Getting Started
#1 Learn the Basics
Until you have mastered the basics and had a few deals under your belt, don’t tinker with what has worked for many years. After you have been successful, then, certainly, tinker all you want. However, the best place to start is to learn what has a history of success. You will find the basics of business brokerage outlined in detail in The Complete Guide to Business Brokerage.
#2 Decide How You Want to Enter the Profession
There are many ways to become involved in business brokerage. Below you will find a brief explanation of each of the options for getting started along with some of the advantages and disadvantages:
Join an Existing Business Brokerage Office
If you become an associate or agent for an existing firm, you usually become an independent contractor for an existing business broker. In states where a business brokerage firm must also be a licensed real estate firm, you will generally have to obtain your real estate sales license and then work for a real estate broker for a prescribed period of time until you can become a licensed real estate broker.
Advantages:
- The least expensive way to start
- Invaluable guidance of an experienced business broker
- Expenses absorbed by the firm
- Support provided by the firm
- Benefit from the established track record and existing listing and buyer base of the firm
Disadvantages:
- Receive only a percentage of the total commission
NOTE: Working with a NEW Business Brokerage firm does not have the same advantages as joining an established office. The owner of the new firm may be as new and inexperienced as you are, and the office may not have an established listing or buyer base. However, it does have one big positive. There is nothing like the excitement and enthusiasm of the new office. Everyone is pitching in to make the office successful. The decision is entirely a personal one.
Go It Alone—Become a Sole Practitioner or Open Your Own Office
Advantages:
- The least expensive way to start if you are going into business for yourself
- Very little downside risk
- Allows you to learn the business in your own time and at your own rate of speed
- You don’t have to worry about recruiting new people or worrying about their success, or lack of it.
- You can focus entirely on learning the business and closing sales.
- Salespeople can’t leave and create competition.
- Your total work time can be spent on “doing deals.”
- Legal exposure is greatly reduced.
- Fees and commission belong to you completely
- No interruptions of salespeople
Disadvantages:
- Many people prefer working with others rather than just by themselves.
- You’re only as profitable as your own last deal.
- You have to do it all.
- When you’re away, the business is also.
- You’re not building anything.
- The pressure is all on you.
- You have no business to sell.
- You better not have a sustained sales slump.
- You need most of the same equipment as an office with salespeople.
- You can get very lonely without other people to talk to.
To be successful as a sole practitioner, you have to be a self-starter. You also will need to have the discipline to work in a home office—if that’s what you are going to do.
The “100 percent Commission” Office
You can align yourself with a real estate firm that is one of the “100 percent commission” type offices.
Advantages:
- Provides you with a base to work from;
- Provides the necessary services to make the job easier;
- Other people to talk to and work with—they won’t usually be business brokers, but it is always nice to have someone to share ideas, or coffee, with once in a while;
- You can develop a good source of leads and referrals from a real estate office environment.
- The office, telephone, advertising (usually), and the administrative support is usually furnished by the office owner.
Disadvantages:
- Real estate licensing can be a problem in these offices.
Another possibility is to align yourself with an accounting or bookkeeping firm. There are natural referral sources in these firms.
The Shared Office
Many professional complexes offer meeting-room space, on an as-needed basis. Perhaps you have an attorney or accounting friend who will let you “rent” a conference room. Executive office complexes are perfect for those sole practitioners who want to work in a shared facility. There are office services provided in addition to conference or meeting rooms. These shared office spaces often have answering services, mailing facilities, and secretarial services that can be used on an as-needed basis. These offices also have the advantage of providing the opportunity to grow and to let you add additional people. Some business brokerages that have several agents continue to use shared office complexes.
The Home Office
About half of sole practitioners work from a home office. With today’s technology, many people have no idea whether they are calling a broker in a huge office, a home office, or sitting in a lounge chair in his or her pajamas. Although almost everything can be done from a home office, it is difficult to meet buyers in a home environment. Many clients would be reluctant to meet in a home, the neighbors might become upset with the constant visitors, and it isn’t, at least as yet, perceived as business-like or accepted by the business community. Sole practitioners, if they are working from a home office, need to also locate an office where they can meet buyers.
Opening Your Own Office
It is always difficult to open your own office, recruit and train new people, and try to put a few deals together yourself. The advantages of opening your own office are that you have more people getting listings, and therefore deals should begin to close more quickly. If one person can obtain, and service, ten or fifteen listings, then five people should get over fifty listings—or so the reasoning goes. Obviously, someone has to constantly motivate the people to do this—or replace the people—and that’s your job.
Opening your own office does require a larger financial commitment than the other options. However, the rewards can be larger, and you can manage rather than just “do.” Some feel comfortable working and training others. If you feel that you are a good manager, and have the necessary financial resources, this might be an attractive option. Opening your own business brokerage office can be a very rewarding experience—both financially and personally.
If you choose to have associates…
#3 Recruit
For those who want to build a business with one sales associate or more, here is what you have to do. The first order of business is to recruit. You want people who are willing to work more than 40 hours a week and need to earn a minimum of $50,000 a year. They come in all sizes and shapes—male or female! Contact the human resources departments of companies that are downsizing. Tell them you are recruiting. We always liked people who had never been in the business before—(“we prefer to train,” was a line in many of our recruiting ads).
#4 Train
Develop a training program—use whatever you have to. The Complete Guide to Business Brokerage is a good choice for training materials as are the other materials found in our package specials. Charge $300 (our figure—may not be yours) deposit for the material. When your associates are done with the materials, you can reimburse the money or let them keep the materials and return the cost out of their first commission check.
#5 Focus on the Producers
You build a business on the steady producers. Keep your producers happy by paying attention to them. Many times, just telling them that they did a good job is reward enough. Invite them to your home for dinner. Send them out to dinner. Reward them with a gift, especially after an important or really tough closing. Remember that it’s the thought that counts. Provide an assistant to those who are your top producers or after they have made x dollars. Get rid of the losers, so your winners can earn more!
