What Can You Realistically Afford? Thoughts For Business Buyers

We all have big dreams. A bigger house. A nicer car. Lavish vacations. Your own private island. What keeps these wonderful flights of fancy in the realm of dreams is the fact that we just can’t (currently) make them happen.

 

 

Big dreams can become a big problem in the small business market. Why?

 

New buyers will often consider businesses that are completely out of their price range – like drastically so.

 

Why do many new business buyers have unrealistic expectations? It may be, in part, because of the way people buy homes.

 

When you go into a bank to get a mortgage, you might walk out with a pre-approval for $750,000. Does that mean you have $750,000 in the bank in cash? Nope. It just means the bank is willing to loan you that amount because they can take back your new house as collateral if you don’t pay them back.

 

Small business transactions don’t work that way. There are financing options if you don’t have a huge amount of cash available – but that financing is very different than what you see in the housing market. You might be able to get a loan from the Small Business Administration (SBA) or from the seller of the business via seller financing – but no matter where you get your loan you are going to have to put up a large down payment and prove that you have the capital to both get through the transaction process and sustain yourself as the new owner of the business.

 

What do we mean by that? The business buying process can be expensive. If you get a loan from the SBA, they are going to require an appraisal of the business – one you as the buyer have to pay for. There are application fees for SBA, as well as application and licensing costs associated with the licensing requirements for your new business. If your future business is in a commercial space, your new landlord is going to want first-last-security and to see your financials to assure them you can not only pay those initial costs, but be able to pay your rent going forward. You might need capital for payroll in the first few weeks or months. The list can be long and pricey.

 

This doesn’t mean you can’t fulfill your dream of buying your own business. It just means you need to be realistic with what you can afford. If you only have $50,000 to spend, you shouldn’t even look at a business that is $750,000. It can’t happen. What you can do is find an affordable business that you can grow. Smaller, more affordable businesses can be very successful – and have lots of room for that all-important growth.  

 

If you want to know what you can realistically afford, ask an experienced and qualified business broker. They can look at your current financial situation, your goals for business ownership and your previous experience – then assist you with finding the right business to buy. The right business will both meet your goals and keep you from extending yourself beyond what is currently financially possible.

 

Have you always wanted to buy a business but aren’t sure what you could afford? Would you like to know what types of businesses are currently on the market in your price range? Ask us! Leave any questions or comments and we would be happy to help.

 

 

 

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com
5111 Ocean Boulevard, Suite E
Siesta Key, FL 34242

www.InfinityBusinessBrokers.com

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Due Diligence On Yourself – Why Sellers Need To Prep

You might think you are ready to sell your business, but very few small business owners actually are. Do you have all of your books in order? Have you made any necessary repairs?

 

Preparing a business for sale can be a lot like preparing a house for sale. You need to make it look aesthetically pleasing and fix what’s broken.

 

There is, however, one major difference. Due diligence.

 

Once you have accepted an offer from a buyer, the due diligence period begins and you will be opening up your financial records, contracts, leases – everything – for that buyer to inspect.

 

Any problems found during due diligence can lead to one of two outcomes. Either the deal is dead and the buyer walks away, or they come back to you with a lower offer to compensate for the problems they’ve found.

 

No seller wants a perfectly good deal to fall through, and you want to get the best possible price for the business you’ve worked so hard to build – so how do you avoid due diligence issues?

 

Do due diligence on yourself.

 

 

Before a buyer has a chance to peek behind the scenes and go over your books with a fine-tooth comb, you should do this yourself. By performing due diligence on yourself you will see your business through a buyer’s eyes and will be able to address any potential problems long before a buyer finds them.

 

Don’t think you have any issues that will come up in due diligence? Think again. All small businesses have a few skeletons in the closet, and they can’t be hidden. Buyers always find issues, so the best way to deal with this eventuality is to solve the problems before they are found.   

 

How do you do due diligence on yourself? Ask your business broker for guidance and perhaps employ the services of a business transaction CPA. In most cases, you as a business owner know what the problems are. Figuring out the best way to deal with those problems will be where those experts come in handy. Is this an issue you can conceivable solve? How can you solve it? Is it a better tactic to just be upfront with the issues that exist when communicating with a future buyer or try to implement changes that will resolve those issues before the due diligence step in the process? 

 

Performing the due diligence process on yourself will help you and your business to stay ahead of the game during the transaction process and will also help you get the biggest return on your business sale. Ask your business broker for help. 

 

Do you have questions about what buyers will want to see during due diligence? Would you like to know what problems we’ve seen in due diligence in the past? Ask us! Leave any questions or comments and we would be happy to assist you.

 

 

 

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com
5111 Ocean Boulevard, Suite E
Siesta Key, FL 34242

www.InfinityBusinessBrokers.com

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Get Ready For The Google: Why Buyers Need To Think About Their Online Reputation

You have the capital ready, you’ve found a business you like and you are ready to write the check. The seller finds out who you are and then suddenly the deal is dead. What happened?

 

They Googled you.

 

When you buy a small business, you are buying something that the former owner spent their blood, sweat and tears for. You are getting the employees they care about, the business reputation they built. Who you are as a person, what you bring to the table in terms of stability and the ability to cement the future of the business they care about matters. It matters more than you may have considered.

 

While you and a business seller don’t have to be best friends or even agree on most things that occur outside the realm of running the business, what your online reputation says about you absolutely has the potential to sink a deal.

 

Try this. Look yourself up. What’s out there with your name attached?

 

Most people don’t have the celebrity-esque issue of having negative news articles all over the internet. That isn’t the problem. What most people have is their social media life. Your Facebook page. Your YouTube channel. Your Twitter account. Your blog. While this realm of your social life was probably intended to be for personal use only, it will absolutely impact the way a business seller thinks about you. It might even make them decide they don’t want you to buy their business.

 

But my LinkedIn page is very professional. Isn’t that the one that matters?

 

Not really. While most people aren’t posting long political rants or inappropriate memes on their “professional” online profiles – many people do on “personal” sites. The problem? Those personal thoughts, jokes and comments can be just as easy to find as your carefully curated professional page.

 

What can you do about it? Google yourself long before a prospective business seller does. See what’s public and make it private. Find what, in retrospect, wouldn’t be considered appropriate for a professional reputation and delete it. Clean up your online presence – immediately.

 

You would do a similar purge of your online presence before applying for a new job, as it is common knowledge that employers absolutely look people up – and there are many, many stories of poorly thought out posts sinking employment opportunities. The same protocol should be in place when you buy a business because you are essentially buying yourself a job. Do the work ahead of time and curate your entire public online presence before it’s too late.

 

Have you considered your online reputation s a business buyer? Would you like to know more about what business sellers are looking for in a prospective buyer? Ask us! Leave any questions or comments and we would be happy to help.

 

 

 

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com
5111 Ocean Boulevard, Suite E
Siesta Key, FL 34242

www.InfinityBusinessBrokers.com

 

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What Does The 10% Look Like? Thoughts For Business Buyers

As a business buyer, it is critically important that you stand out from the crowd. Why?

 

Up to 90% of prospective buyers who enter the business market never buy anything.

 

If you consider this statistic from the perspective of a seller or business broker it looks like this – 90% of the buyers who initially contact you will wind up a complete waste of your time.

 

If you are serious about buying a business, you need to make yourself stand out as a part of that all-important 10% of buyers. How do you do that? Think about who someone in that 10% is.

 

 

What does the 10% look like? Well, like everyone. A business buyer ins’t best described by demographic data – a business buyer is simply someone who buys a business.

 

While this statement might initially sound obvious, preconceived notions about what a business owner looks like can perhaps unconsciously hinder those who could truly be successful entrepreneurs from entering the marketplace. If you’ve always been unhappy with your professional life and have always felt like you could do better if you were the one in chargeyou probably could. Running your own business isn’t any harder than going to a job you absolutely hate. The difference is at your own business the buck stops with you. If you have the drive, grit and creativity to push your business into tomorrow you can be just as successful as the person who climbs the corporate ladder for someone else. The difference is when you get to the level of success you were looking to attain – as a business owner that success is yours.

 

Ok, so I hate my job and I want to be my own boss. How do I get myself into that 10%? It’s incredibly simple. Act like a serious buyer.

 

Serious buyers are willing to sign non-disclosure agreements without a fuss. They understand that they are receiving privileged and confidential information about someone’s business and they respect that confidentiality. Serious buyers take the information they receive and put together a fair offer that has justifiable terms. They don’t waste everyone’s time by throwing in a ridiculous low-ball. Serious buyers also know that the best way to find out what they need to know to make an informed decision is by asking great questions.

 

The message here? The world of small business ownership is diverse. Your actions are what make you an entrepreneur, so use those actions to make yourself stand out.

 

Are you a business buyer who would like to know more about the process of buying a business and standing out from the crowd? Please leave any questions or comments here and we would be happy to help.

 

 

 

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com
5111 Ocean Boulevard, Suite E
Siesta Key, FL 34242

www.InfinityBusinessBrokers.com

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Buying A Business In The Post-Quarantine Economy

Can you still buy a business in the post-quarantine economy? Absolutely. The keys to success are adaptability and creativity.

 

Everyone can agree that the past few months have been difficult, unprecedented and just plain strange. If you were thinking about changing career paths before the quarantine hit, or if the time trapped in your house made you rethink your life choices – you might be wondering if now is the time to make the switch to entrepreneurship.

 

 

It certainly can be. While some segments of the economy are currently struggling, there are a few key industries that are booming. Think about what people are using/needing and you can come up with a whole host of ideas. Here’s a few:

 

grocery stores

liquor stores

health care and health care supply businesses

waste disposal

cleaning services

laundry

auto repair

delivery services

 

The list of newly named “essential businesses” is a long one. If you were thinking about making the switch to business ownership then a business in the “essential” sector is a good buy.

 

If you had your heart set on a different industry, you might still be able to make it work by adapting your business model and the business you purchase to fit with the times. For instance, if you’ve always wanted to own a restaurant you could perhaps find an existing restaurant to buy and change the model to a take out counter that also offers retail food options like fresh baked bread and other staples – making your business a one-stop shop.

 

The key to success in 2020 is adaptability and creativity. If you have that and are willing to put in the hard work – business ownership can be a very successful path.

 

What about all of the news about struggling small businesses? Yes, there are businesses out there who will not make it back. Many were faltering anyway, or didn’t have a business plan or model that could survive the shut down. The silver lining? Those struggling businesses might be a good buy for future entrepreneurs. Some businesses that have decided to remain closed permanently will likely be offered as asset sales, while those who don’t show the best numbers over the last few months might be purchased for a discounted price. Talk to your business broker about the pros and cons of snapping up a currently struggling business to see if the effort it would take to pull the business back from the brink aligns with your goals for business ownership.

 

Are you considering the jump to business ownership? Do you have more questions about what industries would be a great buy right now? Ask us! Leave any questions or comments and we would be happy to help.

 

 

 

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com
5111 Ocean Boulevard, Suite E
Siesta Key, FL 34242

www.InfinityBusinessBrokers.com

 

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Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

5111-E Ocean Blvd
Siesta Key, FL 34242




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