How to Sell Businesses in the US: A Complete Guide
Explore the world of business brokerage, from understanding the role of a broker to the opportunities in buying and selling small businesses. Learn about the industry, franchise dynamics, and why it’s a rewarding career for those who want to help businesses grow and change hands.
Table of Contents:
Introduction
Today, I would love to discuss the topic of business brokerage. Many people from across the United States and abroad might not be familiar with this market. We’ll provide an introduction to the small business sale marketplace, discuss what it means to be a business broker, and answer some pertinent questions about the industry.
What is a Business Broker?
A business broker helps business owners find buyers for their business and helps buyers find businesses to purchase. They facilitate the buying and selling process, valuing businesses, finding the right buyer, and navigating the transaction.
Confidentiality
Business brokers maintain strict confidentiality throughout the entire transaction process, which is a key aspect that many people may overlook.
Types of Businesses Sold
- Range of Values: Typically from $50,000 to $20 million.
- Main Street Business Brokerage: The majority of transactions are under $10 million, and include businesses like restaurants, laundromats, and medical facilities.
- Larger Transactions: Some offices handle larger deals, often functioning as mini M&A divisions.
Founding of FCBB
First Choice Business Brokerage (FCBB) was co-founded 27 years ago by Linda and Jeff. Initially entering the industry by chance, they found it a niche but rewarding area where they could make a significant impact on small business owners.
Why People Choose Business Brokerage
- Variety: Brokers work with a wide range of businesses, from small $50,000 enterprises to larger $30 million deals.
- Continued Education: Business brokerage offers continuous learning opportunities across diverse industries.
- Entrepreneurial Environment: The ability to help small businesses thrive is a major draw for many.
Competitive Landscape
Competitors
The market for business brokerage includes:
- Independent Brokers: Often handle only a few listings per year.
- Franchise Brokers: Offer broader listings and inventory for buyers.
Industry Size
There are approximately 30 million small businesses in the U.S., with only 4,000 business brokers. This makes business brokerage an underserved industry, despite the potential for high transaction fees.
FCBB Differentiators
- Training: FCBB provides a robust training program called “First Choice University,” featuring 44 courses and live case studies to ensure high standards among brokers.
- Support: Continued support from experienced brokers and boots-on-the-ground mentorship.
- Systems & Synergy: FCBB fosters agent growth and builds strong inventory through franchisee support.
Backgrounds of Successful Business Brokers
- Not Just Sales: Successful brokers come from varied backgrounds, such as CPAs, attorneys, airline pilots, and even DEA agents.
- Empathy & Consulting: Essential traits include empathy, the ability to navigate complex transactions, and the desire to work with business owners during significant transitions.
Franchise Fees & Investment
- Franchise Fee: $50,000, which includes training and marketing.
- Minimal Additional Costs: Brokers can start from a virtual office, which keeps operational costs low.
Day-to-Day Operations of a Franchisee
- Working with Agents: Supporting and mentoring agents is a significant part of their daily routine.
- Marketing & Listings: Managing advertising and buyer listings, and communicating with franchise support.
- Buyers & Sellers: Engaging with buyers and sellers to move transactions forward.
Benefits of Business Brokerage
- Work-Life Balance: Business brokerage typically involves a Monday to Friday, 9-5 work schedule, offering a lifestyle not commonly found in other industries, such as restaurants or retail.
- Clientele of Former Owners: Some of the best brokers are former business owners who transitioned to brokerage after selling their businesses.
COVID-19 Impact
- Resilience: Business brokerage showed resilience during the pandemic. Despite initial uncertainty, brokers adapted, with businesses that evolved during the crisis seeing significant growth.
- Learning to Adapt: Many brokers leveraged tools like Zoom for initial meetings, helping maintain client relationships during a challenging period.
Conclusion: The Future of Business Brokerage
Business brokerage is at a growth stage similar to the real estate industry in the 1970s. With many baby boomers looking to sell their businesses, there is an abundance of opportunities for aspiring brokers. As education about the role of business brokers spreads, the industry is poised for significant growth.
