28 Dec The Unique Challenges Faced by Business Brokers
In our most recent Business Brokerage Press webinar “Selling Professional Services with a Retainer,” we were joined once more by legendary Business Broker, Doug Robbins. Over the past five decades, Robbins has firmly established himself as one of the world’s leading experts on the profession. Founding Robbinex® in 1974, Robbins has completed 1,000+ assignments and has completed over 400 business sales, while personally investing in 32 businesses.
Robbins wants Business Brokers, M&A Advisors, and those interested in entering the industry to realize that it is difficult to work in this profession. In fact, Robbins feels that most who enter the brokerage industry don’t fully appreciate what is involved. Many new Business Brokers are caught off guard by unexpected demands, and the accompanying cash flow problems. As a result, it is common for new Business Brokers to leave the profession after just 18 to 30 months.
Working in the brokerage industry has its own unique challenges and obstacles. If you are to ultimately find success, understanding and appreciating those obstacles is essential. It will come as no surprise that Robbins feels that all Business Brokers and M&A Advisors, especially new ones, must make sure they have a constant stream of revenue. They also must be prepared for the long lead times that come along with selling a business.
Additionally, it’s essential to realize that it can take years to convert a lead into a successful sale. Robbins highlights just how extreme the situation of converting leads into successful sales can be. He relayed the story of how one business owner entered his office with a brochure that he had been mailed 12 years earlier. In his experience, the average lead time is between three to five years, meaning that many new Business Brokers have long since left the profession before their first successful transaction was even possible.
Additionally, now is a particularly challenging time as Robbins notes that the pandemic has shifted normal lead times dramatically. Until recently, it also led to fewer clients.
In our next article, we’ll explore the key steps that Business Brokers and M&A Advisors can take to ensure that they are successful. A steady stream of revenue is essential for remaining a Business Broker, and Robbins has tips on how to make that happen.