prospects for you. Adding to the number of prospective buyers of course, increases the likelihood that you'll get the purchase price you desire. Some may decide that a broker is the best option even when there are plenty of prospects knocking at the door. If you don't have the time to do due diligence with the buyer, and your accountant doesn't perform that duty, a broker can step in. The broker, much like a realtor, has as his top priority,getting the highest possible price for the business. This can work for you or against you depending on what your motivations are for selling.

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