Business Brokers And Geographic Market
Often, people will confuse the profession of business brokerage with the sale of real estate
. Although there are similarities on the surface, there are in fact many differences. Business brokers usually serve a much broader geography since, unlike real estate; a business broker needs to understand a company along its industry and valuation parameters.Neighborhood location has much less to do with a business valuation than a neighborhood might have for a house in the suburbs. This article will explore some of the reasons a business broker usually serves a much larger territory than the typical real estate agent.
Business Brokers Usually Work an Asset Class
As mentioned, a realtor may be familiar with the market for real property in a city or neighborhood and they may make much effort to familiarize themselves with local market issues which drive values. A business broker may focus much less on geography per se, since their focus is dominated by the size of the business and industry. As an example, an business intermediary who specializes in businesses valued less than $5 million may be familiar in the business resale market in a very large area such as a territory from Toronto to Kitchener, Hamilton and Niagara Falls, Ontario. The point is that a business brokerage professional need not necessarily limit their practice to only one city when the reality is that they will probably serve their clients much better by having a regional focus.
There are Fewer Businesses than Houses
The other point to consider is that there are far fewer businesses listed for sale than there are homes. As well, a business sells much less frequently than a piece of property might. For this reason, a business broker would have a broader geographic focus in order to do a sufficient volume.
Multiple Company Locations
Sometimes a business broker will encounter a situation where a business for sale has multiple locations. A competent business intermediary should be able to serve this type of client at a regional level. For instance, an owner of a franchise food business with multiple locations looking to sell the business would prefer to deal with a professional with a broader geographic focus. Another example would be an enterprise that has clients throughout the province of Ontario. Such a venture would also benefit from a business brokerage professional that has a broader outlook.
Buyers Come from All Over
The other reality is that business buyers are not geographic-centric. For example, a prospective buyer may be interested in a business for sale in Toronto but they may live in Oakville. This person will not merely limit their search for business listings in Oakville, they will search throughout the entire GTA. If they were buying a home, however, they very well might limit their search to primarily Oakville. The point is that buyers of small businesses tend to broaden their horizons geographically when viewing business listings so a business broker who understands this will naturally broaden the marketplace they cover.
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