Do you want to avoid hiring a bad business broker? Actually, you should ask some important questions in order to make sure that you don't end up hiring an inexperienced professional. Given below are some red flags that you may want to watch out for. Read on to know more.
1. Experience Counts
Actually, you should go with a professional who has a proven resume. You can contact the International Business Brokers Association to know more about the credentials of a good broker. Aside from this, if a professional wants to be an IBBA-sanctioned Certified Business Intermediary (CBI), they have to record years of experience on the job in addition to hours of classroom hours.
2. Beware of Generalists
If you think you can read up on a good broker on Google, you are right. But it's not enough. What you need to do is make sure that your professional is the best fit for your organization. If you are just starting out, you should look for a professional who has tons of experience working for the type of business you operate. Working with a generalist is not a good idea.
3. Size Matters
It's also important to know if the broker can handle the large transactions. For instance, if they usually handle deals of $10 million and your deal is just $3 million, you won't get the attention you deserve, according to experts.
4. Negotiate the Fee
Usually, brokers charge a commission for their services. So, if a professional asks you for an upfront payment, know that it's a red flag. While the average commission charged by brokers is 10%, you can negotiate it. For instance, if you know someone that will prove good for your business, you should negotiate for a lower rate.
5. Avoid Overcommitting
You will have a long relationship with the professional. On average, the broker may take between 9 and 12 months to sell a business. The broker may assemble a solid marketing package from time to time.
While the broker may ask you to sign an exclusive contract, you don't have to sign the contract for a year or longer. The minimum length of the contract should be 6 months. Some people negotiate a 90-day contract and get it renewed for another 90 days. It's easy to decide whether a professional is good or bad in 3 months.
6. Trust Your Gut
Although you don't need to have the broker meet your mother, you have to go with a professional who you can trust. What you need to do is work with the professional as a team and try to make a great chemistry. If you are not sure about a broker, you should trust your gut. By trusting your instinct, you will have a higher chance of hiring a trust worthy professional.
So, these are a few considerations that you should make when hiring a good business broker for your business needs. Hopefully, your business will have a great broker down the road.
