Many people believe that you must be a Lord Sugar-esque salesman with an accountancy qualification and a specialisation to be a business broker. However, this simply is not true. As long as you are willing to learn, passionate about business and want to get results for your client, a business broker franchise could be perfect for you.
John Hatt, the Managing Director of Business Partnership, shares the most common misconceptions about owning a business broker franchise.
Despite the pandemic, business brokers are continuing to be successful, and the industry is growing. However, entrepreneurs may be put off exploring the world of business brokers due to several misconceptions, which quite frankly hold no weight in this day and age. This means people are missing out on the benefits and profits of investing in business broker franchises. So, to help clear the air, here are five common misconceptions about owning a business broker franchise.
- You need accountancy qualifications
Franchisees keen to become business brokers typically come from various backgrounds like finance, accountancy, engineering, marketing, wholesale, and the care sector. Some have owned and sold their own businesses. Others have not. However, contrary to popular belief, there is no tick box of qualifications required.
At Business Partnership, we recruit on aspects of personality and past business credibility. So, if you understand the fundamentals of what makes a good business, enjoy meeting people, can build a rapport and are willing to network amongst business groups, the important parts of business broking should also come naturally to you. You should be able to gain a basic understanding of a company’s stature and situation through reading their accounts. You certainly do not need to be some maths whizz analyst who can make insightful valuations through formulas stored internally in their head.
- Large national brokerages are preferred to local representation
Contrary to popular belief, choosing a local business brokerage over a large national brokerage has numerous advantages. The first is that you can connect with your broker one to one. When running a business brokerage, the personal touch is what is important. It is often the case that a business owner is selling their baby, something they cherish enormously: they do not want some ruthless suit with a rigid handshake and an uncompromising posture to come and value their life’s work after knowing them for 10 minutes. So, business owners often prefer a local and sector-specific business broker due to a feeling of personability and genuine care.
Another advantage of owning a localised business brokerage is that you will have excellent knowledge of market conditions in the area. For example, businesses in real estate sell for values based on local conditions. This means that even if revenues are equal, the same business in a more affluent location can sell for more than in a less affluent location. A localised business broker will understand this and therefore be more valuable to a business owner. Another advantage of being a local business broker is having a professional network of local lawyers, bankers and consultants to refer, to assist the parties with the transaction, which massively benefits the seller.
- You need to be a silver-tongued salesman
Believe it or not, you do not have to be a silky-smooth salesman to be a successful business broker. You could have been the most effective salesperson in a previous role. Yet, building a strong network of accountants, independent financial advisors, solicitors and other professionals will count for more in business broking. Rather than being a salesman, business broking is more about the value of your team and your network, the advice they give, the professionalism they show and the trust you share. A good reputation and a strong network can assist in the negotiation of an acquisition.
Business brokers with high levels of professionalism and experience can keep sellers and buyers moving forward with a deal, even when all seems to be lost. For first-time sellers or inexperienced owners, a local business broker can be a helpful guide. The important thing is to understand your needs, do your homework ahead of time and stay involved throughout the process.
- Franchise fees are a percentage with no upper limit
Once a franchise has given an investor the rights to operate under their brand it is only natural that they want to make sure they financially can afford to provide support to their franchisees. This can be achieved in several ways; however, many people believe the common misconception that franchise fees are just a percentage of what you, the franchisee, earns with no upper limit. This simply is not true. The reality is that there is a wide range of ways franchises operate. One example is fixed management fees. These management fees allow you to earn the fruits of your labour. So, the harder you work, the more success you will have.
- You need a specialisation and must stick to it
A specialisation is excellent. However, as mentioned above, a comprehensive grasp of general business counts most when becoming a business broker. Of course, if you have a specialisation, you may well want to stick to it, and it can undoubtedly help you in some sectors, but it by no means restricts or limits you when dealing with clients outside of your specialisation. This is because you will receive a fantastic level of training when partnering with your business broker franchise.
A franchise is made up of people who have been there and done that, meaning your franchisor and the head office team are well equipped to give you all the help you need to become a success. In fact, a good franchise will provide you with all the training you require to supplement your previous experience. This allows you to thrive as a business franchisor safe in the knowledge you have a solid support network behind you.
Now more than ever, people are looking to buy and sell businesses post-pandemic resulting in a higher demand for business brokers. However, to be successful in this demanding market, having a trusted, well-known brand name really makes a difference. By becoming a franchisee, you have the benefits of a well-known brand that customers will know and love, training and support, and a turnkey business model that enables business brokers to reach their full potential. By joining a business broker franchise, you will be exposed to proper training and receive the right support from the franchisor – which makes a world of difference when running your franchise and helping clients.
About the author:
John Hatt is Managing Director of Business Partnership, a unique national franchise network of 20 regional offices connecting business sellers with business buyers. With over 20 years of experience helping businesses sell quickly at maximum value, John understands the practical and personal issues involved in selling a business and Business Partnership provides a personal, professional, and confidential service to buyers and sellers alike.