Business brokers are intermediaries specializing in helping individuals and/or companies buy businesses and helping business owners sell their businesses. While there are some similarities between business brokerage and real estate brokerage, the two professions are fundamentally different. Almost everybody who can afford it will be involved in buying a house at least once in their lifetime. Very few people however buy businesses.
On average, a business broker might show a business to hundreds of people before finding the buyer that represents the right fit. A business for sale is very intangible, so the decision to purchase it is both an emotional and rational one. Unlike real estate agents, business brokers have to interview potential buyers and assess their personalities. Once a business broker identifies a motivated buyer that can potentially take over the business and improve on it, he/she has to inspire the buyer to do more research on the business and eventually purchase it despite the financial risk the buyer will be taking and the fear that the buyer feels about this risk.
For these reasons, a successful business broker is not a salesperson trying to push his businesses on any potential buyer inquiring about them. A good business broker pulls the right buyers to the company available for sale.
So, as a potential buyer, how should you deal with business brokers when you are inquiring more information about a business?
Show a very high motivation, technical skills and financial capabilities. Since more than 90% of potential buyers never buy a business in their lives, you have to distinguished yourself from the tire-kickers by showing that you have the enthusiasm, the skills and the money to buy a business and make it successful.
- Motivation: because buying a business is not an easy task. People who are not extremely determined and /or who lack the necessary patience generally abandon the idea of purchasing a company when it seems too hard. Experienced business brokers understand this and try to weed out unmotivated buyers very early in the process to avoid wasting their time and the sellers' time.
- Technical skills: Business brokers know that a buyer who doesn't know how to run a particular business has very little chance of completing a deal. Generally, such a buyer will be paralyzed by fear right before signing the closing documents. Fear of the unknown and hesitation coming from the lack of self confidence almost always prevails before a high financial commitment such as the purchase of a business. For these reasons, business brokers will generally weed out potential buyers who do not have the necessary skills to operate the business.
- Money: Unlike buying a house, buying a business requires money in the bank. Financing for small business purchase is not available for most businesses. Most financial institutions do not finance goodwill, which is generally the largest part of the business value.
If you are a buyer who has the motivation, the technical skills and the necessary money to purchase a business then let the broker know and you will get all the cooperation you are expecting.
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