What is a business broker?
A key player in the sale and purchase of businesses is the equivalent of a real estate agent: the business broker. The reason why real estate agents exist is obvious. They are fundamental to the process of preparing a home, marketing it, managing inspections, conducting a sale (either through an auction or privately), negotiating the sale and lastly transferring the property to the new owner. What do business brokers do? Essentially the same thing but with businesses, and as such they are fundamental to a successful business sale.
Steps to becoming a business broker
The most common pathway towards becoming a business broker is through first completing a real estate licence at institutes such as the Real Estate Institute of Victoria or their counterparts throughout the country, such as REINSW, REIT and REIQ. Following this, these institutes often provide those interested with the chance to add extra units on to their licence to become a business broker. Potential brokers can also go through the Australian Institute of Business Brokers to acquire their licence. People often go down this route for the credibility to their credentials that the AIBB provides.
The benefits of using a business broker
There are a series of advantages to using a business broker when either buying or selling a business.
1. A cool head
It can be extremely helpful to have someone who has less of an emotional connection to the business that is being sold or bought. The transferal of a business can be a highly emotional one, often more so than the sale of a home. This is because a business is often something an individual has dedicated thousands of hours to developing, often from scratch. When this is the case, the idea of handing it over to just anybody can be unthinkable for some.
A broker can help find the right sort of buyer for your business and approach the process with a cool head. On the other end of the spectrum, a business broker can provide an outside perspective on the sort of business you should be purchasing, based on your own personality and financial capability. For this reason, it pays to have healthy lines of communication with a business broker and give them as much information as you can to help them help you find or sell a business.
2. Industry know-how
Just as a real estate agent has the processes of advertising (copywriting, graphic design, printing, inspections etc.) streamlined, so too does a business broker. While you can do these things yourself, using a business broker can provide you ease of mind, takes the pressure off for you to plan your next move on from the sale of the business, and can often help find a wider range of potential buyers, while finding the best buyers more quickly.
3. A network of contacts
Working in the industry, brokers are often in contact with those who may be interested in your business, saving you time seeking for potential buyers.
4. The gift of the gab
One of the biggest advantages of an agent, whether it be a real estate agent or a business broker, is their experience and ability in the negotiation and transferal of a property/business. As much as people think they have these skills, this is what an agent does! They have figured out how to read people and evaluate what drives buyers/sellers to in turn drive the trajectory of a negotiation in favor of their client. On top of this, they know what steps to take in regards to contracts of sale.
For more information about business brokers in Australia, visit the Australian Institute of Business Brokers website.