Business Brokers: Should You Be Selective?

Got Inventory?
There are plenty of reasons to be selective, the most notable one is that you want to be able to sell something!
We’ve launched a coaching program specifically tailored to Realtors that want to sell businesses and to novice business brokers.
If you’d like to learn more, email me at joe@WorldwideBusinessBlog.com
Why Don’t Businesses Sell?
Well, why DON’T businesses sell??? That’s the $64,000 question, isn’t it? If you’ve been following this blog for any length of time, you may have read this post about the many reasons that an estimated 80% of businesses that come to market don’t sell. But the #1 reason is that they’re priced too high above value. That fact tells us that we have to know what the business is worth before we can take on an assignment to sell it with any confidence.In our business, selectivity pertains to two specific aspects. The first is sell-ability of the business. The second is compatibility of the sellers.
One mistake I did NOT make when I got started was taking a selling assignment without doing a valuation. Once you have a valuation, you’ll have an idea as to the sell-ability of the business at the price the seller wants.
Anyone who has taken our course to become a business broker knows how we approach a valuation and the way we deal with the client in relation to that valuation. Done properly, the process will significantly mitigate the chances of the client being unhappy if the business, being priced too high, doesn’t sell.
Why?
Because we “warned” them – or rather our valuation did!
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Our course, “The Basic “How-To” of Becoming a Business Broker“, teaches how to market and sell businesses.
Become a Professional Business Broker…
Almost every business is sell-able. Even if a business is not profitable, if it has assets – hard or soft – those assets are worth something to somebody. In such instances, the main reason a business won’t sell is the price.The Other “Issue”
But price isn’t the only aspect to consider when contemplating accepting a selling assignment. Another is the business owner.
Granted, it’s often difficult – even impossible – to tell, during the initial stages of the process, whether a person will be difficult to work with. But the phase of the process that works for us involves the valuation.
When we meet with a potential selling client, we clearly state the need for a valuation and that we won’t accept an assignment to sell a business without one. During this meeting, we also tell the owner that it doesn’t have to be us that does the valuation but one must be done. (We are able to slide into the conversation that we do valuations all the time and that we’ll probably be a lot less expensive than the alternatives.) We can begin to get a sense of the seller’s personality during this meeting and an idea if working with him or her will be tolerable. But we’ll have several phone conversations and at least one more meeting before we get to the point of deciding whether to take the selling listing or not. And it’s during this period that we’ll be able to see what we’ll be getting into. Why? Because it’s when we deliver the valuation of the seller’s business that we get to see the REAL seller.The Bottom Line
Selectivity is important – but so is inventory. In the beginning of your career as a professional business broker you may be reluctant – as I was those many years ago – to be too selective. After all, you want – you NEED – listings. But even at that stage you can be “selectively” selective by taking a couple of long-shots but avoiding assignments that – from wildly unrealistic prices to obnoxious sellers – will just wear you down. With the amount of opportunity unfolding in our industry, life simply too short to work for nothing – or for knuckleheads! Once you get a couple of deals in the sold column, you’ll be FAR more confident in being selective. My experience when I started Worldwide Business Brokers should give you ample proof. If you have any questions or comments on this topic – or any topic related to business – I’d like to hear from you. Put them in the comments box below. Start the conversation and I’ll get back to you with answers or my own comments. If I get enough on one topic, I’ll address them in a future post or podcast. I’ll be back with you agin next Monday. In the meantime, I hope you have a safe and profitable week.
Joe

The author is the founder of Worldwide Business Brokers and holds a certification from the International Business Brokers Association (IBBA) as a Certified Business Intermediary (CBI) of which there are fewer than 1,000 in the world. He can be reached at joe@WorldwideBusinessBlog.com