Business brokers are typically thought of as agents who help business owners sell their businesses. Indeed, this is a huge portion of their job. However, business brokers can also represent the buyer. If you are looking to buy a business, hiring a broker to work with you is a very wise step. Here are some of the services they can offer you in this regard.
1. Finding a Business to Buy
Searching for a business to buy is a lot more complicated than searching for a car or a home to buy. You can't just visit a store and look at an aisle of businesses for sale. Many businesses that are for sale are not even advertised publicly. Rather, brokers tend to know what is on the market, and they have connections they can talk to in order to find out what will be entering the market soon. Hiring a broker to find businesses you might be interested in buying will save you thousands of hours.
2. Valuing a Business
Putting a price tag on a business is tough. There are so many factors to consider, from the overall gross revenue, to the growth potential, to the way the business is perceived in the community. Your broker will have overseen numerous sales before, which will help them know how much a business is actually worth. This will help prevent you from overpaying for a business that ultimately does not earn you as much money as you assumed it would.
Negotiating is a skill in and of itself. It takes practice to be a good negotiator, and you also have to know what you're buying. Chances are, a business broker has had more experience negotiating the price of businesses than you have had. They know what things to bring up in order to lower the price. For example, they might know to ask for $5,000 off the asking price simply because they see the business hasn't been keeping supplies in stock and you'll have to purchase a lot of those supplies once you take ownership. Little things like this add up and can save you a bundle when buying a business.
If your goal is to buy a business, make sure you contact a broker and ask for their help. Like real estate agents, most brokers work for free for their buyers; the sellers of businesses pay them a commission upon purchase.