6 Tips for Hiring a Business Broker in Brisbane When Selling Your Small Business

As a small business owner, selling might seem like uncharted waters for you. Hiring a business broker, preparing to sell, and dealing with the legalities of asset transactions can all be overwhelming or challenging to understand. In dealing with your sale, finding a business broker who can walk you through the process is essential. Even then, you need to know a thing or two about dealing with brokers before hiring one. Below are some tips to help you hire the right broker in Sydney to help you sell your small business:

• Understand the terms of the contract

It may surprise you to find out how many people sign a contract without reading through it thoroughly or understanding it. Whether this is because they’re too trusting or simply in a rush to get their business sale underway, it can cause issues later on. Rather, before you sign any contracts with a broker, read through it thoroughly and mark out sections you don’t fully understand. Then, ask the broker to explain these sections of the agreement to you so you’re fully aware of the terms and conditions of the contract. 

• You can negotiate

When it comes to selling a business, business brokers usually earn a commission based on the total amount that they sell your business for. In Australia, this is usually between %5 and 10% of the total sale value. A common mistake that we see business owners make when they sell their business is that they don’t negotiate. Sure, a broker needs to get fairly compensated, especially if they’re the reason your business sells for more. But for some, 10% of the sale value may be too much. If that’s the case, you can negotiate them down to a more reasonable amount. Keep in mind that, in the end, business brokers also need to earn a living. 

• Do you require exclusivity?

It’s common for some business brokers to take on the sale of a business along with several other sales. Especially if that broker has enough resources and manpower to manage multiple transactions; however, there may also be a downside to this. If the brokerage is spread too thin, it may not be able to give your sale the attention it needs, which could lead to mistakes and opportunities falling through the cracks. If this concerns you, you need to voice it so you can get an estimate of how committed the broker is to the sale of your business. 

• Clearly outline the termination agreement

Understanding the exit clause in the contract is also very important. Because most brokers take their commission when a business sells, they need to be compensated if you cancel the sale midway through. Remember that they have already done work for you during this time. Usually, if this happens, some brokers will have an amount based on the expected earnings you would need to pay as an exit fee for the work they’ve already done. Others would have an initial fee that you must pay when you sign the contract as a precautionary measure for is you decide to pull out later on. That way, they are compensated for the work they have already done. 

• Determine the timeframe

It’s unrealistic to expect a broker to sell your business overnight or even within a month. Depending on the business size, the average turnaround on a transaction falls anywhere from 6 months to a year. Ask the broker to give you an estimate on how long it should take for your business to sell. To ensure your expectations aren’t too high, we’d suggest adding an additional month to what they tell you just to be safe. 

• Request updates 

Finally, you need to be upfront about your expectations. Some business owners prefer to focus solely on improving their business and preparing for the sale, allowing the broker to manage everything else. At the same time, others want to be included in the process. If you’re the latter, inform the broker that you would like to be regularly updated regarding the progress of the sale and about any specific you would like them to include you in. This will ensure that they know what you expect in regard to communication and avoid any issues that may arise. 

Finding the right broker in Brisbane

The ideal business broker will have a decent understanding of the Sydney market, your business industry, and a good reputation with other business owners in Sydney. To find a broker like this, check out Benchmark Business Brokers in Brisbane; they’ll point you in the direction and help you process the sale of your business while guiding you through the process. 

Final thoughts

Consider the tips above when dealing with a broker to help sell your business. In the end, you want to ensure that the brokers you hire are going to prioritise your business, fight for the best price possible and do everything ethically and in a professional manner.