21 Jul Building a Successful Business Brokerage Firm Now and in the Future
In our previous article, we dove in and explored the future of the Business Broker industry as well as three key points that you need to understand about achieving success in the industry. In this second article, based on our recent webinar with Robbinex® founder Doug Robbins, we will more closely examine what it takes to be successful.
Taking On Qualified Clients
Mr. Robbins points out that while there are many variables Business Brokers and M&A Advisors should remember, it is essential to find qualified clients. He points out that you need to be ready to deal with the fact that there are very long lead times involved in the industry. Further, this industry itself is rather complex.
A key way to increase your chances of success is to look for clients that truly are serious about selling. Also be sure to make sure they understand that it will be a detailed and complex process. Robbins suggests that you ask yourself several valuable questions before taking on prospective clients:
- Is this a business we think we can sell?
- What will the price of this business be?
- Is the client, and his or her expectations regarding the valuation of the business, reasonable?
- Can we work with this client?
Investing the time to properly answer those questions is a prudent investment and one that can lay the foundation for moving forward.
Cultivating the Right Team
Answering the above questions and then having a team in place that can act on that information is of critical importance. Mr. Robbins does an excellent job of highlighting the complexity involved in creating an effective Business Brokerage team. As he notes, a marketing department, analysis valuation department, consulting department and business development department are a must for any firm.
A team is vital for success in the Business Brokerage realm. Mr. Robbins noted that it takes about 600 working hours to sell a business. The bottom line is that somebody has to do the work involved to sell that business. It is difficult to imagine a single owner Business Brokerage firm handling all 600 hours involved to sell a single business while simultaneously figuring out how to build the Business Brokerage firm. Bringing on a managing director can be a key asset for this and many other reasons.
Adapting to Our Changing Industry
Mr. Robbins foresees a future in which the traditional Business Broker’s days are numbered. He explained, “It’s going to evolve. It’s not going to happen tomorrow and it maybe won’t happen in five years. But in 10 or 15 years, the story will be different…There will be fewer sole practitioners, more boutique firms, more partnering between brokers, forming teams, more support employees and supporting the brokers to create a larger team.”
He also noted that he expects there will be more focus on long term client relationships, more value enhancing programs for clients, but more selling time and networking. In short, the industry will change and evolve. He feels that one way for you to address that change is to expand the services that you offer. He points to the fact that Robbinex® now offers a comprehensive strategic analysis. Mr. Robbins also believes that the role of consultancy and finding solutions that can be resold to clients are important areas to focus on in the future. He stated, “One of the things that a broker needs to do is become a facilitator of expertise.”
Ultimately, our industry is changing because global business is changing. It is also vital that Business Brokers and M&A Advisors, especially those new to the arena, understand that it takes two to three years (or even longer) to create the pipeline necessary to generate a steady flow of qualified and serious clients. There are many ways to find the best clients, but Mr. Robbins feels that the very best clients come from referrals. As he stated, referrals are “prepared to listen, prepared to work with you, prepared to do what needs to be done and they’re prepared to pay the fees. They’ve been told you’re good and that you know what you’re doing.” Finding those great referrals underscores the importance of investing the time to build trusting relationships.