Building Your Business Pipeline
Transcript of Building Your Business Pipeline
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Building Your Business Brokerage Pipeline
Brenda Sali, CBI, M&AMI, BCA
Workshop Objectives
What is a Business Brokerage Pipeline?
How to Find Sellable Businesses to Build your Business Brokerage Pipeline?
How to Stay in Touch with your Database of Prospects to Build your Brand and have Quality Listings for Years to come.
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What Do You Do Today?
• Direct Mail• LinkedIn• Drop Cards• Emails• Networking (Associations, BNI, etc.)• Facebook• Cold Calling• Other
Path To Success
• We will discuss how you can build a profitable and successful pipeline.
• How the team at Agency Brokerage Consultants built a $100M transaction pipeline annually.
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What is A Business Brokerage Pipeline?
• Typically a Database of Business Prospects
• Business prospects that you want to market to and list for sale
• Constantly Evolving
Universe ‐Narrowing the Playing Field
• Inc. Magazine suggests that there are 27 Million Businesses in the US and 1.17 Million Businesses in Canada.
• The vast majority are not for sale or cannot be sold.
• How can a new Business Broker find 5‐ 10 Good businesses to sell each year out of this large universe?
• How can a broker maximize
– Advertising money
– Time investment
Improving Your Odds for Success!
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Universe ‐Deciding WHERE You Want to Sell
• You should decide what geographical area you want to cover.
• When starting I recommend searching in a radius where you can drive in 2‐3 hours one way.
• Company lists can usually be purchased by:– Zip Codes
– Counties
– States
• Your area’s population and geography
will drive your decision.
Universe ‐Deciding WHAT You Want to Sell
• Not all businesses sell easily, quickly or at all
• Pick 10‐20 businesses categories/types to create a starting database of at least 1,000 businesses
• Business Broker Press periodically lists the top selling businesses
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Universe ‐Deciding WHAT You Want to Sell
Top Businesses Commonly Sold
‐ Restaurants (comprise approximately 25% of businesses sold in the US)
‐ Hair Salons
‐ Construction/Contractor
‐ Manufacturing
‐ Liquor Related
‐ Real Estate Related
‐ Lawn/Landscaping
‐ Retail
‐ Cleaning/Laundry/Dry Clean
Most Commonly Sold Business
Source: April 2019 Five Year Study completed for BBF & IBBA Workshop by Lou Vescio
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Universe ‐ Selecting Business Types
• Select about 10 business types where you might:
– Have owned one
– Have worked in one
– Have some knowledge of the business
– Have an interest in the business
– Fragmented business segment ripe for consolidation
– Is a top selling business
Example: Fast Food Restaurants/Franchises
• Add or subtract from this list as your business evolves
Universe –What Size of Business to Sell?
• Most new brokers will list any business regardless of size
• More experienced brokers have a minimum size of transaction they think is worthwhile
• Must decide what is the smallest commission you want to earn
• What does your minimum transaction size need to be?– $100,000 $500,000 $800,000 >$1,000,000
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Universe – Revenue Size to Achieve your Minimum Transaction Number
• Let’s assume one of the business categories you selected is “Restaurants”
• Let’s assume your minimum transaction size is $300,000 or more
• How much in annual sales does the restaurant need to generate in order to sell for $300,000 or more?
Using Comp Databases
• Use one or more Comp Databases to Calculate the Sales Volume.
Watch how to use BizComps to Calculate Minimum sales volume for a given category type and desired selling price.
https://screenrec.com/share/zBoFT7fHEX
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Sales Volume
• BizComps shows that restaurants that sell for $300K or more sell on average for 44% of sales.
• Therefore, download a list with sales of ($300K/.44) = $681K or more or as close as possible to that number.
• Do this for each of the Business Categories/Types you selected
Note: There are many types of Restaurants, and they can be analyzed in greater deal, such as Sub Shops, Fine Dining, Fast Food, etc.
Determine Minimum Sales Needed
An HVAC Business
that sells for $400k or more
needs at least $750k in sales
A Landscaping Business
that sells for $600k or more
needs at least $900k in sales
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Universe ‐ Refining the Criteria
• We have Selected – The Geography where we want to work
– The Types of Businesses we want to sell
– The Minimum Revenues of the businesses we want to sell
• Other considerationsThe best businesses to sell are:
• Ones that are mature (+5 year in business)
• Ones where the owner wants to retire
• Ones that have a track record of profitable sales
Demographics of Small Business Owners
“Because of the extensive media coverage of young tech entrepreneurs, most people think the average small business owner is a 20 something techie who needs a shower.”
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Small Business Owner Retirement Age
Many Small businesses sell when the owner is ready to retire
• 42% of small business owners said they plan to retire at age 65 or older
• 29% said they hope to retire between ages 55‐64
• Only 19% anticipate plan to retire between the ages of 40‐55
How do we find mature and profitable businesses where the owner is ready to retire?
Source: Inc. Magazine, August 9, 2017
Finding Mature Businesses
US Bureau of Labor Statistics
10 Years Old: 34%
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Business Survival Statistics
• According to the SBA 56% of all startup business fail in the first 5 years
• Most businesses less than 5 years old are not likely to be worth $300K
• The US Bureau of Labor Statistics show that about 35% of establishments survive 10 years and 25% survive at least 15 years
This suggests that for biggest bang for your hard‐earned dollar purchase a list of businesses that have operated for at least 10 years and preferably 15 years.
Targets ‐Why Limit Our List
• What are we accomplishing by fine tuning our prospect list?– Need to create a list of businesses with a higher probability of selling
– By taking a narrow focus on businesses that are commonly sold– And by owners that may be ready to sell– The Broker’s odd of finding a good seller are greatly improved
• What are we trying to find?– Good cash flowing businesses– With a motivated Seller
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Targets ‐ List Criteria
• Based on the analysis of:– Where you want to sell ‐Geography
– What you want to sell – Business Categories
– Size of business ‐ by sales volume
– Age of businesses – target businesses 10 ‐ 15 years old
• A new broker can purchase a more targeted list of 1,000 businesses as a starting point
• When spending a $1.00 to $2.00 per letter, you need to get the best bang per buck from your mailings
Targets ‐ Buying the List
• There are many places to acquire business mailing lists
• Some libraries provide free access to such lists
• Lists can be purchased from:
– D&B Hoovers
– Data Axle Genie (was Sales Genie/InfoUSA)
– Nation‐List International (IBBA Member Michael Marks)
– Direct mail houses
– Industry associations
– Many other sources
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Targets ‐The List
• Expect to pay 10 cents to a dollar per business record depending on the database.
• No list is Perfect
• All have Errors
• Expect 5‐15% incorrect data or business is no longer in existence.
• List should be more accurate for mature businesses
Targets ‐CRM System
A CRM system is a Must to:• Maximize your Investment in the List(s) you Purchase • Maintain your Database of Businesses/Prospects
• Names• Owners’ names• Addresses• Phone numbers (office & cell)• Email addresses
The CRM Database is the Basis of your Pipeline
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Suspects ‐Using your CRM
Upload company data from list(s) into your CRM system• Use it to Market to Suspects – turn them into Prospects
• Keep History of all Communication with Suspects & Prospects
• Create Tasks – phone calls, meetings
• Manage Transactions
CRM Systems for Business Brokers
There are many CRM systems for Business Brokers• Business Brokers CRM https://businessbrokerscrm.com
• Deal Studio https://deal‐studio.com
• Power Broker https://powerbrokersoftware.com
• OLS Business https://www.oslbusiness.biz
• Eagle Software https://www.geteagle.com.au
• Microsoft Dynamics‐Avtex https://avtex.com/solutions/crm
• Navatar M&A CRM https://www.navatargroup.com
• Zoho –Customize your own CRM https://www.zoho.com/crm
Find a CRM that Meets Your Price Range & Requirements
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Making your CRM Work for You
Step 1 ‐Mailings
• Mail letters to your entire database at the rate of 200 each week
• Each company should be mailed to at least 5 times
• This will take 25 weeks for a database of 1,000 companies
Build your Brand through Mailings
• Expect that 1% or less will contact you from the mailings
• A much higher number will keep your letter(s) on file for future reference
Direct Mail Helps Build Your Brand
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Getting the Most from Mailings
• Most Business Brokers find cold calling prospects the most difficult task
• After Referrals, it is your most effective source of creating & qualifying good leads
Prospects – Purpose of Cold Calling
• Learn about the business & the Owner –Ask a lot of questions. Listen. Timeframe to sell.
• Qualify the business – Is it a business you even want to sell?
• Determine next step – Leave the call with a clear future – Zoom call, In‐person meeting, etc.
• Offer something free – “Opinion of Value” on their business
Every business in your database should get a letter or call at least once a year
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Prospects ‐Cold Calling
• After each call or meeting, make notes in the CRM
• Information important to the Broker
–Business Owner’s exit timeframe
• ASAP (if so why?), 1 year, 5 years
–Is it a business you even want to sell?
Prospecting Outcomes
YESMAYBE
NO
Good Brokers Develop Clients Over Many Years
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Prospecting Outcomes
• Most salespeople want to get an immediate
Yes or No• Business Brokers are good with a
Maybe
Prospecting – Business Brokerage & Selling
• Business Brokers are Consultative Salespeople
• Selling is a Skillset that can and should be learned
• Where to get Consultative Sales Training– Books
– Videos –Online & DVD’s
– Online courses
– In Person Courses
• More Training = More Sales
= More Money for the Broker
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Prospecting ‐Qualifying
• Not all business sell easily, quickly or at all
• Only 15% of Business Broker listings sell
• Qualifying your prospects is critical to identifying sellable listings
• Business Brokers need to complete the sales cycle twice – once to the seller and again to the buyer
• The key to qualifying is asking questions and listening more than you talk.
Prospects ‐Cultivating your Pipeline
CRM = Long‐term Pipeline
• Used for direct mail, telemarketing and email blasts
• Keep a history of conversations, emails and meetings
• Manage Transactions
• Task calendar for follow‐up calls, meetings or emails
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Won ‐What to do after you Close a Sale
• Ask the Seller to write a referral letter
• Every time you close a sale, send a letter or postcard to all the similar businesses in your database highlighting the sale
• Include quotes from the referral letter
• Add closed transactions as tombstones
on your website
• Celebrate your closing
Making it A Realty ‐Testimonial
• Coastal Business Intermediaries has built and cultivated their Business Brokerage pipeline using this process
• CRM now contains 5,000+ Seller Prospects, 6,900 Buyer Prospects
• 2020 ‐ $102M in deal flow with 4 brokers
• 2021 –Will hit $140M in deal flow with 4.5 brokers
IT WORKS!
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Learnings
How to Establish & Grow your Business Brokerage Pipeline with Sellable Businesses.
How to Manage, Develop and Stay in Touch with your Prospects
How to Cultivate your Business Brokerage Pipeline for Years to Come.
Questions
Contact:Brenda Sali, CBI, M&AMI, BCA
[email protected] Phone: (321) 255-1309
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