Become a Business Broker
Start and Build a Successful Business Brokerage Career
Becoming a business broker is like most things, there is the quick and easy way and the researched, preplanned more methodical way. Either approach may work, but the latter has a better chance of resulting in a long term successful business brokerage career.
Since there essentially is not a “Business Broker License,” and in some states, a real estate license is not required, thus many people, since there are no education or licensure requirements to get started, decide to take the easy way to starting their business brokerage career. It is estimated that 80%+ new business brokers start practicing without any or minimal business brokerage training. Knowing this makes it easier to understand two other averages; 50%+ of business brokers leave the industry within the first twelve months, and 80%+ of business brokers never make it to their third year. (Results reported by franchised and independent business brokerage practices and business brokerage trade associations.) Obviously, the ease of entry is not an indication of the actual complexity of business brokerage, and what it takes to establish a business brokerage career. Therefore, our recommended steps to becoming a business broker focus on increasing your chances of getting off to a good start and building a long term successful business brokerage career.
Step1. Make the decision that you want to pursue a business brokerage career. If you have not already done so, you should research the business brokerage industry, speak with other business brokers about what it takes to be successful, and make sure you have the full support of your family.
Step 2. Research your market area for the number of businesses and business brokers.
Step 3. Contact the real estate commission in your state to determine if you will need a real estate license to sell businesses. DO NOT guess, or rely upon another business broker’s understanding, make the call yourself. Make sure the discussion includes questions about selling a business with or without real property, assisting with the facility lease, etc.
Step 4. The average new business broker will close his or her fist transaction between months six and twelve. (Do not be misled by claims that business brokers close their first deal within three or four months.) The major business for sale listing sites and business broker surveys reveal the average time from listing to sale is from nine to more than twelve months. Make sure you have the financial staying power with a minimum of nine months personal expenses in savings, twelve months would be better and additional funds to cover business expenses. There’s a big difference between selling out of inspiration instead of desperation.
Step 5. Invest in a quality business brokerage training program. We, of course, are biased and feel the School of Business Brokerage offers the most comprehensive business broker training. The practice of business brokerage can be very rewarding both personally and financially. However, business brokerage is complex requiring knowledge in many areas; sales, marketing, finance, taxation, legal, negotiating, real estate, business valuation, general business operational knowledge, etc. It is impossible to learn all of this within your first few years in the business. Therefore, a one or two-day business broker training seminar cannot adequately cover even the basic information necessary to get started. In most transactions, you will be selling a business that represents a substantial portion of the seller’s (and potential buyer’s) net worth. In other words as a professional service provider, you have the responsibility and legal obligation to know what you are doing. The more you can learn, before you get started, the better. Moreover, continue to learn by joining business broker associations, taking advanced business brokerage classes and reading books about related business topics. The learning should never stop!
Step 6. Unless you have extensive business ownership experience and maybe a real estate background, consider joining an established business brokerage firm. (Some states requiring a Real Estate License, may also require new agents work for a managing broker for one to three years before starting their practice.) If you cannot find a broker to work for, and really want to start you own firm, invest in a quality training program, consult with an accomplished business broker for mentoring and coaching during your first year, join professional business brokerage associations and start meeting and networking with reputable, experienced brokers in your market area and beyond.
Step 7. After completion of your business brokerage training, take the time to develop a business plan from starting out through year five. Define your market area, define what types and size businesses you will target, your minimum guidelines for a business listing, etc. (The School of Business Brokerage assists our students with a business plan.) Then follow your plan! Too many individuals launch a business brokerage career without even knowing these basic things. Recall the stats from above 🙁
So, seven bare minimum but essential steps to consider as you start your quest to become a business broker. And, as always, if you have additional questions, give us a call we will be happy to help. Business Brokerage truly is an excellent career choice!Donna S. Dailey M.Ed, LREB, BEC, SBA Founder and President School of Business Brokerage