Business brokers help people buy and sell businesses. If you’re curious about a career in business brokering, here are the steps I recommend on how to evaluate the opportunity. Because this is not a fast path to income, it warrants your consideration and honest self-evaluation. You’ll also want to read about the pros and cons of being a business broker and The Inescapable Truths of Buying or Selling a Business. For those who will make the commitment, I’ll provide tips on how to get started.
Visit Business Broker Industry Websites
Familiarize yourself with the issues, education offerings, and backgrounds of business brokers.
- Visit the International Business Brokers Association (IBBA) website
- Visit your local Business Broker Association website (see this table of state and regional business broker associations at the end of the article)
- See How Businesses for Sale are Marketed
BizBuySell.com is a great place to do some searches to get familiar with how businesses are listed and advertised. It’s the number one business for sale website for traditional and franchise businesses. You’ll notice that some listings have more financial summary information than others or are more descriptive than others. You’ll also notice that some listings are listed by brokers and others by business owners. You may even wish to inquire on a few listings of interest to see how the process goes. This site will be a key resource for you as a business broker. For a more comprehensive look, read this article on the Best Places to Find Businesses for Sale.
Pick up Some of the Best Books for Business Brokers
I have poured through close to 50 books on buying, running, and selling businesses and I am recommending my favorites. The books cover insights for business owners, financial statements, business brokerage practice, and exit planning for business owners and advisors.
| Links* | Book Recommendations |
|---|---|
 | The Lifestyle Business Owner – Aaron Muller Main Street businesses under $1M in revenue |
 | Buy Then Build – Walker Deibel Larger businesses over $1M in revenue |
 | Finance Basics for Managers – Harvard Business Review Perfect reference guide for business owners and intermediaries |
 | A Guide to Successful Business Brokerage Practice – Bob C. Ross Rare book for business brokers written by a respected industry veteran. |
 | Expensive Mistakes When Buying & Selling Companies – Richard Stieglitz & 3 others Issues selling larger businesses that high end brokers and M&A advisers may face |
 | Built-to-Sell – John Warrilow An easy read by the founder of the Value Builder System |
 | Walking to Destiny – Christopher Snider An in-depth framework written by the founder of the Exit Planning Institute |
View Videos on Business Brokerage
The business brokering ecosystem is tiny relative to most professional service industries, thus the corresponding content is limited. While there aren’t many videos available, I have found a few sources of videos for business brokering and M&A.
- Visit businessbrokeragepress.com and view the video interviews with some seasoned brokers
- Visit Jim Parker on YouTube for deeper discussions on business brokering topics
- Visit Brett Cenkus on YouTube for a series of videos on M&A topics
Skills and Experience to Succeed as a Business Broker
If you followed my recommendations on the steps so far, you may have concluded that business brokering is different than you imagined, or that it’s just not for you. The decision to become a business broker requires careful consideration because there is no quick or easy path to earnings. You will have to embrace these key aspects of the profession. For most people, the first aspect will be the most challenging by far.
- 2-3 year financial runway
- 100% commission sales
- Contracts
- Financial statements
- Small business life and operations
Gut Check on Finances and Costs to Become a Business Broker
Since funding your start will likely be your biggest challenge, here is a little bit more of what to expect. Later in this article, we’ll discuss how part-timing can be an option under the right circumstances.
- $1000 to $100,000 startup costs
Depending on whether you want to be an agent working for a business broker or an owner of a business brokerage franchise, your start up costs can vary greatly. At a minimum, plan on $1000 to cover initial fees for software, systems, subscriptions and education just to get started. If you are buying a franchise, plan on $40-50,000 to purchase a franchise, plus additional funds to attend conferences, recruit agents, establish your business entity and address, and launch your brand and your business.
- $500 per month budget
Budget $500 for monthly expenses to maintain the software, subscriptions, systems and education that you started. Most of the budget is for lead generation. It is possible to have a slightly lower budget if you can hustle on phone calls or networking but this deserves honest self-assessment. Are you willing to do the things that others are not? You can spend $200-$500 per month on outreach or you can grind away as a one person call center for at least 6-12 months. If networking better suits you, prepare to attend chamber of commerce meetings for multiple cities and rise early to join professional networking groups near you such as BNI, LeTip, or others.
- Three years with little income
As I mentioned elsewhere, one respected industry veteran said it can take three years to get going as a business broker. Another felt it could take longer. Read about How Much Money Do Business Brokers Make and the Pros and Cons of Being a Business Broker. Is it possible to be successful sooner? It is certainly possible to close deals in the first year, and if all things line up, you may even have a large closing in your early years. However, early successes are not common and they are also not an indication of a smooth path. Consistency requires more time.
How Much Does It Cost to Buy a Business Brokerage Franchise?
The up front fee for a traditional business brokerage franchise could range from $30-60,000. Monthly fees could land between $500-$100 and the franchisor will typically take 10% of the commission on any closed deals. If you have the funds, this could accelerate your learning and your production. Your initial investment could be recovered with one decent-sized deal or a few small deals.
Decide on Working for a Business Broker or Starting as a Business Broker Owner
As a broker-owner of a business brokerage franchise, you keep all the commissions after paying 10% to the franchisor. As an agent working for a broker-owner, you have to split your commission with the broker-owner. However, you don’t have to part with $30-$60K to invest in a business brokerage franchise plus additional start-up costs. It is much easier financially to start as an agent working for a business broker than to jump into business brokering as an owner.
I met a franchise consultant when I inquired about a listing in BizBuySell. After a few conversations, the franchise consultant presented the business brokering franchise as an option. I remember my response. “If I’m going to consider business brokering, I think it would make more sense to work for a business brokerage first.” Her expert salesperson reply was “They’ll teach you everything you need to know faster.” I took the bait and the rest is history. I don’t regret it. However, I wouldn’t recommend it to everyone.
If your ultimate goal is to be the broker and not an agent so you can keep more of the commission, set a 1-3 year goal to transition from an agent to a broker-owner. You won’t give up much commission to the broker-owner in the early years since your closings will likely be few and far between. After a few years of experience and battle scars, any investment you make in becoming a broker-owner will have a better return than if you made that investment from the start.
Is it Better to Work With an Independent Brokerage or Franchise Brokerage?
Working with one of the franchise business brokerages is a good idea for those new to the industry. Franchise broker-owners are more likely to grow their headcount since they are part of a franchise that encourages and supports recruitment and onboarding of agents.
Independent brokerages are few and far between and you’re unlikely to find one in your area. Veteran independent business broker-owners are much less likely to be interested in growing their practice beyond themselves or just a small tight-knit team. The risk is they may spend considerable resources grooming new agents with little payoff due to the high attrition rate in the industry.
If you have an opportunity to join a highly productive independent broker, you should consider it as long as you have opportunities to learn the breadth of the business that you desire vs being stuck in a narrow role. And you should definitely engage with the IBBA or a mastermind group to access knowledge beyond your small team.
Is it Possible to be a Part Time Business Broker?
There are several scenarios where it might be preferable to be a part-time business broker. Being a part-time agent makes sense because of the long lead time to income and consistency. It can even be beneficial for the employing brokers because full-time agents leave the industry at high rates while part-time agents may have additional income. While it is impractical for a full-time corporate employee to moonlight as a business broker, we’ll highlight several examples where part time business brokering can work.
First, let’s address the full-time corporate employee. Even if the employee has flexible hours and little oversight, such as a remote worker or outside salesperson, the company is unlikely to be happy about your moonlighting. If you market yourself as a business broker, you risk having your employer find out. One person in this situation asked me if there was a salaried support or assistant role that allows for learning and does not require marketing oneself. While this is possible, most brokers that can afford salaried assistants prefer either committed full-time team members or a system utilizing specialized virtual assistants, which is a much more efficient and lower risk approach than to train a part-timer on salary.
Part-time can work if you have no other job, a part-time job, or work for yourself. Here are some examples.
- Real estate brokerage owner or agent
- Insurance brokerage owner or agent
- Independent consultant
- Entrepreneur
- Freelancer
- Semi-absentee or absentee business owner
- Part-time job holder
- Part-time student with sufficient background and work experience
How Does a Business Broker Get Education, Training and Experience?
In an industry that can take years to get established, it is important to be efficient in acquiring knowledge and experience. Here are some strategies to consider:
- Work for a large independent business brokerage
- Work for a business brokerage franchise owner
- Buy a business brokerage
- Access IBBA courses
With all of these strategies, you will have to pay. If you work for someone, you’ll pay with a commission split and monthly fees. If you buy a business brokerage, you’ll pay with a large investment in the franchise plus monthly fees to the franchisor. If you take IBBA courses, you’ll pay thousands of dollars. Here are a couple of low/no cost strategies to ramp your learning and your production.
- Set up a bi-weekly mastermind group with other business brokers
- Sign up for all of the industry podcasts you can find (there aren’t very many)
- Go for listings with a mentor to support you. The learning curve in this industry is steep.
What are the Licensing Requirements for a Business Broker?
Let’s see if I can surprise you three times in this answer. 1) While every state requires real estate professionals to be licensed, most states do not require a license to practice business brokering. 2) One of the states that does not require a business broker to be licensed is New York. 3) In the states where a license is required, the type of license is not a business broker license – there is no such license. The license that is required is a real estate license. Here are the states that require a business broker to be licensed in real estate even if the business for sale does not include a real estate sale or lease.
Caveats
- Any sale that includes real estate requires the intermediary to hold an active real estate license. This is true in every state whether or not the real estate transaction is a sale or lease. Business brokers who are not licensed may partner with licensed real estate professionals.
- A stock sale requires the intermediary to be licensed with the SEC to sell securities.
Why is it that business brokering doesn’t even have its own specific license and that licensing isn’t required in most states?
- State governments have to deploy their resources where they are most needed.
- No state has set up a department of business brokering due to the relatively low numbers of business brokerages, professionals, and transactions compared to real estate.
- One of the main reasons that departments of real estate exist is for consumer protection. One could argue that if you are going to buy a business, you are a more sophisticated investor aware of the risks.
Develop Your 3-Year Business Plan for Succeeding as a Business Broker
Talk to brokers and brokerage owners to understand how to plan for success. Prior to launching your new career, make note of the various moving parts and prepare these items.
- Marketing Budget
- Marketing Tools
- Selecting Activities You Can Execute Consistently
- Financial Projections
- CRM recommendations
- Lead Lists
- Lead Generation Systems
- Listing Sites Prioritized
- Additional Tech Tools
- Listing Scripts
- Listing Agreement Objection Handling
- NDA Best Practices
- Expectation Setting Meetings and Scripts
- Transaction Checklist
- Front Loaded Due Diligence
- Your Role as Psychologist and Escrow Facilitator
- Managing Attorneys
- Closing Mechanics