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What Does It Take to Run a Brokerage Firm?

“I had bad experiences with brokers – so I became one”

We talk to brokerage owner and serial entrepreneur Eddie Pampalian about his experience.

Eddie is the owner and manager of Network Infinity and has been a broker for seven years. 

In this interview, we asked Eddie to explain exactly what a business broker does and the secret to his success.

But what if you’re a broker wanting to buy or sell your own firm? Do the same rules apply? We get the inside track from an expert who has owned 13 businesses himself.

What does a business broker do?

The way I would explain it is that we’re the real estate agents for buying and selling a business, rather than property. We place the opportunity of buying a business in front of the most relevant audience at the right time.

Have you owned a business before?

I’ve owned 13 businesses in the food and beverage sector over the years and right now I own three. Quite a few of my colleagues in Network Infinity also own businesses – we all have that kind of background.  

I got into brokerage because I had a few bad experiences with other brokers when buying and selling my businesses – and I realised I could provide a better service!

How does Network Infinity work? 

We’re the national franchisor of a business brokerage.

It’s a tough market to be in, especially for a broker [operating] on their own. There are a lot of overheads, you need to advertise in many different places and we offer an alternative.

The day-to-day nature of the broker business is hard work; there’s a lot of paperwork and you have to devote a lot of time to communicating with accountants, solicitors and other stakeholders involved with each sale.

It’s easy to get bogged down and we provide solutions to overcome this. For example, we have a central fund for marketing that all franchisees contribute to, plus we have several people in head office who do all the paperwork.

This means that our brokers can do what they do best: making connections with new clients and keeping the ball rolling.

How do you buy or sell a brokerage firm ?

You still have to evaluate each business. For example, if the brokerage is a one-man band and most of their business is made up of new business as opposed to repeat business, it would affect the overall value.

However, if it’s an established business with a specialised niche in the market, they’ve probably got systems in place and a good customer database – and it could be a high-value business.

You would also look at their market share and what kind of clients they have. It’s great if they have a large franchise on their books.

What type of people are your customers?

We’re a national company and we deal with many different industries. A major proportion of our clients are in the food and beverage industry, as they seem to change hands more often than other businesses.

What advice would you give to someone contemplating buying their own business?

They need to carry out detailed research and have a good understanding of the market. The most critical decision is whether or not to join a franchise or go into business for themselves. 

I would advise that the franchise model is a good option. Network Infinity is based on a ‘when we make money, you make money’ model.

We also keep fixed costs low, but that means our royalties are higher than other models. Other franchises might work differently.

Anyone thinking about buying a franchise needs to do comprehensive research before joining.

If they want to go it alone, they need to weigh up the costs. Fixed costs can be three to four times higher if you do it on your own – so even though they’re not paying a royalty, their overheads are often higher.

It comes down to the individual, really. If they’re willing to put the work in and have good contacts, then it could work.

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Faye Ferris

About the author

APAC Sales & Marketing Director for BusinessesForSale.com, the world’s most popular website for buying and selling businesses globally and attracting over 1.5 Million visitors each month. To contact Faye please email faye@BusinessesForSale.com

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