Business brokers have become key players in today’s business; they act as mediators to assist buyers and sellers of businesses. This article aims to answer the question, how much do business brokers make.
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How Much Do Business Brokers Make
Business Brokers in the United States are among the handsomely paid workers. An average business broker can make up $64 per hour and about $128,000 annually. Generally, brokers charge a commission of 5 – 10 percent on every transaction they carry out.
The commission percentage brokers charge depends on several factors which are peculiar and unique to them. Every broker or brokerage firm has a defined metric for charging their commission percentage; hence there is no stipulated figure for commissions on brokerage services.
If you are considering becoming a business broker, it will interest you to note that they enjoy many opportunities. Whether you want to become a business broker because you are passionate about the art and doing business, how much business brokers make is something that you would be interested in, and this article covers every aspect and detail necessary to give you an informed lookout on what business brokerage is about?
As I stated earlier, business brokers charge a commission of 5 – 10 percent of the entire cost of a business deal. The percentage range is a function of the individual or company broker, and it varies from broker to broker. Some brokers in the United States charge as much as between 8 – 12 percent commissions.
Factors such as the business type, size, etc., primarily affect how brokers charge their percentage commission. When a business broker expects a meager selling price, they are likely to set higher percentages. You can, however, negotiate brokerage commissions and fees when they seem too high for you.
How Much Do Business Brokers Make in the United States 2021
Business brokers in the United States with over four years of experience can earn up to $80,000 – $120,000 annually. Those new to the industry will have their income level around $40,000 – $70,000 annually. The experienced business brokers with more than ten years of experience are the highest earners with an annual income of about $130,000 – $200,000.
Who Is a Business Broker?
A business broker (also known as a business transfer agent) is an individual or company that acts as a mediator or intermediary between a buyer and seller of any small, mainstream, or large business.
There are a couple of brokers in the corporate world. While this post focuses on business brokers, it is quintessential to note that insurance brokers, freight brokers, real estate brokers, and much more. A business broker, however, is the type of broker whose focus is on intermediating for businesses.
Business brokers represent either of the parties involved in the sale of a business. They carry out a variety of activities targeted at helping their clients get the best out of every business deal. It is the job of a business broker to procure a satisfying business deal.
In addition, a business broker is saddled with the responsibility of procuring a satisfying deal. Their job involves creating a solid business relationship and establishing trust. They are expected to know the needs of their clients and assist them with actualizing their objectives.
As a business broker, you are supposed to maintain a high level of confidentiality and discretion. It is part of your job description to investigate the market to find and match the right buyer and seller. To function in this capacity, business brokers must possess a comprehensive knowledge of the business market and how the role they have to play in this business world.
Business brokerage is a big job that requires a passion for making money and skills and vast knowledge of the business market. A business broker must be well informed regarding paper works because they will likely handle paper works.
What Do Business Brokers Do
A business broker’s job is to ensure that the buyer and seller of any business are treated fairly and satisfied at the end of a business transaction. They make this possible by seeking out and meeting the needs of clients.
Business brokers are expected to carry out the following activities:
- Estimate the value of the business to be sold
- Get the business listed
- Price negotiation
- Escrow services
Generally, they assist with the sale of the business, helping to take the stress off their clients by assuming full responsibility.
A business broker must be skillful in communication and negotiation to effectively convince the buyer, bringing the business deal to a close. Also, a business broker should be good with time management and have comprehensive knowledge of financial and tax-related matters. Also, they must have a reasonable level of legal expertise. This is important because business acquisition requires legal backing.
Other aspects of the services of a business broker include:
- Valuation of a business to help clients decide the best selling price
- Preparation of an MoU of the company
- Preparation of adjusted cash flow statement of the business from three years cash return for the buyer’s review.
- Determining the genuineness of a buyer or other potential buyers
- Ensuring business confidentiality
I will be answering more questions on this article in the FAQ section below.
What is Business Brokerage Fee?
A brokerage fee is an amount charged by the business broker for services rendered to a client in executing the business transaction or providing specialized service to the client.
How Do Business Brokers Charge Commission?
Business brokers charge commissions using a percentage rate. A business broker usually charges a percentage of 5 – 10 percent commission of the final selling price of a business. For instance, if a company is sold for $1,000,000, a business broker who charges 10 percent of the business’s selling price will anticipate receiving a commission of $100,000.
Is Business Broker’s Commission Negotiable?
Yes. Clients and business owners can negotiate the percentage charged by the business broker. An effective negotiation will lead to an agreeable end where both the client and the business broker are satisfied.
Is Marketing Fee Included in Brokers commission?
The inclusion of market fee to commission is subject to the individual broker. A business broker can decide to include or not include the marketing fee in the commission paid. They can choose to levy the client upfront.
In cases where a business broker has a list of potential buyers, they may not charge a marketing fee. However, if the broker has to list the business for sale, they may charge a marketing fee.
Can I Pursue a Career in Business Brokerage?
Yes, you can. Business brokerage is an excellent career choice and a big job at that. However, it comes with a lot of challenges. With patience, consistent growth, and experience, you can grow to become an expert broker.
In the beginning, business brokers may earn meager amounts. But with each business deal closed, one begins to gain experience and connections, and before long, as expertise is achieved, financial gratification follows. Although challenging, becoming a business broker is rewarding.
As much as making cool cash can be a driving factor for becoming a business broker, look beyond the cash and choose to be the best in the field. Do not solely focus on making your percentage cut that you do not care what your client feels. The goal of every entrepreneur is to make their customers happy. This should be your goal too.
If you want to become a business broker, you are about to make a life-changing decision. And while the job can be stressful, you can make a whole lot of cash. I am confident you got value reading this article on how much do business brokers make.
Now, you are aware of the salary range of a business broker in the United States and their job description. Please share this article with your friends and family if you got value reading it.