Just like traditional business owners, online business owners will need business brokers when it's time to sell their businesses. The type of broker who deals with buying and selling online businesses is called an internet business broker. They know how to facilitate and manage all online business transactions.
But how do you tell that a is legitimate or not, especially if you are using brokerage services for the first time? Yes, you can depend on referrals or check through the list of International Business Broker Association (IBBA). But if you’re still having doubts, here are signs to tell that you’re dealing with a bad broker.
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Whether you are looking to sell or buy an online business, you’ll benefit a lot from using the services of business brokers. Using a reputable business broker means that you’ll get the much-needed help in business valuation as well as marketing.
Also, legitimate brokers have administrative knowledge, and so they will help you in ensuring that all laws and regulations are followed during the selling process.
But with the increased number of online businesses, a considerable number of people and agencies claiming to provide valuable brokerage services have emerged.
While many of them provide valuable and excellent services, some are out to steal people of their hard-earned money.
But how do you tell that a business broker is legitimate or not, especially if you are using brokerage services for the first time? Yes, you can depend on referrals or check through the list of International Business Broker Association (IBBA). But if you’re still having doubts, here are signs to tell that you’re dealing with a bad broker.
1. What They Say Doesn’t Match Their Track Record
Many businesses market their services by showing their track record, and business brokers are not exceptional. And there is nothing wrong with that. However, you should be concerned if what they tell you does not reflect the situation on the ground.
This means that if a business broker claims to have sold million-dollar businesses in the past year, they should have financial records to prove that. If they claim that they specialize in selling your type of business, again, they should show you the proof.
The easiest way to know whether a business broker is worth their salt is looking at their recent transactions and referrals. If they are not willing to provide such information, you might need to think twice.
2. They Don’t Give You Detailed Business Valuation
Anyone can claim that they can give you a quote for your business value. Some brokers provide an estimated value for your business after asking you a few questions through a phone call. Others will look at your financial statements for a few hours and then give a verbal estimate or even email you a number. All these are indications of a bad broker.
You deserve detailed information when it comes to business valuation. You certainly didn’t put years of sweat, blood, and tears into building a brand only to have it reduced to just a number by a bad business broker.
A reputable business broker should provide you with a detailed, comprehensive, written report on your business valuation.
Sometimes you may not agree with everything, but you should at least be satisfied with the process they used and the effort they put in during analysis.
3. Inflating the Value of a Business Deliberately
Many online business brokers inflate the value of a business deliberately as a way of attracting buyers. Some might suggest this practice to you when selling your business as a way of generating more interest in your business.
But nowadays, buyers do due diligence, and they can easily find out if a business has been overstated. In such cases, sellers have a hard time trying to explain to potential buyers why their business value was not correct.
4. They Are Disinterested in You or Your Business
A good business broker should take time to dive into your business so they can understand it well. They should ask all the tough questions so they can know what makes your ecommerce store unique and valuable.
It should concern you if a broker is not interested to know about your business, the reason for selling it, and what you want to achieve after your business sale.
You should only hire a broker who has a great interest in your business and your goals.
5. They Allow Sellers to Control the Process
If you’ve sold a business before, then you know some several steps, and details must be involved before closing a deal. Bad business brokers don’t involve themselves in this process and let sellers take control.
Your business broker should be the authority in the selling process and should guide you through the selling process. A reputable broker should give a step by step guide of the selling process and then work with you to make sure that you get the most out of your business sale.