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

3 Key Considerations When Choosing the Right 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