Just like the traditional process of selling or buying a business, you will benefit by using a business broker when selling or buying an online business. This type of broker is called an Internet business broker, and they specialize in the management and facilitation of online business transactions.
Whether you are a buyer or a seller, there are significant benefits to using an Internet business broker to help you with your transaction. Using a legitimate Internet business broker means that you will be able to access vetted websites, so you are protected as a buyer. Legitimate online brokers also have a huge reach, so they will be able to find the exact business you want to purchase or the exact kind of clients you are looking to purchase your business. Finally, their experience in brokering these kinds of transactions can also help you manage the administrative side of the deal, including following all the regulations and laws, as well as submitting and filing any necessary paperwork.
However, with the rise of the popularity of e-commerce, there is no denying that there has also been a huge boom in the number of people and agencies offering their services as Internet business brokers. While many of them do offer valuable and exemplary services, there are also bad apples in the lot that use underhanded techniques, shady business practices, or are just flat-out scammers looking to steal your money.
The question here is, how do you find a reliable, trustworthy, and experienced Internet business broker, especially if it’s your first time to use the service? Of course, you can try looking through the list of the International Business Broker Association (IBBA) to see if they are certified, or you can use referrals from others who might have used their services in the past, but if you are having doubts here are five signs that should make you stop and think twice about using a particular Internet business broker.
1. Deliberately Inflating the Value of a Website
Many Internet business brokers deliberately inflate the value of the website that they place on their listings as a way to make it more enticing for buyers. If you are selling your website, they might even suggest this practice as a way to generate more interest in your business. However, buyers these days actually practice due diligence, and it’s easy enough to find out if the value of online business has been overstated. In these cases, you as a seller might end up going through a frustrating time trying to explain to potential buyers why your business value was misrepresented.
2. Constantly Reassuring You How “Fast” and “Easy” the Process Will Be
The general rule when it comes to the online business brokerage is that there is no guarantee that a business, no matter how strong or promising it looks on paper, will sell off easily. In fact, a broker who will constantly tell you that they will be able to sell off your business “quickly” is probably looking for underhanded ways to get the process going, such as lowballing your business to potential buyers or just outright lying about your business to get people interested.
3. Bragging about a “Secret Buyer’s List”
Many shady Internet business brokers also claim to have a “secret buyer’s list”, which is a list of repeat buyers that they allow having the first pick of the business. As a seller, they might tell you that these buyers have already been vetted and are looking for the next business to purchase. As a buyer, they might include your name on that list as an incentive to working with them. However, this is a shady business practice because it creates an unlevel playing field where those who are not “in the know” will be left with subpar businesses to choose from. Do you really want to be part of that group?
4. Poor or No Vetting Process
When you take a look at the active listings of an Internet business broker, you might think that having hundreds or even thousands of listings means that they are an active and trusted broker. However, it might mean just the opposite. It could mean that they are a lazy company that takes any job that comes their way and does not take the time or effort to actually vet their clients. They take whatever business comes their way at face value. As a rule of thumb, reliable Internet business brokers will have around four to eight active listings per agent, and these brokers specialize in certain niches as much as possible.
5. Little or No Client Testimonials on Their Page
This might seem like a no-brainer, but an Internet business broker with few or no client testimonials is either starting out or isn’t a good company at all. What’s more, they would be more than happy to send you the contact information of their former clients to use as a reference. If they are a trustworthy company, they would even be happy with meeting a new client face to face in order to represent the strength and reliability of their company.