If you are a salesperson with experience selling to businesses and are looking for a good opportunity, you should become a business broker. Here’s why:
- You can make a good income.
- You have flexible hours.
- You are in a growing market.
- Your competition is limited.
Business Brokerage Press recently came out with their 2013 annual survey of the industry. According to their survey, when asked “How much should an industry veteran earn a year in commissions?” the average answer was $156,000, with the most frequent answer being $100,000. When asked how much a new business broker should be able to earn in their first year, the average answer was $47,000 with the most frequent answer being $50,000. Not much difference. The last numbers point out the reason that people may not become business brokers – it takes time to make money. When asked, “How many months did it take for your newest broker/agent to have a closing or sale?” The average answer was 7.8 months. That’s because of the two step sales process. First, you need to list businesses for sale and then you need to sell them. After the business is under agreement, it typically takes two or three months to close the sale. Not surprisingly, the average age of business brokers tends to be older. Again, according to the BBP survey, the average age is 52. One reason is probably because someone this age has saved up enough money to afford to wait out the time when they start making commissions.
Another benefit of being a business broker is the flexible hours. With a laptop, a cell phone, and an Internet connection, a business broker can work from almost anywhere. We want a new broker to work out of our office most of the time so they get more guidance. But, if they need to work from home for personal reasons, they can do so.
I’m the owner of a business brokerage agency with two other business brokers. Both of them are in their thirties. We do a few things differently than most agencies to get a new broker going. First, we have a lead generation program that brings in seller leads and we give the leads to them. Getting leads is one of the hardest things to get when you are starting out. The second thing we do is give a new business broker a draw. It’s less than they could make if they just went out to get the best paying sales job they could find, but it gives them some income while they are getting started. We are also a member of BBANE, a group of New England business brokers that co-broke. This gives the new business broker businesses to sell. These programs are working.
The future for business brokerage is very good. The baby boomer generation is just beginning to retire and, for many years, retiring boomers will be a steady source of potential clients. At the same time, the number of business brokers was recently reduced by the recession. My personal opinion is that the number has not returned to the pre-recession level.
What does it take to be a successful business broker? The first thing you need is sales ability. Not just general sales ability, I look for business to business sales experience and skill. You have to be willing to make cold calls. You need to be persistent and followup. You need to be able to relate to business owners on a peer level. You also need to have some attention to detail. The sale of a business involves a lot of items and you need to stay on top of them. You also need to understand the basic financial statements of a business – the income statement and balance sheet. This can be learned. This is not a complete list, but it covers the basics.
If you are reading this, live in Eastern Massachusetts, and are interested in becoming a business broker, please contact me.
