Why You Should Consider Working with Distressed Businesses

Why You Should Consider Working with Distressed Businesses

In our previous article, we introduced distressed business expert Howard Brownstein’s impressive background and additionally explored some of his key points on what business brokers should know about working with distressed businesses.

Brownstein emphasizes the importance of building a foundation of information about distressed businesses. For as he points out, no two distressed businesses are failing from 100% identical causes. In the overview section of Brownstein’s webinar presentation, he presented a series of questions that you need to ask when you begin exploring a distressed business.

  1. What is the business’s potential value?
  2. Is there something of value under the problems?
  3. Under better or different circumstances, could the business be viable?

Answering these three key questions can help you determine whether or not a given business is worth their time and effort. And this point brings up another issue, namely why business brokers should pursue distressed businesses in the first place. Brownstein’s view is that, while life would be simpler without working with distressed businesses, there are often huge opportunities to be found.

The recent economic downturn brought about by COVID-19 means that there will likely be a great deal more distressed businesses on the market in the coming months or even in the next couple of years. The simple fact is that the pandemic will lead to more distressed businesses. Brokers who exclude these businesses may be doing so at the peril of their own bottom line. Brownstein also outlined a few of the reasons why you should strongly consider taking on distressed business clients.

  1. One result of the pandemic is that we will see more distressed businesses.
  2. There may be less competition from other business brokers.
  3. Distressed businesses are typically more work but business brokers can justify higher fees as a result
  4. Owners usually have a more realistic view of what their business is actually worth

Distressed businesses are only likely to become more numerous in the future. As many of our past webinar experts have stated, successful brokers must be ready and able to adapt to ever changing situations. Working with distressed businesses represent a way to get a jump on the competition and potentially reap considerable rewards. In our next article, we will explore more of Brownstein’s pointers and tips if you’re looking to enter the world of distressed businesses.

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