The Best Business Brokers for Small Business

Best Business Brokers for Small Business

There are thousands of business brokers for small businesses across Australia that all claim to do the same thing better than the others. 

That is; to sell your small business.  

The good ones will tell you what it’s worth, the other ones will tell you what you want to hear in order to sign you up.  

So, as a small business owner, how do you find the right business broker for your small business?  If you have a small business and are thinking it’s time to sell, then this article is for you.  

In this article, I discuss the different categories that business brokers can specialise in, and how to be confident when assigning a business broker to sell your small business.

My name is Mick Godwin and I am a professional business broker that specialises in small to medium-sized businesses that have a market cap value, ranging from $500,000 – $5,000,000.  

I’ll tell you why specialising in a market bracket is important a little further on in this article, but for now, it’s important to realise there are two types of business brokers.  

Those that specialise and those that don’t.  

The Best Business Brokers for Small Business

The term small business can mean many things to many people and is also defined differently by different regulatory bodies in Australia.  ​​ 

However, the Australian Securities and  Investment Commission (ASIC) defines a small business if it satisfies at least 2 of the following:

  • the consolidated revenue for the financial year of the company and the entities it controls (if any) is less than $50 million;
  • the value of the consolidated gross assets at the end of the financial year of the company and the entities it controls (if any) is less than $25 million; and/or
  • the company and the entities it controls (if any) have fewer than 100 employees at the end of the financial year.

Now, when I come across a ‘small business’ that has 80 employees and is doing $45 million dollars in revenue annually, I pass that straight to the mergers and acquisition team as it simply is not a small business in my industry.  

But it gives you an idea of how broad the term ‘small business’ is.  

To help me help my clients, I have my own definition of business categories.

Regardless of entity structure, for example, company, trust, partnership or sole trader, a micro business has less than 3 employees including the owner, less than $250,000 in annual revenue and a market valuation of less than $250,000.  

If this is you, then don’t fret, you probably have a very sellable asset.  

Whereas I define a small business as a business that has four or more employees (non-family), has revenue between $500,000 and $10,000,000 and a market value cap between $250,000 and $5,000,000.

Why a Business Broker Should Specialise

Think of someone who’s interviewing for 4 roles at the same company; one role is in marketing, another is in finance, the third is for human resources and the fourth interview is for operations.  

Assuming the company has the slightest bit of competence, they would reject this generalist applicant for all four roles as there would be better applicants who specialise in each role.  

Our keen job hunter could probably do all four roles, but he or she wouldn’t know the role innately enough to be anyone’s trusted advisor and would likely lack the strategic agility that comes with years of learning a specific niche role of industry.

Now, take that mindset and apply it to the sale of your small business. This analogy should help you identify the best business brokers for small businesses.

Remember, business brokers don’t have an all telling platform that we can log into and enter an address that will advise on an acceptable selling price like real estate agents do.  

Along with learning the art of deal making which usually involves keeping a sale on track for at least six months, we need to read financial statements, understand cashflow challenges and how the debtors and creditors affect the business.  

We need to talk the language of accounting, finance, strategy and be humble advisors to both the buyer and seller for sustained periods of time.  

On top of all this, each industry has different important factors to discuss that are specific to the industry, with those elements changing again as the size of the business increases.  

The buyer looking to buy a job for $100,000 speaks a different language from an individual or group that is investing $5,000,000.  

Those guys aren’t buying a job, they’re focusing on strategy and opportunity so to maximise the purchase of your business.  A good business broker needs to be able to have that discussion.

Finding the Right Business Broker for Your Small Business

Despite the importance of specialisation, it’s not the be all end all when it comes to choosing a broker.  Some brokers will do exceptionally well when faced with a new industry that is in the same market cap value range they’re used to.  

For businesses that are under $1,000,000, you should look to other qualities as well as specialisation.  

In this article, I discuss other ways to know if the business broker is right for you.  I believe an important attribute when identifying if the business broker is right for you is if they are advising you on the information you need to hear, instead of what you want to hear.  

If your business is a two man operation, affords you a comfortable lifestyle and makes you $150,000, then it’s good in many ways, but it simply isn’t worth $700,000.  Regardless of what the other guy said.

If you want to know more about what’s involved with selling your business, book an appointment here or email me directly at the details below. 

In this call, I’ll tell you exactly what information you need to understand where your business sits in the market so you can make better business decisions when it comes to selling your business.

I’ll be happy to help you become clear on your next step to exit your business successfully.

Mick Godwin

0416638154

Email mick@mickgodwin.com.au

How To Choose A Business Broker?

business broker
business broker

Business brokers. Who are they, what do they do and how to find the right one? 

Unfortunately, people aren’t as clear about the role of business brokers as they are to other broker agents despite there being thousands across the country.  

In essence, business brokers usually act as selling agents for business sales. Just in the same way real estate agents operate in real estate sales and stockbrokers act in share sales.  

So what are the requirements to become a business broker, and how do you know if you have the right one for you. Of course, there are probably more considerations than you think when appointing the right business broker to sell your business. 

Still, it’s essential to consider that sometimes what the business broker doesn’t say can help you decide.

My name is Mick Godwin, and I am a professional business broker.  

I speak with buyers and sellers all day, providing them with guidance and advice on everything from identifying different value drivers, determining the correct method for valuation, managing a sale and assisting buyers on what type of business model is best for them.

The role of a business broker

A good business broker needs to wear many hats when managing a sale. In the beginning, their role is to listen to the vendor (seller) to understand their business. 

Depending on whether the broker is listening or not can sometimes be the first indicator of understanding if the broker is right for you, as some business brokers use this time to tell you about themselves. 

If they’re doing this now, you can bet they’ll be acting for their own interests during the sale of your business. 

We’ve all heard of board members giving themselves huge bonuses and leaving shares holders with nothing, or politicians helping their friends and not serving their constituents. It’s the same thing. 

Once a broker understands your business, they can then give recommendations on a price that the market is willing to pay, not a price you want to hear (but hopefully, it’s the same amount)! 

Finally, they manage the sale, talk to buyers, and assists solicitors through to settlement so you can continue running your business.

Is your business broker qualified?

However, just because your broker has a business card doesn’t mean they are perfectly qualified for the role. 

Did you know that in QLD, you can sell a business by doing a real estate course! 

This is a massive floor in our system and one that the Australian Institute of Business Brokers (A.I.B.B.) is working hard to rectify. 

Being a member of the A.I.B.B., which I am, is an excellent way to know if your broker is qualified. 

The A.I.B.B. stipulates that all brokers must adhere to continuous professional development (C.P.D.), resulting in members having a greater level of knowledge in business, strategy, operations and ethics in selling. 

If you learn that your business broker is usually a real estate agent, you might want to look around for a qualified business broker. 

If an agent doesn’t specialise in an asset field, they won’t know if their offers are high or low.

How to find the right business broker

Business brokers are everywhere. 

If you know anyone who’s sold a business, you can ask them. Sometimes your accountant or solicitor may be able to recommend one. If you’re reading this, then your best option is to get in touch with me here. (Link to Calandy)

Regardless of how you come across a business broker, I would strongly recommend you at least talk to 2 to 3. 

Pick the one that seemed most interested in what you had to say and then follow their requirements for determining the value of your business. Just be wary; any broker offering a free appraisal probably doesn’t value their time or skill set too high. 

But if you’re serious about selling and getting the best price the market will allow, $500 is money well spent when selling a business worth hundreds of thousands of dollars.

If you want to know more about what’s involved with selling your business, call or email me directly at the details below. 

I’ll be happy to help you become clear on your next step to exit your business successfully.

Mick Godwin

0416638154

Email mick@mickgodwin.com.au

5 Top Business Brokers On The Gold Coast

Finding The Right Business Broker

This article has been written to help you find the best business broker on the Gold Coast so they can sell your business at the highest price.

I have provided an overview of some of the top business brokers on the Gold Coast. Some of the reviews are more detailed than others as some of this information is hard to find, but by reading through the review you will have a better understanding of the industry on the Gold Coast.

Regarding fees, the industry standard is 8% for businesses under one million dollars and reduces in percentage the higher the business value.

Fees are an important factor in choosing a business broker because my experience tells me that the lower the fees the lower the chance you will sell your business at the highest price, with the least hassle in the shortest time.

ABS

ABS Business Sales

According to their website, the team at ABS focuses on the South East QLD area with offices in Brisbane and the Gold Coast.

This means they should have good local knowledge and contacts but usually means their network coverage and connections are limited as they are not collecting buyer and seller details from brokers all over the country.

The firm also works in the commercial leasing space and commercial real estate, giving them a broad range of services around the commercial categories of selling and buying.

One weakness would be the website, it seems a bit out of date.

Regarding commission fees, my understanding is they work off industry standards which start at 8% and reduce in size as explained above. This demonstrates confidence in what they do.

Website: https://absbusinesssales.com.au/

Benchmark Business Sales

Benchmark Business Sales & Valuation

Established in 1999, it shouldn’t be news to those who already follow me, but Benchmark is the firm I have the most experience with and work very closely with.

Like all firms, they have their strengths and weaknesses. However, I can say that overall, the brokers I’ve worked with at Benchmark seem to have a very high level of knowledge when it comes to understanding the mechanics of business, as opposed to just trying to sell a product.

This is critical and sometimes overlooked by vendors as usually, a buyer becomes far more engaged when the broker is knowledgeable about the business they are selling and can address any concerns from the buyer.

Fees are reasonable, and they do have three categories in order to assist each vendor with the required level of service. The firm’s coverage is national and many of the brokers are involved with the Australian Institute of Business Brokers.

Website: https://benchmarkbusiness.com.au/

The Finn Group.

The Finn Group

The Finn Group has been established for nearly 20 years and according to its website is Australia’s number one brokerage. Though, I would expect every firm to have that on their website.

I have spent some time with The Finn Group so I do know some particulars first-hand. For example, the listing and marketing fee can be around $2500 plus a weekly direct debit payment for advertising.

When I was involved, this was usually around $150 – $300 per week. So, although the listing fee was slightly less than ABS and Benchmark, your overall cost can add up if the business is on the market for some time.

Be careful when signing up for ongoing costs.

Website: https://thefinngroup.com.au/

Smart Business Sales

Smart Business Sales

Although I have had no experience or interaction with this company it seems they are more an online firm than a traditional broker firm.

Although not interacting with this company, I definitely have had a lot of experience with software valuation tools like the one shown on their website. Unfortunately for the unsuspecting seller, these valuation tools usually end up producing a report that’s not worth the paper they are printed on.

A quick look at the businesses they have for sale and it seems they have signed a deal with a couple of head franchisors so almost all the businesses they have listed are not actual businesses, but franchise opportunities for someone to buy.

The website looks like it puts a great effort into capturing your data for marketing purposes but not promoting itself or its brokers.

Website: https://www.smartbusinesssales.com.au/

Link Busines Sales

Link

Link is one of the better-known brokerage firms. They are a foreign-owned firm with both national and international based brokers. The website is better geared to the business seller and buyer as you can see three options straight away on their website; buying, selling and valuations.

I like this approach as it’s clear and simple, with no long-winded sales copy and buzz words that don’t really mean much. They do have an appraisal calculator on their website, these are fine for curiosity purposes but as I said previously, any type of value software is not worth the time.

I would be wary if this was their approach to understanding the value of your business. I have dealt with one of the brokers from this firm and he was nothing but helpful. We were working on bringing his seller and my buyer together. The deal never happened but that particular broker was helpful.

Website: https://linkbusiness.com.au/

Next Steps

Whichever firm you go with will depend on a few things that are unique to your circumstances. The main thing to remember is it’s not just the firm’s, or the broker’s reputation you can rely on. The level of success you and your broker achieve in the sale of your business will be largely dependent on a combination of the broker, the brokerage firm and how accepting you are of their advice or opinion.

No point going through the entire process butting heads and questioning everything they do. If they seem they are not the right fit for you and your business, find a broker who is.

If you would like to know more about what’s involved with selling your business, then call or email me directly on the details below. I’ll be happy to help you become clear on what your next step is to successfully exit your business.

Mick Godwin

Business Sales Strategist

0416 638 154

Email – mick@mickgodwin.com.au

Book a 15 minute chat

Benchmark Business Sales and Valuations

1300 366 521

https://benchmarkbusiness.com.au/

What are the Business Broker Fees when I sell my business?

business broker fees

“How much do you charge? Or, what are your business broker fees?” are common questions every broker receives and it’s the one question a good broker can’t possibly answer until they understand the business that they are selling.  

Would you be comfortable getting quotes from a builder to build your house without them having any idea what he (or she) is building?

How big is it, where is it located, and does it have a pool or no pool?

If a builder gave me a fee before knowing anything I would surely run the other way.  

But for some people, they expect a broker to answer that question before ever understanding the business.  

And as a broker, if broker fees are the only thing a vendor wants to know, then I politely say that I can’t help them.  

No one wants to be in a race to the bottom and that vendor doesn’t really want to sell their business professionally.  

All they want is to be validated and think they’re getting another bargain.  

Ironically that bargain will end up costing them hundreds of thousands of dollars.  

Keep reading and I’ll explain some of the reasons why.

What Are Your Fees?

My name is Mick Godwin and I am a professional and established business broker.  

I work with some of the best performing, award-winning brokers in the country at Benchmark Business Sales and we often get questions about our business broker fees before we even know a client’s full name.  

Sure, there are some industry averages we can point you to when it comes to commission. 

As the majority of vendors have never been involved with the sale of a business before, they can mistakingly make incorrect comparisons with selling real estate, which usually is around 2% – 3%.

For example, an average industry percentage fee is usually about 8% for under $1million and 6% for over $1million.  

Generally, there is a minimum fee, which can vary from $20,000 – $30,000.  

This is because the work involved is usually the same regardless if the business is selling for $100,000 or $500,000.

Why are business broker fees more expensive to sell than real estate fees

Below are some reasons (definitely not all) why business broker fees are higher than real estate fees; 

  1. Selling a business takes far longer than real estate, often six months or more.  
  2. There is far more expertise in successfully selling a business than real estate. For example, financial literacy and capital requirements to operate, operational or industry-specific knowledge and the strategic advantages some buyers might be after. 
  3. We don’t have the luxury of entering an address into some software and getting an appraised price that people will accept after 1 weekend of experience.
  4. There is a large portion of real estate buyers whose purchase decision is based heavily on emotional thinking rather than rational thinking; for example, they can see their kids running around the backyard.
  5. A business sale usually involves multiple accountants, solicitors, directors and other external parties that can influence decision making.   
  6. We help parties negotiate difficult clauses that have been introduced by an overzealous solicitor.
  7. We have a sales mindset for walking buyers down the sale funnel over a period of months and sometimes years.  
  8. We need to understand a business intimately to handle any objections that arise.
  9. There is a higher risk of buyers not receiving finance for business loans, reducing the buyer pool.

How to find the right business broker

When talking to a broker about selling your business, look for those brokers who want to learn about your business.  

A good broker facilitates conversations in a way where they are always asking questions to learn more about both seller and buyer motives.  

There aren’t too many guarantees when it comes to a successful sale that achieves the highest price, with the least hassle and in good time, but one thing is for sure; successful sales aren’t done by the cheapest broker.  In fact, you’ll find that no sale at all is normally achieved by the broker who discounts their value to get your business.  

To summarise, Benjamin Franklin famously wrote, “the bitterness of poor quality remains long after the sweetness of low price is forgotten”.  Which very much applies to poor quality service.

If you would like to know more about what’s involved with selling your business, then call or email me directly on the details below.  I’ll be happy to help you become clear on what your next step is to successfully exit your business.

Mick Godwin

0416638154

Email – mick@mickgodwin.com.au

Benchmark Business Sales and Valuations

1300 366 521

www.benchmarkbusiness.com.au