by William Bruce
Updated November 25, 2016
As an instructor for the business broker training programs of the American Business Brokers Association, I’ve had the rewarding opportunity of offering 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 personal 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 two decades, and I’ve seen laziness doom a few individuals.)
Also important is the ability to budget your personal finances. While the income potential from business brokerage is significantly into the six figures, it tends to be “lumpy.” My point: Don’t go out and buy a new Mercedes with your first commission!
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?
To read our article on the duties and responsibilities of business brokers, please click “What Are Business Brokers and What Do They Do?”
There are several business broker training alternatives available for individuals who want to enter the profession. The American Business Brokers Association conducts a two day training seminar offered four times a year at various locations around the country. For additional offerings, a quick Google of “Business Broker Training” will return many options.
Some final thoughts:
- 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 17 states require business brokers to have a real estate license regardless of whether actual real property is being transferred.
- Before you commit to a business brokerage franchise or licensing arrangement (both of which can be expensive), investigate your options as an independent. Some franchises are very good, but it’s easier than ever to be an independent. The decision depends on your personal needs and preferences.
For further reading, here are additional related websites and articles:
- The American Business Brokers Association (provides business broker training)
- How to Use Valuation Guidelines to Estimate the Value of a Business
- How to Analyze a Business You’re Considering Buying
- How to Make a Written Offer to Buy a Business
- Seven Negotiating Rules When Buying or Selling a Business
- How to Conduct the Due Diligence When Buying a Business
# # #William Bruce currently serves as president of the American Business Brokers Association. He is a business broker, an Accredited Business Intermediary (ABI) and a business appraiser assisting buyers and sellers of privately held businesses in the transfer of ownership. His practice includes consulting services nationally for business buyers and sellers. He may be reached at (251) 990-5934 or WilliamBruceOnline@gmail.com.