Whether you provide legal advice, financial planning, insurance coverage, or another service entirely, your clients look to you so they can retire when the time comes. Your clients undoubtedly appreciate guidance from you on their current and future endeavors by helping them forecast business climates in order to maintain a sustainable business. As a professional service provider, looking out for your clients’ best interests is likely your top priority.
What is a Business Broker
A business broker manages the optimization of value and smooth transition of the sale of a business. They do this by partnering and guiding business owners and buyers through the sale or purchase of a business.
Preparation for this process is the key to a successful transition. The earlier in the life of a business that the owner starts building an exit strategy the more likely it will command a premium value. When the process is started years in advance of a sale, a good business broker can formulate multiple strategies to help an owner achieve their objective. For any owner who hasn’t started the planning process, the best time to have a conversation about future planning is right now. Make a recommendation to your client about meeting with a business broker so they can start thinking about long-term goals for their business and their own exit; whether they’re one, five, or even fifteen years out from retirement or selling.
By making this recommendation to your client, not only are you looking out for their long-term interest and success, you’re also providing value over and above what you already provide, making your work and relationship with clients even more meaningful
Transition360 is the only business brokerage firm with a proven and comprehensive program that helps small business sellers and buyers through an optimal transition. This program generates a 93% success rate in selling business that we engage with. This makes us the best Seattle area business broker to use when you want results.
How Business Brokers Provide Value
A business owner’s retirement needs and desires are often closely tied with the successful sale of their company, but few owners understand the function of a Business Broker. Similar to how a CPA is a critically important part of corporate taxes and a good attorney is necessary when writing business contracts, an effective broker can be invaluable in developing a successful exit strategy that supports reaching your short and long-term financial goals. Despite its importance, nearly 75% of business owners do not have an exit strategy. We see this as a huge opportunity for professional service advisors.
The Importance of Planning Ahead
Most business owners know the importance of planning ahead. Whether by forecasting financial results, analyzing new trends, product or services, or leveraging new opportunities, it’s a smart business decision to have a strategy developed. Ultimately, success in business means planning ahead with multiple outcomes in mind.
A business broker can help create a strong exit plan that helps ensure clients maximize business value, which for many owners, will be the largest transaction in their lifetime.
Potential Roadblocks and Setbacks
Deal killers and roadblocks come with the territory once an owner decides to take their company into the market. The biggest advantage to planning ahead is business owners can prepare for and ultimately move through these potential obstacles more smoothly. Listed below are a few examples of these roadblocks that we have seen in our 40-year history.
Time: A major hurdle business owners face when looking to sell their company is lack time between contacting a business broker and the ideal sell date. On average company in the US takes 13-16 months to move from market to closing. This is why we encourage business owners to start developing relationships with business brokers several years ahead of their desired exit.
Financial and Tax Documents: Financial records are not always up to date or don’t adequately reflect revenue, cost of goods and profitability by product, service and/or customer.
Finding the Right Buyer: The process of finding the right buyer and avoiding bottom feeders and time wasters is where an experience broker like Transition360 brings critical value to the table.
Owner Dependency: Some business owners wear too many hats, making the business dependent on them. If a buyer thinks the company is too dependent on the current owner, they’ll look for another business.
Flatline: When businesses have lost steam and are just coasting, buyers wonder what’s going on behind the scenes that caused the owner and the revenue to flatline.
Spouse: Sometimes a spouse is not in agreement that the business owner should sell. Everyone needs to be on the same page before moving forward.
Disbelief: Some business owners do not believe their company is worth anything and do not pursue selling the business because they don’t think the business has assets. Assets are not the only thing with value in a business.
Personal Identity: Some individuals have a hard time knowing what they would do or who they would be if they didn’t own the business. This fear drives them past good opportunities to monetize their business.
Value of Company: In the valuation phase we establish a general range of value for the business, but this is not always enough to achieve an owner’s financial retirement goals. This underlines the importance of planning ahead. Knowing this years before an owner wants to sell allows them to work with a broker to get to the value they need.
By building a relationship with a business broker ahead of your exit, business owners are empowered to manage obstacles, increase business value and make the business attractive to the largest buyer base possible.
Our Business Sale Process
At Transition360, we have developed the 360° Development Program™. This is an exclusive multi-phase service designed from 30 plus years of best practices for selling businesses. Different phases are used for different companies to optimize the transition of a business between the owner and the buyer, consequently eliminating Deal Killers and Time Wasters as early in the process as possible.
We’ll walk through five phases with the business owner that include:
- Phase 1: Business Analysis
- Phase 2: Market Valuation
- Phase 3: Value Acceleration
- Phase 4: Exit Planning
- Phase 5: Business Brokerage
Nationally the Business Brokerage profession averages a 25% closing ratio. Transition360 sells over 93% of the companies we engage with.
With Transition360’s years of experience and reputation for successful transactions we look forward to building a relationship with both professional service providers and business owners to help plan successful transitions. Contact us today to get started on your exit strategy.