13 November 2023: Business Brokers: Specializing
If you’re a business broker – or considering learning how to value and sell businesses – have you thought about specializing; that is, specializing in one or two specific types of businesses?
When new business brokers are going through our courses there’s often discussion about the upsides and downsides of specializing. In fact, one of our courses, “Introduction to Business Brokering“, includes a full lecture specifically on this topic.
Last week, during an onboarding call with a new course enrollee, this topic came up. In a slight twist, our new broker didn’t bring it up; I did. The reasons I thought it would be wise to discuss were related to his background and experience. More on this in a moment.
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We don’t generally recommend that new business brokers specialize – at least initially. But, like so many instances in life there are exceptions. This was one of those instances.
General Advice
As a rule, we advise new brokers to generalize for their first year or two. Get a few deals under their belt. Learn the ins and outs of several industries, if possible. They may find that they get a greater sense of fulfillment in one or two specific industry channels than in some other ones.
But it’s not at all unusual that new brokers continue to be generalists. In fact, in our experience, most do. They enjoy learning the inner workings and culture of different industries. This approach makes them the potential “go to” person for any business owner in their region or beyond. As a generalist, it also means they’re likely to get more general inquiries from buyers. This is beneficial from a co-brokering or referral standpoint.
For example, a generalist member of The Brokers Roundtable℠ who is approached by a buying group looking specifically for commercial plumbing contractors based on the U.S. left coast can, if they’re not already representing one, post the need in The Brokers Roundtable℠ to see if any of the member brokers or business owners might have something that would fit the buyers’ criteria.
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Courses! Courses! Courses!
Many of you have asked if our Flagship Course, “Learn How to Value and SUCCESSFULLY Sell Businesses“, could be made available on a module-by-module basis. Instead of enrolling in the complete course, could you enroll only in the module(s) you wanted? We’re happy to report that this is now possible.
We’ve broken our Flagship into six separate modules (or module groups) to give you all the flexibility you need to learn only what you want to learn – and we’ve moved them all over to the new Brokers Academy in The Brokers Roundtable℠ . The Flagship is still available but the modules are now available individually.
You don’t need to be a Member of The Brokers Roundtable℠ to access any of these courses but if you are, you’ll receive a 20% discount on any course you enroll in. If you’re not yet a member of The Brokers Roundtable℠, you can learn more – and get access to all the talent and resources – here.
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When I got started back in 2001, I took any listing I could get. (Like most new brokers, I needed listings and was not about to turn any down, regardless of industry – or size, for that matter!) But I still enjoy working with different businesses and, therefore, remain a generalist.
Of course, the market you work in will have an impact on whether you should specialize or remain a generalist.
For example, if you’re in rural or semi-rural area where the number of businesses is limited by the number of people populating the area, generalizing might be the only way to go. A broker in our network lives and works in an area with a population of only about 50,000. As can probably be imagined, specializing in ANY industry – small manufactures, convenience stores or even tax preparers – would be unwise. There simply aren’t enough businesses in ANY given industry where he works.
But our tagline -“Every Business That Doesn’t Fail Will be Sold…Every One!” is borne out in this example. His area, small as it may be, has convenience stores, tax preparers, small manufactures, retailers, etc., just like any other area. There’s just not enough of any one type to make a successful career of it. He’s a generalist.
The Exceptions
There are always exceptions, right?
If you’re moving into business brokering from some other career, you may have the most important ingredient needed for a specialist.
The onboarding call we had last week for a new course member was with a man who was probably at the mid-point of his career. Over the last 20 or so years, he had spent time as a chief financial officer (CFO) for two Lower Middle Market businesses and as a consultant to several others. One of those “others” was a group recently formed specifically to acquire a single business type. This group planned to focus initially on one distinct industry in one particular geographic region. But their plan was to go nationwide eventually. This was a classic “roll-up“.
Our new broker was perfectly positioned to take advantage of two opportunities using his experiences as CFO and consultant.
As a CFO, he was well-connected in the industry the company he worked for was in. He new the CFOs of other companies in that industry and he knew the industry’s numbers. He had personal relationships and knew who to call. As a consultant, one of the business he advised was in the industry channel that the roll-up group was targeting
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Our course, “Learn How to Value and SUCCESSFULLY Sell Businesses“, teaches you how to accurately value and successfully sell businesses.
Once we heard about the extent of his connections, we suggested that, because he was known in these two channels, there would be little effort required to get to the decision-makers in those businesses, to let them know what our broker was now doing. My advice was to focus on those two target groups – where many of the players know him. I reminded him that, again, given our tagline, every business in those two channels was likely to be either a buyer or a seller.
The Bottom Line
Though many of the people who enroll in our courses don’t have the kind of background that this fellow has – real estate agents are a prime example – and would be wise to be generalists initially, those who do have some industry credibility, contacts, etc. might consider whether specializing would be a good decision.
And to be sure, there are all sorts of specializations.
In our network, we’ve trained brokers that specialize in restaurants, hardware stores, wholesalers of a particular line of building materials, etc. We even have a broker who specializes in the sale of private schools.
And specialization can be taken even deeper. For example, specializing in restaurants can almost be considered “generalizing”. Depending on the geographic market, specialization in the restaurant industry can be as precise as “white table cloth” restaurants, Mexican, Asian, sushi, wine bars, etc., etc., etc.
Remember, “Every business that doesn’t fail will be sold…Every One!” If you have expertise in a specific industry, specialization is a legitimate path to consider. Get known as the “go to” professional in the industry and you’re likely to have plenty of businesses to sell.
I’d like to hear from you. What topics would you like me to cover? How can we tailor these posts to be more useful to you and your business. Let me know in the comments box, below, or email me at jo*@Wo*******************.com.
If you have any questions or comments on this topic – or any topic related to business – I’d like to hear from you. Put them in the comments box below. Start the conversation and I’ll get back to you with answers or my own comments. If I get enough on one topic, I’ll address them in a future post or podcast.
I’ll be back with you again next Monday. In the meantime, I hope you have a safe and profitable week.
Joe
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The author is the founder, in 2001, of Worldwide Business Brokers and holds a certification from the International Business Brokers Association (IBBA) as a Certified Business Intermediary (CBI) of which there are fewer than 600 in the world. He can be reached at jo*@Wo*******************.com