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What’s the make up of your customers?

make up of your customers

Do you know the make up of your customers?

This week I asked an owner of a cleaning company, Julie, if she had any statistics, which in the business world is termed Management Information (MI), which would provide her with a bird’s eye view of the business at a glance.

Unsurprisingly the answer was no as Julie is so busy with the day-to-day actual operations of the business and, well, cleaning. So, as a starter I asked for last months’ figures for:

  1. Number of new customers   (new wins in the month of June)
  2. Total number of existing customers
  3. What’s the split by customer type (private individuals / private companies / public sector / other?)
  4. Average monthly £ income per customer type
  5. Number of private individuals which are clean only
  6. Number of private individuals which are cleaning & ironing

The aim of the MI figures above is to start to build up a snapshot of customers in order to judge what the customer base split is and where the money (ie. revenue) is coming from. The next step would be to work out what the top 5/10 customers are by revenue.

An area to focus on for growth is up-selling private individuals from ‘clean only’ to be both ‘cleaning & ironing’ which is why 5 and 6 are listed above.

Once gathered, the figures should be put in a spreadsheet so then we can do month on month comparisons going forward.  The quicker the figures can be generated after the month is completed, the better. As long as its not too much trouble and doesn’t take up time, you can always present the figures as graphs or pretty pictures to convey the message quicker.

These figures should then be acted upon and form the basis of discussions as to how the figures can be improved upon, with an actual, detailed plan for each strategy that is then reviewed alongside the next set of monthly figures.

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top 10 tips when selling a business

top 10 tips when selling a business

I was asked recently for my top ten tips when selling a business on a back of a napkin! so here they are, in super short napkin format though much more readable!

Top 10 tips when selling a business

  1. Keep it simple and squeaky clean.
  2. It’s all about the numbers.
  3. Sales and forecasting counts.
  4. Have a Finance Director (FD).
  5. Don’t give them ANY reason to be chipped, ever.
  6. They have to want it. They are buying for their reasons not yours.
  7. It will never go how you want, expect the unexpected.
  8. It’s always a negotiation.
  9. Plan ahead.
  10. Have great professional advisors. Use them as that’s why you are paying them.
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Identify potential buyers for your business in 3 ways

identify potential buyers

There are a number of ways to identify potential buyers and I thought I would share with you three ways to get you started.

If you’re thinking that once you’ve identified potential buyers for your business that the hard work is over, you’ll be mistaken. The hard work is only just beginning.

Believe it or not, you are most likely to already know who your potential buyers are likely to be. I didn’t believe that at the beginning of my business sale process but only months later I was a convert! Once you’ve identified potential buyers, the next step is to find out how serious they are and discover whether or not they can afford to buy you (in cash terms) and most importantly actually want to do the deal.

But I’m running ahead of myself here, let’s go back a step to how to identify buyers:

1. The easiest potential buyers identification is to look at your competitors. Perhaps they are looking to consolidate their market position, are envious of your customer list, or want to employ you and your people for their talent.

2. Another potential buyer type could be an established company that is looking to get into the market space that you are smack in the middle of. These are regarded as new entrants to market. Most likely armed with a war chest for acquisition targets and lacking commercial experience of your marketplace.

3. For the third potential buyer type, it’s time to consider the global market. It there a similar business to yours in the same market in a different territory? Not quite yet a competitor and certainly not a new market entrant.

So there you have it. Obvious isn’t it but don’t overlook the low hanging fruit potential buyers, they are the most likely winners in the end. With these three different buyer types, you should have the beginnings of a good list that will need qualifying.

Good luck with your identify potential buyers process!

Joanna Miller helps business owners navigate their way through the start to finish process of selling a business.  Her specialty is helping owners understand how to prepare and make the most of their business sale process to maximise their company’s value. To understand how you can sell your business quickly for the highest sales price, purchase her book, “How To Sell A Business: The #1 guide to maximising your company value and achieving a quick business sale

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5 ways to discover your potential buyer’s hot buttons!

hot button

Recently I was asked by a business owner how they could find out what their potential buyer’s hot buttons were. That got me thinking about how I would approach it. Having gone though the business sale process already successfully, Knowing what I know now, here are five things that you should try on your ‘target’ in order to glean what are likely to be those hot buttons. These suggestions are listed in no particular order and remember that the potential buyer that you have in mind may not realise that they are on yet!

  1. At your next industry event or exhibition, casually talk to a few of your target potential buyer colleagues. Take them away from their stand by suggesting that you both swap freebies (‘oh I’ve got one at my stand.’) or buy them a drink/snack, and after some small talk, find out what their perception of your business is.
  2. Plan and organise to meet up with the target potential buyer Managing Director over a nice lunch and talk about the  weather, the industry as a whole, their plans, your plans, mutual acquaintances and companies. Mention three things that you love about their business and then ask what they love about yours — remember don’t take any offence if they can’t think of anything or say something negative. It’s all useful information as it gives you a little insight into their perception of you.
  3. Look at your target potential buyer’s filed financial accounts and pay special attention to the shareholding, commentary and notes in those accounts. If they are registered in the UK then this information is available at Companies House and it’s only £1 per document. If your target potential buyer is a publicly listed company, read their annual reports to find out what their strategy is and sometimes they even state if they are looking to acquire in order to grow!
  4. If you know the target potential buyer’s top 3 clients, ring those clients up and find out if they know about your business. In order to protect your identity. You could be calling on behalf of a market research company.
  5. Has your target potential buyer made any recent acquisitions? If so, find out who were the owners/business managers that sold and get in contact with them to find out why they were acquired and what hot buttons their business had. (This suggestion is similar to taking the MD out to a nice lunch).

Hopefully these suggestions get your creative thought processes going and you’ll come up with some more as I’m sure that there are more ways to discover your potential buyer’s hot buttons. What would you do?

 

Joanna Miller helps business owners navigate their way through the start to finish process of selling a business.  Her specialty is helping owners understand how to prepare and make the most of their business sale process to maximise their company’s value. To understand how you can sell your business quickly for the highest sales price, purchase her book, “How To Sell A Business: The #1 guide to maximising your company value and achieving a quick business sale

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Ready To Sell Your Business: Now What?

ready to sell your business

So you’ve built your business and now you’re ready to sell your business and you think you are ready. Are you really ready? Have you considered everything yet? Here are four crucial areas that it’s worth considering very closely if you want to maximise your business exit.

Make yourself redundant.

If you’re still at the centre of the business and finding that everything and everyone revolves around you – that’s not good. The business needs to function without you being at its centre so start stepping away from the day-to-day decision making and trust your employees who you have hired to do the job do it! If you find that you are micro-managing because of fear, loosen the reins and let your employees take the lead. If they don’t perform, there are always better people out there. It’s a question of finding them and making sure that you end up with a performing team with you out at the front, leading. You job will be to sell your business at the best deal you can.

Numbers. Numbers.

The price you’ll get for your business maybe a multiple based on income eg. three times total revenue so make sure that when you present your numbers that they are accurate and your forecasting (generally three years out) is realistic, especially if you stay on in the business because you’ll be asked to smash through those forecasted numbers!! Make sure that your team know what they are aiming for and get their buy-in to achieving those numbers. Your aim is to get a huge slice of the bigger pie so reward them for performance.

Cash is king.

Grow your top line – your revenue. Focusing on revenue will easily prove that the business is growing and will continue to as new sales comes in. Of course, don’t forget to review your cost lines and see if you can squeeze more out for less without compromising or introducing problems elsewhere in the business.

Think like a potential buyer.

Put yourselves in a potential buyers’ shoes and try and look at your business through their eyes. Do you know what unique selling points the buyer’s love? What are the business’ strengths and where are the weaknesses? Tighten up on those, eliminate them where you can. Make sure that you don’t give the potential buyer an excuse to delay or walk away because they found something that you should have first. Instead, you should be making sure that they can’t wait to give you an offer and close the deal as soon as possible.

 

Joanna Miller helps business owners navigate their way through the start to finish process of selling a business.  Her specialty is helping owners understand how to prepare and make the most of their business sale process to maximise their company’s value. To understand how you can sell your business quickly for the highest sales price, purchase her book, “How To Sell A Business: The #1 guide to maximising your company value and achieving a quick business sale

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LawyerFair – How to choose a business lawyer that’s right for you

LawyerFair - choosing a lawyer

How to choose a business lawyer that’s right for you

Throughout the years I’ve unfortunately had to use lawyers on several accounts. I say ‘unfortunately,’ because legal proceedings have never been an enjoyable experience for me. A few times I had to seek settlements from clients, I’ve gone up in front of an employment tribunal (for unfair dismissal) and most recently, I used a lawyer to help me exit my business.

Fortunately, however, every lawyer I’ve used helped me to achieve the intended outcome. Sometimes, however, I look back and think that my choice of outcome might have been wrong. In fact, that’s my largest gripe with solicitors – you tell them what you want and they get to work rather than perhaps offering alternative solutions.

Let me digress.

Many lawyers fail to propose fixed fees or fully detail the legal process involved and the client is left with an ever widening black hole of debt.

Looking back upon my employment tribunal case, if I knew then what I know now, I would have never fought for ‘principal’. An ex-employee sought legal advice because he claimed he was fired for being gay. From my perspective, the ex-employee was dismissed because he was always late, called in sick often, rarely hit targets and failed to do the same job that his peers were doing. Furthermore, he was employed for only 10 months before being fired.

Because of my need to prove the truth it cost me over £25,000 to ‘win’ the case and when I won I didn’t really win. The process took two years, caused terrible stress and the whole case seemed to go on and on and on. I learned the hard way that the legal system and courts favour the employee – even if you have 100% proof against the claim.

The solicitor I used was a very professional and sensible man. He explained the worst-case scenario yet felt it would never get to the courts. Well…he was wrong. After hiring him and then the barrister to argue the case, I was left out of pocket and deflated. There was no sense of victory. And the ex-employee lost nothing. He didn’t have to pay to string me along for 2 years!

Perhaps it’s one of those lessons that you have to learn yourself? But I can’t help but feel the solicitor didn’t prepare me for the rocky road I had to walk. Looking back, I wouldn’t worry so much about principle – I’d find a way to resolve things as quick as possible so I could go on and live my life. Hindsight is a great thing – I do wish, however, that the lawyer offered alternatives that were perhaps easier, cheaper and took less time.

Digression over.

Let’s face it – lawyers are not the most liked people

The general public looks at them through weary eyes. Lawyers have the capability to twist, turn and respond to any query with legal babble talk leaving the listener to wonder what’s really going on.

Finding a good, reputable, proactive, straight-talking, client service led UK lawyer isn’t always an easy task

I think another thing that really causes anxiety when finding a lawyer is that you know you’re screwed if you don’t get the right one. It’s not like you’ll be able to sue the lawyer if they do a bad job – will you?

But heres a service that might help

LawyerFair - choosing a lawyer
While connecting with people and businesses over Twitter I came across LawyerFair. They offer a UK lawyer comparison service that looks very beneficial to business owners.

Using LawyerFair is very straightforward:

  1. Fill in a small form detailing your requirements. The form is in 3 parts and asks basic information about the legal requirements necessary, where you are in the process, whether you want fixed fee or not. It also asks for a budget, whether you want a local solicitor or are willing to work with a remote one. You’ll easily complete the form within 5 – 10 minutes. At the end of the form, you’ll need to register for the free service so LawyerFair can respond to your request.
  2. You’ll then receive up to 3 proposals for your request within 48 hours.
  3. You can check the various lawyers profiles and how other users rated them
  4. Chose a solicitor that suits your needs best based on profile, past experience, cost and gut feeling

The main element of LawyerFair that excites me is the review aspect. If past clients are unhappy with a lawyer, they can make their feelings known. Any LawyerFair recommended lawyer will know that potential and most likely work hard to ensure top marks are giving.

On the flip side, however, for comparison sites to work you need quite a bit of work to flow through them. A comparison site is no good if the majority of recommendations haven’t been rated by others.

That being said, the service has been created to help business owners to make more informed decisions when seeking legal advice. The service is free so there’s nothing to lose by giving it a go.

When it comes to using lawyers in the UK, my advice is this:

  1. Make sure you consider the ramifications of the outcome you want. Ask the solicitor what the process is likely to be and consider the worst-case scenario and whether you’re okay to live through it.
  2. Give LawyerFair a go at http://www.LawyerFair.com

To read about my experience with lawyers when exiting my business, read this: How Could My Company Be Valued £500k By One Broker and £3.6m By Another?

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Why signed client contracts are gold dust especially during a business sale

client contract

When you win a new piece of business, having clients sign a contract with your business should be part of your everyday operational procedures. After all, you and your team have done the hard work, which is winning the business in the first place.  What’s some paperwork compared to that?!

Speaking from personal experience, you will generally find that the paperwork trail is left to the last minute and can be easily forgotten about as now the business is busy making sure that its going to deliver it. Sometimes the paperwork gets lost or the contract is drawn up and then gets lost in legalese for months on end.

Whatever the reasons, make the time and ensure that you have signed client contracts. It will be worth it as it helps keep your business valuation up. Buyers love to see signed client contracts, it’s practically an annuity stream. You should love them too!  They simply are gold dust as they help with forecasting revenue and unless something goes horribly wrong – guaranteed income.

Encourage contracts to be drawn up and signed

Make contract signing part of new business process and take a proactive approach. You could offer the sales person an incentive / additional commission / bonus for getting the contract signed within a certain period. If that’s not quite right for your business as contracts are handled by your financial controller or a contracts manager then make it clear what timeframe contracts need to be signed in and manage it. Hold a monthly review where you check on the progress made. The longer you leave an unsigned contract, the harder it will be to get it signed because of i) amount of time lapsed  ii) change in personal – oh, Fred no longer works with us and I’m not sure what you agreed with him…

You may want to record the different ‘stages’ of contract signing so its easier to mark progress made. Here are some example categories where the total count for each would be presented. The information can be further drilldown on as needed:

  • Unsigned (no info)
  • Unsigned (awaiting internal review)
  • Unsigned (on hold)
  • Unsigned (reviewed, awaiting internal signature before posting)
  • Unsigned (posted, awaiting client signature)
  • Signed (by client and scanned to filesystem)

Of course, there may be the rare occasion where an unsigned contract works in your favour. For example, there could be a price reduction based on increased volumes – which only comes into effect with a signed contract. But you should have worked that into your financial model at the outset and be able to bear the reduction in your profit margin. (In other words, that’s a poor excuse for not having the contract signed!!)

All my client contracts are signed – anything else?

If you’re reading this thinking ‘all my client contracts are signed’ give yourself a huge pat on the back. But that’s only one part done before you start celebrating, are all your supplier contracts signed too? And have all your signed contracts, suppliers and clients, been scanned and available electronically for the data room?

And that’s not all….

As well as having your signed contracts signed, do you have all your client contract key details in a single place for a quick and easy reference? Key contract details include:

  • The client’s name (!)
  • Is the contract signed or not?
  • How long is the contract for?  1 year, 3 years
  • How and when does it expiry?
  • Extension terms
  • Pricing
  • Tier

Our Contracts Summary Template has all this key information in a spreadsheet and as such as will help you manage your client contracts better and you will be in a position to answer these questions as well as being proactive in retaining the business when it comes up for renewal or extension (on the basis that you still want their business).

  • What revenue does the contract bring to the business?
  • Is the client one of your top 3? Top 5?
  • Are there any price changes during the contract lifetime and are the finance team aware of it?
  • Do you know when your next 3 client contracts are due to expire?
  • Does the contract need something in writing by a certain date in order to extend it for another term?
  • Which contracts aren’t signed yet and why not?

During a business sale, you want to make sure that none of those signed contracts ends. So, do a deal to secure its extension, remember it’s going to impact your business sale price.

If a contract does ends, don’t lose any of the original details and keep a record of that too along with why it couldn’t be extended or renewed.

It’s worth spending time on contract gold dust especially when it has a direct impact on how much your business is worth to a potential buyer so start reviewing the state of your client contracts today!

Joanna Miller helps business owners navigate their way through the start to finish process of selling a business.  Her specialty is helping owners understand how to prepare and make the most of their business sale process to maximise their company’s value. To understand how you can sell your business quickly for the highest sales price, purchase her book, “How To Sell A Business: The #1 guide to maximising your company value and achieving a quick business sale

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My business due diligence experience

due diligence calmness

Due Diligence Naivety

When I first heard the words ‘due diligence’ I wondered what that was all about and was told ‘oh, its when the potential buyers look at your books’.

I took that to meant the business‘ finances; so things like the profit and loss account, balance sheet, bank account statements and the management information reports that we had.

That’s probably true if your business is turning over less than a million. But as my business didn’t fall into that category our solicitor passed over a due diligence questionnaire (DDQ) which ran to 12 pages! It was then when I had an ‘OMG’ moment as I looked through and saw that it covered all the different functional areas of the business.

We started collating the document list ASAP! And to help you know what you’re getting yourself in for we’ve reproduced the list in our ‘Preparing for Due Diligence Checklist Pack’ along with my recommendation for your data room folder structure.

On top of this during the business sale process in order to field and answer all the demanding questions from the buyers, the documents started to pile up.

By the end of the process, for my business, it turned out we had prepared approximately 800 documents! We had to provide examples of everything. Detailed sales forecasts for the next 3 years, samples of our software code (for IPR), a record of the last 2 years salary increases, a list of leavers and reasons why they left the company.

Some of the information was provided by the solicitors, like property searches and they helped with scanning paper contracts as we didn’t have the right tool nor resources to spend on this.

But the vast majority of the documents, 95%, has to come from the business and your business broker isn’t really going to be able to help besides pointing out what documents are essential and missing.

Delegate, delegate, delegate

Preparing 800 documents for due diligence did take a toll on me. Luckily only a core 30 documents changed over time that needed to be updated during the business sale. However, in order to get all the documents ready in the first place, I changed the business operating processes to be more efficient so I could just use the documents as they stood or with minor ‘tweaks’ and at the very least have the right company folder structure where I could locate the information very quickly. I also made sure that processes such as sales, finance, account management were documented which is simply good practice to do.

How you know you’re fully prepared

Having this all in place allowed me to field the questions from potential buyers quite easily and provide the answers within a very short time period, mainly within a 24 hour turnaround time.  Being prepared allowed me to refer them to the right document in the data room to go look at instead of unique answers to each question. And if the answer wasn’t readily available, that’s when it got created and added to the data room.

Of course going around the sales process over five times does make you a pro and you quickly find ways to make it all the more efficient. That’s why I created the  ‘Preparing for Due Diligence Checklist Pack’. It gives you a head start as it includes all the common documentation in a checklist that a business going through due diligence needs.

As long as you have one person that is responsible for managing the data room and can source the documentation from the business whenever needed (this includes 11pm at night), you will find the whole due diligence stage easier and best of all it doesn’t have to all be done by you – allowing you to focus on the business and not in it!

Joanna Miller helps business owners navigate their way through the start to finish process of selling a business.  Her specialty is helping owners understand how to prepare and make the most of their business sale process to maximise their company’s value. To understand how you can sell your business quickly for the highest sales price, purchase her book, “How To Sell A Business: The #1 guide to maximising your company value and achieving a quick business sale

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How to Stage a Beauty Parade: Selecting the Best Professionals to Sell your Business

How To Stage A Beauty Parade

How to Stage a Beauty Parade – Which Professional Advisors to Beauty Parade?

There are four core professionals available when selling a business and they include a: Business Broker, Solicitor, Accountant and Tax advisor. Retaining professional services is very costly, so there needs to be enough room in your sale proceeds to pay for them and enjoy your own personal profits. Generally, businesses that are selling for over £1m are more likely to use a team rather than just one professional. With so much expense at stake, it’s imperative to know how to stage a beauty parade.

If, however, you’re selling for under the £1m mark there’s still a need for professional services – perhaps not all of them. Cost can be a huge factor. There’s no sense selling out if all your profits are used up by the professionals that make the sale happen!

Regardless, whether you’re selling for over or under the £1m mark, chances are that you’ll need to retain some professional services. One of the best ways to decide the best professional for your requirements is to stage a professional advisors to beauty parade.

A beauty parade is where you ‘interview’ more than one professional service provider within the same profession against the same criteria and scoring system. For example, when a friend of mine recently exited his company, he staged a beauty parade between three different solicitors. He asked each solicitor the same questions and scored them against the same criteria.

If you’re selling for millions, it’s likely that you’ll have a large team and it’s highly advisable to stage a beauty parade for each profession: Broker, Solicitor, Accountant and Tax advisor. It might seem like a lot of work, but your professional advisory team can ultimately make or break your business sale.

How to Find the Professionals

The best way to find business sale professionals is to start asking around. It’s often hard to beat a word-of-mouth referral. Failing that, you can search locally on the Internet, get recommendations from other professionals or if you belong to a business group, find out if they can point you in the right direction. You can also use social media (LinkedIn, etc) to find professionals although you’ll have to be discrete about how you do it.

Sending out a Brief

Once you select several potential professional advisors, depending on your needs, you can then send each company a short concise document outlining your intentions, objectives and time scales. You’ll want to give some history, explain your situation, tell what your company does and so forth and then ask several questions that you can use to narrow down the professionals that you’re most interested in.

The initial brief email is an early qualifying device. You can make early judgments about the professional/company based on how quickly they responded, the tone they use and how helpful  the seem to be.

Short-list the Candidates and set up Interviews

As soon as you’ve narrowed your selection, it’s time to set up interviews. It’s best to see similar professions close together. For example, if you’re going to interview three brokers, try and see them all over a day or two.

Create a Beauty Parade Question Sheet

Going on gut instinct isn’t always the best way to do things! With a score sheet you can ensure that you ask each profession the same question and can then compare answers. For example, you’ll want to ask each Broker questions like:

  • What were the last 5- 10 deals that you successfully completed?
  • Who, specifically, facilitated those deals? And will they be helping me?
  • Can you give an example of helping a business similar to mine (either in size, market, overall objective)?

And ask the Solicitors questions like:

  • What is your suggested sale process steps and approximate timescales?
  • For each individual and as a business, how many other deals do you normally work on at the same time and what stage are those deals at?
  • Based on what you already know about my business, can you point out some strong versus weak points concerning the business sale process (in other words, what’s going for you and what’s going against you?)

Create a Beauty Parade Score Sheet

In addition to asking each profession your questions, you can also create an overall score sheet that holds items like, “Did you get on well or was there a clash of personalities?” or “Did you like/dislike any of the team?”

Decision Time!

After all the interviews, tally up your score sheets and determine what professional seems best for your situation.

Make your Life much, much Easier

If the concept of how to stage a beauty parade makes sense to you but you’re overwhelmed by the various steps, let us help you out. We’ve created a 45 page pack called, ‘The Seller’s Professional Advisors Beauty Parade Pack.’ The pack outlines exactly what you need to write in the briefing email, how to short-list the candidates, over 20 questions each for each profession on key questions to ask, a beauty parade score sheet in addition to the process necessary to retain the professionals.

Don’t have the headache we had going through this process with little help, use this pack to ensure you get the best professionals possible!

Kim Brown, Co-Founder of Business Wand, helps business owners navigate their way through the start to finish process of selling a business. Her specialty is to help owners cut costs and increase profits prior to sale. To understand how you can sell your business quickly for the highest sales price, purchase the book, “How To Sell A Business: The #1 guide to maximising your company value and achieving a quick business sale”

 

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How to select a business broker

Select a Business Broker – What to look for

Selecting a business broker is easy, selecting the right one should be another key element in your business sale strategy. Business brokers are usually highly experienced executives who have made a career out of selling other people’s businesses. When you have made up your mind to sell your business, your broker will help you go through every stage of the sale process by advising you and preparing the sale documents.

There can be many ways to find good business brokers. The Internet is the most obvious resource, using which you can look for business brokers in your area. Referrals from friends, partners and family members who have had an experience of selling their business are another important resource for finding a good business broker. You can also advertise your requirements for a broker online or through newspapers.

Remember, that it will be you who would be paying the brokerage fees, and your buyer will not share that burden with you. Apart from looking at the qualifications, certifications, experience, and client feedback of your potential broker, you should also pay close attention to the fee schedule and the terms and conditions of your contract agreement that you will be signing with your advisor. Get our The Seller’s Professional Advisors Beauty Parade Pack for more details.

Look at Broker Qualifications

Poor economic conditions have given rise to scams and misrepresentation. You should be doubly sure that the broker you are hiring has the right qualifications and has the legal permissions to represent you for business sale. You should ask any prospect brokers whether they are certified business intermediaries and hold the documents to that effect. A good broker would probably also be a member of International Business Brokers Association and/or other broker associations in different countries and industries.

Look at Broker Experience

Don’t hesitate to ask the business broker in detail about their previous experience and similar cases that they have handles in the past. Ask for references and verify the broker credentials with previous customers before you sign the contract.

Look at Broker Commitment

Even an outstanding business broker is worth nothing for you if that broker does not keep your sale at the top priority. The commitment can be determined by the amount of time a broker devotes to your case, and the amount of workload that a broker has. If a broker is already engaged in bigger deals, the chances are that you will be treated as a second-rate customer. On the other hand, a broker who is without a job might not be a great broker to hire. However, you should not accept anything less than 100 per cent when it comes to attention and commitment from the broker. Make your demand known to your prospect broker, so that your job is taken more seriously.

Look at Broker Fees

The broker fee is usually in the form of a percentage of the sale figure. However, brokers would almost always demand some expenses to be paid up front. While the standard commission is around 10 per cent, many brokers build a lot of hidden charges in their fee schedules, like document preparation fees, consultancy charges and the like. When your potential broker presents you the fee schedule, make sure you thrash every detail and leave nothing hidden in the small print.

Look at Broker Pricing Methods

A professional business broker will determine the price of your business and will guide you about the price that you should demand. You should know what methods your broker uses for estimating the price of your business. Scrutinise the broker’s past performance with a focus on the price demanded and the price realised for previous sales.

Look at Other Credentials

Every credible company has a website these days; your broker should have one too. The broker should be easily accessible and willing to help you with every detail of the sale. It is very important that you talk to business owners who have hired that same broker in the past. By working a little harder while hiring a business broker, you’ll be saving yourself a lot of hassle later. If the broker is incompetent or not committed, you run the risk of selling your business cheap or losing the sale altogether. Make sure that your broker hasn’t been sued and is under no current litigation by any buyer or seller.

Signing the Contract

Most of the brokers will want you to give them exclusive representation. Once you sign the agreement, you wouldn’t be able to engage any other party or broker for the sale of your business for a certain period. This period could be six months more. However, if you have a personal approach to some buyer or are already negotiating the sale with a partner or friend, you may include an exception in the contract in consultation with your broker. Make sure that the contract is concluded as the sale takes place, and there are no outstanding or long term liabilities against you.
Many brokers will also be willing to help you prepare the documents for a business sale without requiring you to sign up and get listed with them. They would complete your paperwork for a fixed charge, and you can decide to retain the later for the conclusion of the sale. It would really depend upon whether you have a buyer already interested. If you don’t have a clue about who will buy your business, it is advisable to go ahead with a seasoned broker.

Joanna Miller helps business owners navigate their way through the start to finish process of selling a business.  Her specialty is helping owners understand how to prepare and make the most of their business sale process to maximise their company’s value. To understand how you can sell your business quickly for the highest sales price, purchase her book, “How To Sell A Business: The #1 guide to maximising your company value and achieving a quick business sale