If уоu’rе thinking about becoming a Colorado business broker, thе fоllоwing information ѕhоuld greatly assist уоu in making thе right decision about obtaining a Colorado business brokers license and moving forward with your plan.
Thiѕ article will рrоvidе уоu with thе information and insight уоu will nееd tо start оn thе road tо success.
Fоr thоѕе readers ѕtill in thе decision-making stage, the information we’re offering will hеlр уоu in twо ways.
First, it will рrоvidе уоu with thе ѕаmе knowledge, education, аnd information аѕ thе individual whо hаѕ аlrеаdу made thе decision tо bесоmе a business broker.
Secondly, and mоrе importantly, it will give you some warnings about what NOT to do if and when you become a business broker. These warnings are critical if you’ve not decided yet what to do. You may not be cut out for business brokerage, and we’re going to address that subject in this article.
Evеrуоnе ѕееmѕ tо hаvе thеir оwn idea оf juѕt whаt business brokerage iѕ, оr реrhарѕ whаt thеу wаnt it tо be. Wе can’t make thе business whаt уоu wаnt it tо be; wе саn оnlу tеll уоu whаt it iѕ аnd lеt уоu tаkе it frоm there.
Yes, you probably got to this page because that’s what you searched for.
But, there is no such thing.
Colorado, however, does require a business broker practicing in Colorado to have a real estate broker’s license.
And, even if you didn’t search for that, we’ve got you covered.
Before this article is done, we’ll tell you how to get that. That’s probably what you meant to look for anyway!
But, just understand that it’s not a special business brokerage license and there is no Colorado-sponsored continuing education to back up business brokerage as a profession. Colorado requires a business broker to have a real estate license because the Colorado state legislature does not know the difference between a commercial real estate broker and a business broker.
Besides, the more licenses, the better the fee revenue! Right?
Nor does the Colorado Real Estate Commission (CREC) want to recognize business brokerage courses as qualifying CPE credits for a real estate broker’s license held by a Colorado business broker! That’s always being appealed by the Colorado Association of Business Intermediaries (CABI), but with rare success. What CREC does require is that you take real estate continuing education!
Keep tuned in. We’ll let you know if there’s any change in that. At Colorado Business Brokers, we’re all CABI members.
There Are Three Types of “Business Brokers.” Let’s make sure you know which is which:
Business Brokers are the ones that practice on “Main Street,” or at least handle “Main Street” sized businesses.
If a business is owned by the same person who also serves as its CEO, then it is likely in the domain of business brokers.
It’s most often got no more than 50 employees and its annual gross sales are under $10,000,000. Average size is more like 5 employees and under $1,000,000 in annual sales for a business that a business broker would represent.
Mergers & Acquisitions (M&A) Intermediaries handle a slightly larger business.
Sometimes the owners of these businesses are the CEOs too, but often there is a professional level of management after a business begins to exceed 50 employees and $10,000,000 in annual gross sales.
Investment Bankers are the third category of brokers. They handle the even larger deals that are – let’s say – $50,000,000 in annual sales and on up. Now, at this level, there is always a group of professional managers hired by the owners.
The owners, too, are likely to be mostly just shareholders and maybe board members, but not likely to be company executives.
They may not be involved in the day-to-day business at all.
This could still be a private company, but it can also be a publicly-held company.
So, to be clear, we’re just talking about the “lowest” category, the general “business broker” category of the smaller businesses.
85% of all business entities are at this end of the market. About 40% of workers are employed by these companies.
This market segment ranges from the “mom ‘n pop” store to some pretty big and sophisticated companies of regional or even worldwide import, but it’s still referred to as the “Main Street” market, even if that image is misleading.
This is the world of the “business broker” who needs that Colorado Business Brokers License that is really just a standard-issue real estate brokers license!
If, however, you now want to be an employing broker yourself (to be able to have other brokers in your own firm ), there is yet another course – a brokerage administration course of 24 hours – that you are required to take and pass, in order to qualify as an employing real estate broker.
Business brokers everywhere around the country are basically all practicing in the same types of markets, but the industry is so small that no two brokers seem to do it the same way. This has led to a lot of confusion.
There is a national professional trade association that you’ll want to be part of called the International Business Brokers Association (IBBA), and in Colorado, its affiliate is the Colorado Association of Business Intermediaries (CABI), that you’ll want to join. But, the numbers are really small – there are only about 5,000 business brokers nationwide. Under 2,000 are members of IBBA, In Colorado, there are probably fewer than 200 business brokers, only half of whom are members of CABI.
The big problem with this field of business brokerage is a lack of formal education available to help new brokers.
There is no college or university anywhere in the world that offers a degree in selling businesses.
There are some national franchises (TransWorld, Sunbelt, Murphy, VR and others), but their training is for their franchisees only and it is always quite minimal. The IBBA has classes that lead to a “Certified Business Intermediary” (CBI) designation, but it’ll cost you about $5,000 or so to complete that program, and it typically takes a couple of years to complete.
Because that “Colorado Business Brokers License” itself requires that you take a 168-hour course, we usually recommend that you don’t try to do all of that at once. Your best bet is to get the real estate license first, then practice a year or two with a firm that will give you some training, then join IBBA and get going on your CBI.
Before you take ANY courses, however, let’s make sure you know five things about our business before you even start. And, for those of you who have already started, listen up! You need to know this too because it’s possible then no one else has given you an honest answer to your questions about these challenges.
The average business broker does better than that and sells 20%. Many sellers on BizBuySell are business owners and their odds are less than 5%! Some firms can sell as much as 70-80% in good years. But, a really good broker is likely to sell no more than 40% of his/her listings over time. “Good years” are happening right now (2013-2019). “Bad years” were not that long ago (2008-2012).
There IS a way to cope with that reality.
But, you have to come to grips with the fact that this is not a profession where you’re going to win “your cases” all the time, or even most of the time.
What you must do is get to that 2 %who will buy as quickly as possible.
Automate the responses to the 98%.
You must learn the key questions to ask at the very beginning of the relationship and stick with you plan to ignore those with the wrong answers. That can be hard for those of us who like most buyer prospects. It’s hard to cut them off.
That means that you will need to market and “brand” yourself (not relying on your franchise or company brand) and teach your prospects who you are, what you do, why they need you and how they can best benefit from your services.
There is a “best way” to do that, but it’s hard to do until you are really an expert in this business. Teaching something requires more knowledge than just knowing something. You must know it well enough to be able to teach it. That’s quite a challenge.
Business brokers need to learn a new sales paradigm that we at Colorado Business Brokers label as the “listen, teach and lead” method. It’s no longer appropriate to “always be closing!” So, that’s the answer.
But most old-style sales folks don’t get it, and most can’t sell at all in any style.
Well, there is no easy way to say this. It’ll take years for you to learn business valuation enough to explain it (teach it?) to your seller prospects, seller clients or to the buyer prospects. You’re going to feel uncomfortable about this for years.
What you can do while you’re journeying through this long learning curve is to learn a short-cut business pricing method for now until you have more experience to know that even pricing a business is not a science. Pricing a business is an art. If you do it often enough with the short-cut methods that you can learn quickly, you will slowly develop that “art.”
First, let us assure you that the five challenges we just described each has a workaround solution. If they didn’t, there wouldn’t be any business brokers at all. But, you do need to talk to us, so we can tell you how those problems are solved.
If you want to avoid talking to us about it, you can go to Business Brokerage Press online at www.BBPInc.com and buy a 36-lecture video series with an eBook and/or printed book by Colorado Business Brokers Managing partner, Glen Cooper. Glen just finished creating this for you. It’s called “Glen Cooper on BUSINESS BROKERAGE.” Go to the “Shop” section of the Business Brokerage Press website. Glen’s book is over 300 pages and nearly 100,000 words, so there’s lots of detail there for you.
Glen specifically addresses those five challenges and outlines the best ways to handle each one. No one else covers this material as completely. What Glen teaches is not taught by the franchises or by IBBA. Neither franchise recruiters nor IBBA membership committee members want to talk about the hard parts of the business too much. It’s not good for recruiting new people.
No two businesses are alike. No two selling experiences are alike. It may take a few years to feel comfortable, but you will get a world-class, hands-on education in business valuation, small business marketing, negotiation, diplomacy, confidentiality and how to hold the hands of stubborn entrepreneurs through what for some is the worst moment of their lives, and for others the best moment!
You will also get a master-class in patience!
After riding the roller-coaster of deal flows for a few years yourself, nothing will make you sick ever again!
Researching and preparing the marketing material for the business you have for sale, talking to enough prospective sellers to get that listing in the first place, then finding and engaging 50 buyer prospects for every one that buys is a boatload of work. It’s interesting work, but it does suck up your time.
The difference is that “older and wiser” is valued by sellers and buyers of businesses.
In the world of high-tech, they think you’re too old at 40 to be keeping up. In business brokerage, some may think that 40 is too young! As long as you appear energetic, sellers are more likely to hire an older broker.
Don’t forget, however, that becoming a business broker in Colorado starts with getting that magic Colorado business broker license. That’s the beginning search word you might have used to get to this page, so we’ll use it again!