30 Apr Advice for Business Broker Newbies in the COVID-19 Market
There have been many unexpected twists and turns since COVID-19 suddenly surfaced and firmly planted a spot in the history books. One of the surprises within our industry has been the uptick in people looking to become business brokers and M&A advisors. In this article, we’ll review the thoughts from the panelists on our industry veteran roundtable discussion. The focus was on how newbies should handle entering the world of business brokerage at this decidedly unusual time.
The panelists for this discussion included Bob McCormick, Managing Partner at Murphy McCormick Capital Advisors; Scott Bushkie, Founder and President of Cornerstone Business Services; John Howe, past chairman of the M&A Source and current chairman of the International Association of Business Intermediaries; and Sara Burden, President of Walden Businesses.
What Sectors Should be Pursued?
John Howe had several interesting points during the webinar. At the top of the list is that it is important to consider what type of businesses should be pursued by brokers at this point in time. For example, he feels that the restaurant sector is obviously going to be challenging for an array of reasons. How restaurants will get back up and running and how will the population respond are two big questions that remain unanswered. Other businesses, such as manufacturing, will likely fare much better as they will be in higher demand. Newbies will want to focus on businesses that are likely to bounce back from the pandemic more quickly.
Focus on Your Education
Other key advice from the panelists included focusing on developing a depth of knowledge. What is meant here is that a newbie business broker should become dedicated to being a lifelong learner of all things within the industry. In short, you must constantly invest in your own education and not simply being “chasing a check,” as this will lead to failure in the long run.
Be Disciplined on Your Engagements
Bob McCormick echoed this sentiment, stating that it is important to “recognize it’s a long-term sales process, whether there’s a recession or not…you must be disciplined on what engagements you take on.” McCormick feels that a dedication to the long-term sales process, one firmly built on the back of proper relationship management and the marketing process, will yield the most consistent results.
Downturns Can Make You Stronger
Scott Bushkie added that there are some surprising benefits to entering the market during lean times. Using his owner personal experiences from the dotcom downturn, Bushkie noted that entering a down-market means that you think more, work harder and are more creative and innovative. You also will gain the considerable added bonus of knowing what to do and how to respond to future downturns in the market, which will invariably come.
Bushkie’s second key piece of advice to business broker newbies is to invest the time to select the right clients and have the right paperwork in place. You want to make sure that you have contracts that clearly outline everything involved in your services and that clear expectations are in place.
Could New Business Brokers Have the Edge?
Sara Burden believes that newbies could actually have an edge over established business brokers. She points out that many established and experienced business brokers are “resting on their laurels” and are not working as hard as they should be.
An aggressive newbie entering with new ideas could be met with a surprising level of early success. After all, these are the people who are likely busy on the phone and focusing on building relationships. One of the consequences of the pandemic is that many businesses are operating with skeletal crews, which means that when you call, the owner may actually answer the phone. The traditional gatekeepers may be gone and this could allow you to have direct, and rare, access to the business’s owner.
When it comes to this important issue, are panelists agree. While there is no doubt that starting a brokerage career during the COVID-19 pandemic may present some challenges, the right approach can make a tremendous difference.
