Selling and buying a business entails a stressful process, whether you are the seller or the buyer. For business sellers, there are a lot of documentations, financial, accounting, and legal issues that need to be sorted out. The same is true for the buyers. Finding a business that is suitable to your budget, preferences, and experience can be quite a challenge. This is where business brokers come into the picture.
Business brokers or brokerage companies act as intermediaries that fill the gap between business sellers and buyers. Business brokers are much like real estate brokers except that their products are companies or enterprises. They are knowledgeable with regards to the latest in the business world, particularly in the local market. These brokers are adept with business valuation and negotiation and have connections with prospective buyers and sellers.
The retirement of baby boomers has driven the demand for business brokers. With a business broker, you are assured that you get the right value from your business or money. Nowadays, this service has become a necessity for both business sellers and buyers. The business brokerage industry is valued at around $1 billion and is expected to grow 3.1% over the next five years.
If you have a knack at selling and are looking for a good opportunity, being a business broker is a lucrative career that you can consider. Here are some things you should know about this profession.
Earn Good Income
Probably the foremost questions of an aspiring business broker are: How business brokers get paid? How much does a business broker earn?
There are several ways a business broker gets paid.
First, the success fees or commission, wherein a fixed percentage on the sale price of the business goes to the broker. Although it runs around 5-10%, this fee is negotiated before the business is put up on sale. Payment is received only after a successful sale.
Second, there are retainers or flat fees that business sellers charge for every business that is listed. It can either be a monthly charge or an upfront payment.
Lastly, business brokers can be employed by a brokerage firm. Here you will receive a fixed monthly salary – and depending on your contract bonuses for every successful sale.
On average, a business broker in the US earns $100,000 annually. Entry-level positions pay around $49,500 per year.
Own Your Time
This is probably one of the best benefits of being a business broker. Since everything is now on the Internet, all you need are a mobile phone, a laptop, and a stable internet connection to work. Many business brokers work right from the comforts of their home. They simply call up clients for any concerns or go out for meetings. Having a flexible time also allows you to work on other interests and gigs.
According to Ibis World, there are 3,721 business broker businesses in the US in 2021 and employs around 11,411 individuals. Although some states have higher numbers of brokers, such as California, Florida, and New York, there are many other areas where the number of business brokers is still very low.
At present, there is no single company that holds more than 5% market share which makes the competition open for all.
As an emerging industry, now is a great time to pursue a business broker career. Many opportunities await you. As the baby boomer generation begins to retire and leave the active business, there is a steady source of potential clients. Likewise, as the pandemic comes to an end, many businesses that have closed shop would likely be put up for sale – and brokers are most welcome.
An Orlando Business Broker noted that employment opportunities for aspiring business brokers abound. Take note, however, that you need to meet state certification regulations and licensing to practice the profession in certain jurisdictions.
Qualifications of a Business Broker
A career in the business brokerage industry sounds exciting but are you up to it?
A business broker requires financial analysis, sales, communication, accounting, and negotiation skills. You need to build relationships with stakeholders, such as sellers, buyers, marketing, and fellow brokers. Ideally, you need to have a degree or at least an undergraduate course in business administration. If you are employed by a brokerage firm, you’ll benefit from their training programs and support. Mentoring will also help take the confusion and simplify complex business aspects.
You can also choose to learn the basics by enrolling in short-courses. There are online and traditional adult classes that offer business broker courses. Having the right foundation can help you start and succeed in this field.
If you think you have the necessary skills and education preparation, you can give this profession a try.