So you’ve decided to sell your small business and now you’re ready to introduce your company or business to potential sellers. There are two main ways to sell your business which is to do it yourself or to utilise the service of a business broker.

For the average person, using a business broker can be the best way to help find a buyer and assist with your exit strategy. Choosing the right broker is necessary to maximize the sale price of your business. On the flip-side, choosing the wrong broker could have your business laying inactive on the market for months or years or have you leaving money on the table.

Read: What are business brokers and what do they do?

1. Check business broker for their license and insurance

Business brokers in Australia should be licensed, insured, and a member of industry associations like the AIBB (Australian Institute of Business Brokers). Ask for a copy of these documents upfront to protect yourself and to hold them accountable in and when something goes wrong. If a business broker is unwilling to provide license or insurance details, consider engaging another company that is more professional and has the relevant paperwork.

2. Ask broker for their estimated valuation

Asking a potential broker for their estimated valuation as well as their reasons for it provides a good indication of whether or not they’re honest or lying to you to get your business. There are many business brokers that provide over the top valuations in order to persuade you to choose them. If you end up falling for it, you will only end up disappointed when there are either no buyers or low offers compared to the initial “valuation”.

It is can be a good idea to choose a business broker that is realistic and will provide you with an honest valuation based on current economic conditions, interest rates and buying trends.

3. Get a breakdown of what is included in their fees

It is best practice to get a breakdown of what is expected of the business broker based on the fee(s) that they are charging you. If advertising is included, get them to specify what it entails as well as everything else that is their responsibility. That way there are no nasty surprises during the selling process or any added fees which you thought were meant to be included.

4. Ask for their previous selling history

There are many good honest business brokers out there that want to do right by their customers but there are also many bad ones just like in any profession. Some business brokers have a business model of getting as many clients as possible to make money from the listing fees as well as a commission in the event their client sells the business on their own. Ask for your potential brokers’ list to sell ratio. Any reputable business broker would have this on hand and a good business broker would have a relatively high list-to-sell ratio.

5. Ask them for their marketing plan

A good business broker will have comprehensive strategies to sell their clients’ businesses. This would usually entail an online marketing approach as well as direct contact with their list of contacts within your relevant industry. It is best to avoid business brokers that can’t provide you with a well thought out marketing strategy.

6. Ask for examples of similar industry sales from the broker

If your business for sale is a restaurant, ask for them for real examples of businesses they sold in the same industry. If they can list a lot, it is likely that they have a good list of contacts of potential buyers in that industry or have a great marketing strategy for selling that type of business.

7. Test the responsiveness of their communication

Get a friend or family member to contact them about another one of their business listings to test how quick and responsive the business broker is. Find existing business for sale listings from them on our website. A good business broker will respond quickly to leads. Just don’t take this too far and waste their valuable time.

Final Tips:

If your business for sale is a restaurant, ask for them for real examples of businesses they sold in the same industry. If they can list a lot, it is likely that they have a good list of contacts of potential buyers in that industry or have a great marketing strategy for selling that type of business.

You can use our free directory of business brokers if you are interested in hiring a business broker to sell your business.