Successful female entrepreneur with a new online business working from home on her computer typing in data
There are many different channels you can go through to sell your e-commerce business. But what do you look for in an effective business broker? How do you know if they’re a good fit and have your best interests at heart? How do you know if they have the experience and credentials to help you?
Here are some qualities to look for in a broker.
Willingness to Help You Prepare
According to Practical Ecommerce, listing your business without sufficient preparation is a major mistake.
In addition to financial statements, you need to prepare other important pieces of information, such as staffing, product segmentation, industry trends and so on. This will form the foundation of an effective prospectus.
An experienced broker will be able to guide you in preparing a prospectus for your business.
Is the broker interested in learning about your business? Are they taking the time to learn about why you’re selling, and what you’re looking to achieve?
They should be using this information to form your strategy. If they’re only asking for the sake of formality, and they have no intention of helping you reach your goals – both financial and non – you need to look elsewhere.
With the right information in hand, an experienced broker will know how to promote your business to the right prospects. Most of all, they will keep your interests at the forefront throughout the sales process.
Typically, a broker will charge a seller anywhere between 10 to 15% of the final sale value, depending on the size of the business.
Is your broker going to charge you a fair value? If they charge too little, you have to wonder about the quality of the service, and if they charge too much, their service may not be competitive.
Look for a broker that doesn’t overcharge or undervalue their services.
Many entrepreneurs have an aversion to hiring a broker in the first place.
You may be an expert in building businesses, but when it comes to selling, you may not be as experienced.
A baseline requirement for a good business broker is experience. Look into the credentials of the broker. How many sales have they successfully completed? What types of businesses have they sold in the past? Do they understand the e-commerce niche?
Figuring Out Your Valuation
Many sellers make mistakes related to pricing their businesses because they base it on instinct. Even if you think you know how much your business is worth, you shouldn’t create a listing without the proper data.
A qualified broker will help you determine your business valuation strategically so that you drive maximum interest without turning away prospective buyers unnecessarily. It is in the broker’s best interest to value your business accurately, as they won’t get paid if you don’t.
Negotiations will also go smoother if you can justify the asking price with accurate documentation.
A Well-Defined Process
A skilled broker has a process they follow to the completion of a sale. They know what to expect, what to do, and how to secure a desirable outcome for the seller.
Ask questions. Is the broker willing to give you answers? Do they seem knowledgeable with regards to your industry and business model? Can they explain their process from start to finish?
You need to be fair with the questions you ask, but any broker worth their salt will be able to walk you through any concerns you may have around the sale of your site.
Is the broker legitimate? No matter the service, you always need to ensure that the provider isn’t out to make a quick buck and then disappear.
Can you find relevant information on their website? Is their About page fully fleshed out? Can you find team profiles? Do they have a physical address and company name? Are they a part of credible industry associations, like the International Business Brokers Association?
Do your due diligence. Following the other steps defined herein should help to confirm the legitimacy of a given broker.
Listings Being Managed By The Broker
How balanced is the broker? Are they ready to take on your listing at the snap of a finger, or are they balking at the thought of taking on one more business?
Legitimate brokers should be willing to reveal how many listings they are overseeing. If they aren’t working on many deals right now, they might be inexperienced or disreputable. If there are a lot of deals up in the air, it is unlikely that they will be able to give your site the attention it deserves.
Use this information to determine the broker’s selling abilities. The person representing you should have experience in selling e-commerce businesses, and not be too eager take on new projects merely because they can.
Filtering and Screening
It is unnecessary to talk to everyone that’s interested in buying your business, as this will be a major time cost. This can also result in breaches of confidential information that would make the sale of your website a difficult proposition.
A good broker will have a filtering and screening process in place to ensure that potentially poor prospects don’t get to the next stage in the buying process.
Ideally, you’ll want to talk to a few qualified leads and not have to communicate with and follow up with everyone that shows the slightest bit of interest in your business.
A new listing doesn’t always take on a life of its own. If a broker is unwilling to provide you with details around their promotional strategy, it may be an indicator that they don’t have any procedures beyond creating a new page on their website and sending out a quick email to attract the attention of buyers.
Ask what steps they will be taking to promote your business, from advertising to marketing. If the broker has a good reputation in your industry and they are well-connected, it’s a good sign that they know what they’re doing. But don’t be afraid to probe a little.
Also look into how they plan to maintain confidentiality in the promotion process.
If the broker has your best interests at heart, they will keep sensitive details confidential, especially to staff, customers or competitors. An experienced business broker will make this their top priority.
Look into whether they require interested buyers to sign non-disclosure agreements, and if their current listings contain information that should have been kept confidential (if you are able to view them).
Does the broker actually have relationships with buyers, or do they just have a generic mailing list that the listings go out to?
A small, qualified network of buyers is often better than thousands of people who have only shown passing interest in buying someday.
The mettle of a business broker is tested by how well they’ve cultivated relationships with qualified buyers over the years. Ask open-ended questions around their process to gain a better understating of how they go about promoting a business for sale.
Length of The Sales Process
A good broker will provide you with a rough timeline for the completion of the sale based on prior sales. This is a moving target, as it’s subject to market conditions, the size of the deal, and complexity.
But don’t shy away from asking your broker to get a rough estimate. Between 30 and 90 days is about the average, but make sure you are aware of the factors that can affect a sale.
If your broker tells you that you don’t need legal assistance, they aren’t doing their job properly. Asset purchase agreements should be used on all sales, so be sure to ask about this.
Qualified brokers will assist in the drafting of the asset purchase agreement for a sale, as well as refer you to legal counsel for advice when necessary.
Is the broker a freelancer or a full-time employee? Do they work from home, or are they employed at an established company?
If they aren’t working full-time, it’s a good sign that brokering is not their primary job. You want to be represented in a professional manner, and you want to work with brokers dedicated to helping you achieve your sale objectives.
Seek out a broker who is with you from start to finish in the selling process.
Now you are better prepared to find the best e-commerce business broker for the sale of your website.
Don’t take the sales process too lightly. Good representation makes a tremendous amount of difference, as the broker will be able to walk you through the entire sales process and help you reach your goals.
You’re going to be trusting them with a large sale. You might as well do you part to make sure there’s a good fit so you can get the results you’re looking for.