14 Aug Advertising Budget Request
We receive quite a few emails from business brokers with questions and we’re happy to respond to them. Following is a question and my response. I guess I’m old fashioned and I know that not many agree with me, but here goes:
You have been helpful over the years to me in regards to misc. questions I have had. This year’s is:
We are considering doing some advertising to help promote our brokerage to both local business owners and their advisors. Is there a rule of thumb for business brokerage on an advertising budget? For example is it typically 5% or 8% or 3% of commissions/revenues… or is there some other formula.
We have your most recent edition of the Business Reference Guide and use it almost daily.
Thank you very much for your help.
This may sound flip, but you have to spend whatever it takes. In my opinion, too many business brokers spend more time processing a listing (valuing, etc) than trying to get more of them. Quantity alone may not work, but the more merchandise one has, the more activity one gets.
I would spend my money on a consistent mailing program and make it a monthly program. Send out 500 to 1,000 mailers a month to a selected list. Follow it up with a telephone call. Also, “midnight” mailers seem to work. Drop off mailers under the door when the business is closed. Sounds silly but many say it works.
I’m not sold on advisors. Most small businesses don’t use them except for tax work or legal issues. Many advisors don’t want to make recommendations because they don’t want to worry about the recommendation not working out. It’s the old “silence is golden” play.
An office needs a really good web site because it is now the entrance to your office. I can recommend my son Ron who does many of them for many business brokers associations, etc. You can learn more online or view a portfolio of sites he has done.
You and/or your people should also be cold-calling. Oldest way in the world, but it still works.
One final thought. I don’t know if you have agents or not, or how many if you do. In the “old days” each agent strived for 5 listings a month. An office with 4 to 6 agents had an inventory of 60 to 80 listings. Today’s offices have a lot less. There has to be a dividing line between quality and quantity. Quantity can very often turn into quality with a little work from the broker. Are your people working on getting listings or are they spending their time in the office behind their computers? That’s why I would take young “go-getters” who can take some rejection. (That’s what it takes to get listings in an office.) From my experience, it’s the go-getters who will make the office profitable.