One of the first known Business Broker listings, in the United States, is said to have occurred on May 11, 1742. This Boston Gazette advertisement featured the listing of a Slitting Mill and Iron Forge business for sale:
“Slitting Mill and Iron Forge. To be Sold a good Penniworth, a Slitting Mill completely finished and furnished, situated in the middle of near 29 Forges in the Compass of 12 Miles, with a well built Forge with Two Fires, and conveniency for a third; together with a well built and well accustomed Grist Mill, all standing on one Dam; on as constant a stream as this Land affords; with accommodations for other Water Works; A good Dwelling House, Coal House, and above 6 Acres of Land, and a good Orchard upon it, said Works stand on Namasket River in Middleborough, 13 Miles from Plymouth, and 10 from Taunton. All finely situated for a County Seat; and now Lets for 379 Pounds per Annum. Any Person or Persons minded to purchase the same may inquire of the Rev. Peter Thacher of Middleborough aforresaid, or of the Printer hereof, and know further. N.B. The Reason of this Sale is because the Person wants the money for it, and intending to leave off that Business.”
This article highlights an important truth; business brokers have been the middleman in business sale transactions for over 250 years. Imagine trying to navigate the sale of a business without a Business Broker. As a business owner; How would you do it without access to technology? How would you find a buyer? Know the laws? How to price your business? etc. Today technology has narrowed this gap between Business Owner and Buyer. The changing times challenges us with the question, "Should business brokers continue to be the middleman for business sales in the future? " Addressing this question, I feel, is the key in setting Business Brokers up with 2x more sales. In order to dive into this question, afford me to use an analogy. Let's say I was a skydiving instructor. As an instructor I only had the experience of 5-10 skydives per year. Would you sign up to jump out of a plane with me? - I wouldn't if I were you. The truth is that most business brokers, on average, only close 5-10 business sales a year. Should 5 - 10 repetitions a year really be the industry benchmark? I think we we owe it to business owners to have as much experience as possible when handling their precious retirement parachute.
This thought drove me to do some thinking, which led to some digging. After doing some research, I found that listing a business and screening buyers takes up to 50-70% of a Brokers' time. It got me thinking... What if Brokers had a way to automatically screen buyers? What if they could focus on the closing side of their job? This is where BizRetire comes in. What does BizRetire do for the Broker? BizRetire acts as a pseudo gate-keeper to filter out tire-kicking buyers:
- We require buyers to agree to a Non-Disclosure Agreement. - Listings are 100% private (unlike BBS which is public). - Buyers have to pay in order to see listings (requires financial commitment).
- Buyers cannot directly contact Sellers or get their contact info; Sellers must initiate after Buyer interest is given.
Steps for the Broker to sell more businesses: Remember the question, "Should business brokers continue to be the middleman for business sales in the future? " This is where the rubber meets the road; try to keep an open-mind. 1. Prepare a quick and minimal price analysis for the business owner. 2. Refer owners over to our platform, and They list. A good owner candidate might be:
-an owner with a business that may be "too small", "unsellable" , etc.,
-an owner with a DYI mindset, OR
-an owner with steadfast and incorrect assumptions, - the hope being Buyers will set them straight to reality.
3. Owner conducts Buyer screening, this allows them consider Buyers that: -Can afford their company, -Have the right personality for the business, employees, community, suppliers, and customers. (legacy) -Align with the mission/vision/values of the company and community (legacy) AND,
-Have the right experience / background to grow the company.
4. The owner comes back to you with some Buyers that they like and they're interested in selling to.
5. You take over from there and help get the business sold; completely skipping the screening and listing process!
Case Study Example:
Both Examples Average Business Sale Price: $500,000 "Main Street" Business Broker - AKA "Normal Way" Time Spent w/ Buyers: 60% Sales Per Year: 5 * ($500,000) = $2,500,000 Commission: 15% * ($2,500,000 in sales) =
Take-Home Pay: $375,000
Vs.
"BizRetire Way" Time Spent w/ Buyers: 0% (100%/(100%-60%) = 2.5x more sales/efficency)
Sales Per Year: 5 * 2.5 = 12 rounded down
Commission Rate: 8% * (12 x $500,000 = $6,000,000 in sales) Take-Home Pay = $480,000 "BizRetire Way" - Modified for time
Time Spent w/ Buyers: 0% (100%/(100%-60%) = 2.5x more sales/efficency)
Sales Per Year: Only choose to pursue/sell 7
Commission Rate: 10% * (7 x $500,000 = $3,500,000 in sales)
Take-Home Pay = $350,000 Time worked = Only work 59% of the time (7 sales/ 12 total sales time allowed) Time for Vacation, Hobbies, Family = 41% of your total year, or 4.92 months.
Why do it this way? You now become the Best Broker on the market:
-You now charge a smaller commission/fee, while making larger margins for your time invested (you're doing 40-60% less work). -Your experience is second bar-none (twice the number of reps as anyone else on the market).
More Time for You:
-can now focus on the businesses that make the most sense for you, knowing the ones that aren't at least have a decent shot.
Higher Closing Rates:
-Business owners are less likely to dip out at the closing table if they know the Buyer, like the Buyer, and feel their business is in good hands.
Any questions or want to start? Contact us via our contact form, or via the outreach method you were contacted by. Early Business Broker partners will receive 100% off business listing for their clients; don't wait!
Claims in this article are theoretical and do not guarantee results. This article does not imply or create an agreement between any party.
Comments