It’s 1:36 pm Thursday afternoon. I just got back from lunch and am settling back into my routine when the phone rings. It’s not a number I recognize, but the caller id says it’s from Parsippany, New Jersey. Hoping it’s business owner looking to sell their company or a prospective buyer inquiring about one of our company’s open listings, I quickly answer, “HartmannRhodes, Mark speaking how can I help you?”
“Hi, my name is David…” and I quickly learn it’s not a business owner looking to sell his family business or a prospective buyer looking to invest in one of our listings. Rather, it’s someone who wants to become a New Jersey business broker. The caller, David, wants to “pick my brain” about the business brokerage world as he is contemplating a second career. David, age 59, is a former middle manager from a Fortune 500 company where he worked in sales for 25 years but was recently downsized due to the Coronavirus. David’s brother-in-law’s best friend, Alex in Scottsdale Arizona, is “making a killing in business brokerage” and the brother-in-law (and probably his nagging sister – aka David’s wife) think David would be an “amazing” business broker even though none of them really know what a business broker does day-to-day.
We get probably 3-4 of these “I want to be a business broker calls” every month. Some are people like David seeking a second career, some are people looking to find a career after a few false starts, while some are thinking about a way to make some extra money working part-time nights and weekends.
Here’s the advice we give them about being a New Jersey business broker:
YOU NEED TO INVEST MONEY IN YOUR BUSINESS BROKERAGE BUSINESS.
Going into the business brokerage world requires start-up capital. How much will depend on whether you are joining a franchise like Transworld or going with an independent like HartmannRhodes. This money will be used for marketing and advertising, travel and entertainment, association dues and events, and continuing education. Business brokers need to have a reasonable business plan for their first year in business and they should probably assume they won’t close a single deal. That’s the harsh reality of your first year in business brokerage.
GETTING STARTED IN BUSINESS BROKERAGE TAKES TIME.
Don’t expect your first day, week or even month to get a listing or find a buyer that wants to buy a business. Business brokerage doesn’t work like that. First, you need to build spheres of influence that will put you in front of business owners and buyers as someone they can trust with what is probably their most valuable asset. Inside a serious business broker’s spheres of influence you would find attorneys, accountants, wealth managers and financial advisors, real estate agents and brokers, insurance agents, and many others who routinely work with business owner and buyers. How do you meet these attorneys, accountants, wealth manager and alike? You make calls, send emails and press the flesh. There are a lot of Chamber of Commerce breakfasts and MeetUp happy hours in your future. You should make it a goal to meet a certain set number of new referral partners to add to your database each week and stick to that number. Next, you need to stay top of mind with these strategic referral partners. How? Two ways: Connect the members of your sphere of influence together for business opportunities and they will connect you with business brokerage opportunities. And, send them thought leadership about business brokering makes them feel more secure sending you referrals. Once you have a few hundred people in your referral network, you will begin to see how easy it is to get an ongoing stream of opportunities.
YOU NEED TO BE TAUGHT HOW TO BE A BUSINESS BROKER.
Since New Jersey, like nearly all other states doesn’t have any formal licensure requirements that means that anyone can become a business broker without any training. (I have mixed feelings about this, but that’s a topic for another day.) But will you be successful? Probably not. Business brokers just starting need basic education on the foundations of business brokerage, financial statement recasting, how to negotiate lease transfers, due diligence and so much more. And, these subjects you aren’t going to see in the curriculum for a Master’s degree at your local university.
The gold standard business broker certification is the Certified Business Intermediary awarded by the International Business Brokers Association (IBBA) in Independence, Ohio. The IBBA confers the Certified Business Intermediary designation upon completion of a rigorous training sequence online and in person, attendance at the IBBA’s Annual Conference and competition of a proctored written exam. (It’s not something brokers can take lightly.)
In addition, beginning business brokers may wish to learn about other related areas such as Exit Planning. The Exit Planning Institute (EPI) in Westlake, Ohio offers training and certification leading up to the Certified Exit Planning Advisor (CEPA) credential. CEPAs help business owners prepare their businesses for sale to maximize enterprise value. Along those same lines is the Certified Value Builder (CVB) which is offered from the Value Builder System in Toronto, Canada. The Value Builder System is developed by John Warrillow. John authored Built to Sell which should be required reading for any business broker.
Lastly, if business brokers want to graduate to larger transactions, I’d recommend spending a week at Kennesaw State University in Georgia taking the Certified Mergers & Acquisitions Professional program. This weeklong course is taught by practitioners and academics and is probably the best investment you will make in your business brokerage training.
Now, none of the education will be a substitute for the learning a business broker gets from closing his first few transactions. And, savvy business brokers quickly realize you will learn something about yourself, people and business brokerage on every transaction.
Does the forgoing scare our caller David? Probably, and it should unless David is seriously willing to make the required financial investment, execute a plan to build an amazing referral network, and invest time in plenty of ongoing training. If he does, then over time he’ll establish himself as a recognized brand in the New Jersey business brokerage community and become the “go-to” guy for members of his sphere of influence earning him top commissions year-after-year.