Are you in a dilemma as to whether you should buy a business through a broker? Or you are about buying a business through a broker? Well, below are ten kick-ass success tips you must know.
Buying a business can be very complex and time-consuming, especially if you are trying to handle it all by yourself. To avoid the frustration of wasting your time and money, it is highly recommended that you buy through a broker.
Aside that buying a business through a broker saves you a lot of time and effort, it will help you make a soothing buying decision in the end, since you will most likely be given a pool of available options to choose from.
In addition, brokers can help you secure a clean deal without the seller taking advantage of you. (They know their reputation is always at stake, so they try their best to satisfy you). When buying a business through a broker, there are certain tips that you should implement to ensure a smooth deal and to avoid losing out on a great bargain. Here are 10 such tips:
Top 10 Kick-Ass Tips for Buying a Business through a Broker
1. Evaluate your level of seriousness
Nothing annoys sellers and brokers more than dealing with an un-serious buyer. So, don’t initiate a deal when you are not very sure that you want to buy a business.
- How serious are you about buying a business?
- Are you really prepared to face the challenges of taking the reins of a new business?
- Do you have the support of your close ones?
- Can you afford the likely cost of the business?
- Do you know everything the whole process entails?
Your answers to these questions will help you know whether you are serious about buying a business or not.
2. Be clearly focused
Having confirmed your seriousness to buy a new business, you should map out a plan. You are not just going out to buy any business (unless you are not serious). You certainly have some specific businesses in mind as well as certain criteria that each business must meet for you to consider them. All these should be written down.
Also, you must plan how you will go about the whole process—from your meeting with the broker to the finalization of the deal.
3. Find out why the seller wants to sell
The seller’s reason for selling the business might not be much of a big deal to the broker, but it might mean a lot to you, the buyer. So, ask why the business is for sale, as this question alone can help you assess the business properly and find out if there are any hidden problems the seller is trying to run away from.
4. Ask questions
There is no limit to the number of questions you are allowed to ask when assessing a business you are interested in.
You need as much information as possible to help you assess the opportunity fairly and make a well-informed decision in the end. Don’t be deterred if the seller requires you to sign an NDA before revealing the core secrets of the business. If that’s the only route to getting enough information about the business, then ply it.
It goes without saying that only an unserious buyer will start negotiations without having access to funding or cash. Most brokers will try to assess your funding ability by requesting certain documents such as your personal bank account statement, as they will want to ascertain your seriousness.
Remember that aside the cost required to buy the business, you will need extra funds as operational costs and other expenses.
6. Don’t contact the seller directly
The seller certainly has a reason for involving a broker in the process. So, never try to contact the seller directly for any reason—unless the broker gives you the nod to do so. Most brokers detest this, not because they are trying to protect their commission, but because it might infringe on the seller’s confidentiality and defeat their aim of hiring a broker. So, you have to respect this rule.
7. Declare your decision
Courtesy demands that you inform everyone whenever you have made a decision regarding the business. Let the broker know your decision and why you have taken it. If you decide not to buy a business due to certain concerns, they can help you find a more suitable option.
8. Present yourself well
If you want the broker to take you seriously, you will need to present yourself well—in all ramifications. Usually, brokers will want to know if you have the ability or skill set required to run the business, and if you will get on well with the owner. To get the required insight, they will look into your CV and other personal documents. So, upload your CV, assemble an acquisition brief, and know what you want to achieve.
9. Understand the role of brokers
Sometimes, brokers will take steps or stipulate requirements that you find unnecessary or annoying. These are usually done to protect the seller’s interests and yours; and you have to understand this. So, don’t get upset when the broker asks you to provide information about yourself and your finances, or when you are asked to sign a confidentiality agreement.
Remember that the broker may be talking to you and other interested buyers at the same time. So, try to understand whenever they adopt measures to find the best match.
10. Be confident to make an offer
Making an offer should come after the due diligence process. If you like the business and it meets all or most of your criteria, state your interest and make an offer. However, only make an offer after you have gotten the finances in place.