How to Become a Successful Business Broker

William Bruce, President, American Business Brokers Association

What does it take to become a successful business broker? What are the business broker training options?

Difficulty:

Moderate

Instructions

1. As an instructor for the non-profit American Business Brokers Association, I've had the rewarding opportunity of offering business broker training to numerous individuals. Many of these folks have gone on to very prosperous careers in business brokerage (and become good friends in the process).

   What I've learned is this: A business background is essential to success as a business broker. Even better is prior ownership of a small to medium size business.

   Beyond this, other assets that are important for success are (1) a sales aptitude, (2) an ability to be diplomatic in difficult situations and (3) a stick-to-it determination to work hard and independently on your own schedule without becoming lazy. (I've been a business broker for over 10 years, and I've seen laziness doom more than a few individuals.)

   Also important is the ability to budget your personal finances. While the income potential from business brokerage is significant (the average in 2007 was $342,696), it tends to be "lumpy." My point: Don't go out and buy a new Mercedes with your first commission!

2. So what else do you need to become a successful business broker?

   Well obviously, you will need some training specific to business brokerage. Regardless of your education and business background, there are many considerations specific to the profession that you'll want to become familiar with. Just a few of these are:

   * Should I buy a business brokerage franchise or go independent?
   * What about office space: home office or "real" office?
   * How do I get listings if I'm just starting my practice?
   * What's percentage commission should I charge?
   * How do I recast financial statements for discretionary cash flow?
   * What are the most common business appraisal methodologies?
   * How do I build a marketing package for each type of business?
   * How do I maintain strict confidentiality while marketing nationally?
   * What advertising venues are appropriate for marketing a business for sale?
   * How do conduct the initial buyer / seller meeting?
   * What are the do's and don'ts of successful negotiations on price and terms?
   * How do I get the transaction to the closing table (and get paid!)?
   * What documents are involved in closing?

3. There are several business broker training alternatives available for individuals who want to enter the profession. A quick Google of "Business Broker Training" will return many options.

Tips & Warnings

• When considering your professional training options, check references of previous students.

• Make sure the training program you select offers post-classroom support, preferably at no cost.

• Check your state laws. Currently 16 states require business brokers to have a real estate license.

• Before you commit to a business brokerage franchise or licensing arrangement (both of which can be expensive), investigate your options.

• Some franchises are very good, but it's easier than ever to be an independent. The decision depends on your personal preferences.

Resources

• American Business Brokers Association