Charting Your Path: A Step-by-Step Guide on How to Become a Successful Business Broker
People change. This is simply a part of human nature. A business broker can help if you want to sell a company. Some men and women who work with a business broker on this task find they want to pursue a career in this field.
Working as a business broker is fulfilling. You get to help people make their dreams come true. While entering this field may not have been your goal when you were first planning to sell your business, if you believe it is the path forward, the following steps will help you achieve it.
Find a Specialty Niche
Specializing in a niche industry or type of deal can set you apart from other brokers. Offering niche expertise may attract more clients and enable pitching targeted buyers. Possible specialties include franchises, e-commerce, manufacturing, professional services, family-owned companies, mergers and acquisitions, or deals under $5 million. Focus on an industry or niche with high transaction volumes. Consider also specializing by business lifecycle stage, as each has distinct motivations and deal approaches.
Gain Relevant Experience
Ideally, work at an established business brokerage firm or M&A advisory for one to three years before going solo. Learn valuations, listing preparations, buyer targeting, sales negotiations, and closing processes. Build a professional network and observe experienced brokers. Work on various deal types and sizes. Track your contributions so you can demonstrate your capabilities later. Without prior experience, it’s very challenging to succeed as a new business broker.
Build a Business Plan
When ready to start your practice, create a formal business plan. Outline your target markets, ideal customers, services offered, and fee structures. Describe your brand positioning and special points of differentiation from competitors. Detail marketing, networking, lead generation, and prospecting activities. Include financial projections of expenses, revenues, and commissions over several years. Calculate the startup costs for an office lease, equipment, marketing, legal, licensing, training, and insurance needs, as well.
Raise Operating Capital
Business brokering is not capital intensive but often requires funding in the initial years as you build your book of business. Estimate the living and operating expenses you can expect before profits. Explore SBA loans, bank financing, partnerships, or even credit cards to bridge the gap. Many brokers struggle when first starting because they are undercapitalized. Develop relationships with investors and lenders to access capital when needed.
Start Marketing and Networking
The primary goal early on is establishing a sales pipeline by promoting your services. Leverage past business contacts and advisers like bankers, accountants, attorneys, or consultants who can refer clients. Set up meetings with business owners to understand their needs and seed ideas about selling their companies. Ask professional allies to refer you to business owners considering a liquidity event. Attend trade events, conferences, and seminars to network. Join relevant professional associations, and be sure to continually market your specialty services and past deal records.
As opportunities emerge, guide clients through sales preparations, due diligence processes, and negotiations. Pay attention to their special needs and concerns, and handle contracts, legalities, and execution professionally and efficiently. Follow up consistently to ensure satisfaction. Ask clients for introductions, referrals, and success stories to share. Consider expanding your offerings once established, like mergers, capital raising, or exit planning, and continue prospecting new clients while nurturing existing ones. With hard work and dedication, you are now on your way to becoming a successful business broker.
