Business Slowdown: What's A Broker To Do?

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Posted on January 9, 2009 by Peter Siegel, MBA

Business Slowdown: What's A Broker To Do?

While a number of business brokers involved in the current market are complaining about the loss of business, and wondering how much longer they can hang on in an environment where deals are becoming fewer and farther apart, the smartest professionals realize this is a good time to work on some of the projects they've been putting off. They've always known that "seeding" activities--such as prospecting for new clients--are important, but there just didn't seem to be any time to engage in them. Until recently.

The good news is the surprise that many people experience when they get busy laying the groundwork for future business, and discover people ready to buy or to sell today.

And here are some thoughts about work that can be conducted now, to help build a new client base and increase the likelihood of sufficient business in the future.

--Direct prospecting for seller candidates can take the form of an email campaign, a telemarketing strategy, a direct mail program, participation in small business community activities, or just walking down streets where retail and commercial business are found, shaking hands and passing out business cards. Probably the best idea is to engage in all of these.

For many brokers the idea of cold calling to find sellers is about as appealing as the thought of bathing in ice water or cleaning fish. Perhaps it was possible to avoid doing much of this when there were other, reasonably productive ways to stay busy. But now, those committed to remaining in the business should focus on creating new relationships, perhaps not for today, but for the time--hopefully in a few months--when money and confidence have returned to the market where small business are bought and sold.

--Anticipating that the next wave of buyers will include many who've recently become unemployed, brokers may want to introduce themselves to human resources specialists at local corporations--the very folks who will counsel those being laid off. Also working with the newly-jobless are "outplacement" organizations, many of which may have contracts with local corporations to help the human resources departments in their efforts to find work or other business opportunities for former employees. State employment development departments have much the same objective as these private organizations.

Business brokers can enter this picture by relaying an idea to those providing service for job hunters--the suggestion that some people looking for work might actually be better served by introduction to a skilled broker rather than, or in addition to, getting the usual pep talk and list of possible job openings. That is especially the case for "clients" who've received a severance settlement that can be used for the down payment on a business.

--There's a similar approach--a tactic for getting acquainted with strategic advisors--that helps when seeking prospective sellers. Some brokers make it a practice to prepare letters that explain what they can do for sellers, and then conduct a mail campaign--often with follow-up phone calls--to accountants, attorneys and asset planning professionals.

Stockbrokers and real estate agents often work hard to cultivate relationships with these advisors, hoping to get introduced to clients who will want their services. Business brokers don't usually pursue this networking opportunity as aggressively. And yet, before small business owners can invest funds in the stock market, or buy pieces of property, many need to sell their companies. Their advisors ought to know whom to call, when clients are ready to exit their businesses with the cash required to execute their estate planning strategies.

--Going back to school may require as little a commitment as catching up on the continuing education requirements to keep broker and agent licenses active, or may involve considerable study in a useful discipline--such as business appraising--that will help generate added cash. And business brokers who've put off satisfying requirements needed--for example--so they can get "certified," might now discover they actually have the time.

Not only do these suggested activities promise to bring reward in the future, they often represent an opportunity for business brokers to remain active enough right now, to maintain that positive attitude so necessary for success in this industry.