Consider the benefits of hiring a business broker
If buying a new home i s generally regarded as one of the most stressful decisions of your life, that stress can be magnified ten- fold when it comes to buying a business. The investment is often larger, and you’re investing not only in an asset, but often in your future income and financial security.
That said the independence and earning potential that come with owning your own business often makes the stress entirely worth it. The trick is to make the buying — or selling — process as straightforward as possible. This is where a business broker comes in.
A good broker can take the emotion and stress out of the contract process by acting as an intermediary between purchaser and vendor. They will have the knowledge and experience to be able to manage all aspects of the deal from the lawyers, accountants and bankers to lessors, franchisors and council processes where necessary.
In many respects the broker acts as a business mentor to both buyer and seller. They will know all aspects of the business for sale, and be able to advise on where it is performing well and where it may need extra work, or where a small change by the buyer may immediately improve profits, much as a commercial or residential real estate agent would advise a client on the key features of a property.
On top of that a broker can help a prospective purchaser find a business that suits their capital investment as well as their knowledge base and skills.
Anyone looking for a business broker to assist them should look for one who has excellent knowledge and experience, as well as the ability to empathise with both vendor and purchaser, understanding their goals and requirements from the deal. Ideally a good broker should also have a strong background in business management themselves. Though they are working for the vendor to get a good sale, it is important that the broker is also able to reassure the purchaser and be able to answer, honestly and accurately, any of their questions. After all the purchaser of a business may well one day become a vendor.
Get rid of rubbish, quit old stock, tidy up and document the systems. In some cases, make sure you’re banking the money rather than spending, so the books can show what is really happening.
Also just like buying a house there can be many good reasons a healthy business is sold, from simple boredom to wanting to make the most of new opportunities, as well as break- ups of personal or business relationships.
Think about where you can take the business in the future. It is that future you are buying. How can you grow the business? How can it be improved?
Can you imagine yourself actually working in the business every day. It may not be all beer and skittles. Remember, the business owner owns the business 24/ 7; you can’t knock off at 5pm on a Friday and forget about it. It is a big responsibility.
The upside of buying a business: you can purchase yourself flexibility and independence in your working life; your income is a direct result of your hard work rather than having an employer benefit.
Greg Clarke is Harcourts NZ GM