Using Advisor or Business Broker Help in Buying a Business

I would strongly recommend getting advisor or business broker help to make your decisions much easier during your business purchase hunt.

Advisors and Business Brokers help a buyer tremendously when on the hunt. They also provide much needed insight for when you find a viable business fitting the criteria model you have made in your prep work before starting the hunt.

I want to explain to you not only the importance of Advisor and Business Broker help, but the differences between them and some nuances you should be aware of.

Business Broker Help Reality Check

Before we go too far, it is important for you to know that Business Broker help comes in 2 flavors. There are Brokers that represent sellers and Brokers that you hire to help you find and buy a business.

Brokers that are assigned to you by a brokerage while you are searching their database are a help, but they are obligated to think in the best interests of the people who are actually paying them... the sellers.

Don't turn your back on them because of this. They will most certainly help you find a good match for a business in their database. Most will also give you very good advice to help you successfully move through the buying process too.

Just keep in mind that they are helping you out but since you are not paying them, they have no allegiance to you and you do not have full reign to get them to do your work for you. Don't expect it, it won't happen.

Just think of your own desire to help people. Being helpful only goes so far when it turns out to be a very demanding person you are helping and they aren't paying you a dime.

That's why being a good buyer is so important. The more you are prepared and know the process the more they will help you because it won't be a burden on them. Have your funding aligned, know how to truly find a good business to fit your needs, have a handle on business valuations and have a background on letter of intent procedures and the due diligence process.

If you are not going to get Business Broker help by hiring one, then you absolutely need to have all of the above ready to go so that the "free" Broker will be more inclined to give you assistance.

Business Broker Help- Hiring One

On the other hand, you can take another path to further ensure your success in buying a business.

In this case, you would actually hire a Business Broker to help you determine the best industry and location for you to be in, look for the businesses for you, present them in a light that makes sense to you, determine a fair market price range and help you through the due diligence process. They can often also help in securing funding for the purchase or negotiate seller based financing.

This kind of help can be paid for in a variety of ways. Sometimes a small upfront fee is paid and then a small percentage of the purchase price, say 1%-3% would be paid upon closing a deal. The other way is an hourly fee. Something in the $125-$200/hr range would be acceptable. It would be rare to get someone to work on a flat fee since it would not be in the Broker's best interest to take that kind of risk on a possibly over demanding or ill prepared buyer, but it is possible.

Although the first payment method above is the cheapest way upfront, sometimes it's not the best way to go. Most small businesses require the same amount of work to be done regardless of the asking price so this would make a Broker lean towards a more expensive set of businesses and skew them from looking completely at you best interests.

An hourly rate is most likely the best case. The key here is your preparation. The more prepared you are, the less work the Broker will need to do. It can mean the difference of a $3000 bill rather than a $6000 bill to get things done right and get the perfect business for you.

Advisor and Business Broker Help- Do I Really Need Them?

If you have already bought a business before then maybe you don’t need help.  Although it wouldn’t hurt to get a second opinion on businesses you are seriously considering purchasing, especially when determining a fair market price.

If you have never bought a business before, it really is a good idea. A business buying savvy Advisor or a Business Broker can give you a lot of insight on how a business works and how it is doing with very limited information. This is a good thing to have on your side especially when initially looking at a business to see if you should bother with it at all. Obviously assistance in making an initial offer and during due diligence is a good idea too.

Once you buy the business, a Business Advisor will truly come in handy to help you settle into your new venture quicker and with better success.

Be smart and do not buy a business and expect to know everything and do everything. Plan on sticking to what you know best and get help with everything else until you either learn it, or permanently hire someone to take over the work. Taking on too much will quickly put your new venture into a hole.

Advisor and Business Broker Help- Where do I Find Them?

I would start with asking other business owners you know if they could recommend someone. If this is not possible, ask attorneys or accountants. I would also recommend doing a strong internet search specifically for the following key words “business broker help in buying a business” or “business advisor help in buying a business”. From the search results, look for one in your local area. 

You can technically hire this kind of help from anywhere as long as you don’t need them to physically look at the businesses with you.  Be prepared to get in touch with a few. You really need to feel comfortable with this person.

Keep in mind that using a Broker that came directly from a listing is OK, but they are really representing the seller more than anything else. With that said, some of the larger Brokerages will actually assign a Broker to you that is there to help you out but you need to ask how this works on a case by case basis.

Advisor and Business Broker Help- When Should I Hire?

That’s very simple. As soon as you have performed your prep work, you should look for the proper Broker or Advisor to help you out.  Services should be used through the due diligence period. They really aren’t needed following that unless you are looking for help with the business after the purchase from an Advisor.

Advisor and Business Broker Help- Some Final Notes

First of all, please keep in mind that a Business Broker and a Real Estate Broker are completely different animals. One knows property and buildings while the other knows businesses. Do not waste your time and money (or even if it is free) with getting business purchase advice from a Real Estate person.

Do yourself a huge favor and do not employ an Accountant or Attorney as your Advisor. Everyone has their place in this process and this is not the one for either of these professions. Although these professionals are needed in the process and should have experience in business buying/selling procedures, the majority are not qualified, nor do they have the time, to be a Business Advisor to you. If that was the thought process you had, forget about it right now. I promise you it will not be money well spent.

One last note: Please keep in mind that any advice you get from a Broker or Advisor is just that; advice. This is your money, time and effort going into the business you want to find and purchase. All final decisions are yours to make.

Being prepared before even starting your hunt is essential. Getting help doing anything you have not done before is just as important.