Why Now? And The Other, Deeper Questions Buyers Should Be Asking Sellers

 

When you start looking at businesses to buy, you will probably have a list of questions you’ll want answered by the sellers of the businesses you’re considering. The typical questions, like “why are you selling” and “how long have you owned the business” might seem pivotal.

 

However, there are a handful of more unconventional questions you should be asking that you may not have considered.

 

Why now?”

The “why are you selling” question is an important one, but another very important question needs to be based on the timing of the sale.

 

Sometimes the answer to both questions is the same – like in the case of a seller who is putting the business on the market because a sudden health emergency will prevent them from running the business. This scenario would not indicate issues with the business, rather personal issues with the current owner.

 

If there is not an impending emergency forcing the sale, then the answer to the “why now” question will be critical in determining the true health of the business.

 

If a business appears in good shape, then the “why now” answer should be something along the lines of “well, we’ve reached pivotal markers in the long-term exit plan for this business, and we are ready to move on to other ventures”. The seller in this situation decided long ago on the future sale of the business, and has been readying the business in that time.

 

If the answer to the “when did you decide to sell” question is “well, we decided yesterday” – then you should dig much deeper into the business, as a sudden urge to jump away from a perfectly good business should seem suspect.

 

Where did your listing price come from?”

For a seller the evaluation of their business can be tough. They’ve invested countless hours, large amounts of money and tons of energy – and placing a monetary number on something so life encompassing can be nearly impossible.

 

A listing price should be based on realistic terms, like the money the business generates and the value of the equipment – not on the emotional value or the sum of every penny the seller has ever spent on the business.

 

When looking at businesses be aware that some sellers find brokers who are willing to list the business for whatever the seller wants, no matter how ridiculous, just to have the listing. The prices of these businesses will be highly inflated and there will be no justification.

 

If you had unlimited resources, what changes would you implement to grow the company?”

Sometimes businesses remain stagnant and have limited growth because of lack of funds, sometimes it is because of the apathy of the seller.

 

Any seller who has an eye on the future and an eye on growth will already have considered this question and have an immediate answer.

 

If a seller hesitates or can’t come up with a reason, then they may not have been conducting their business with an eye on the future. Not good news for a new owner taking the wheel.

 

When you are looking for a business to buy, don’t just ask the basic questions. Questions like the ones above delve deeper into the motivations and actions of a seller and can tell you volumes about a business.

 

Are you a business buyer who would like to know what other questions you can ask sellers to delve deeper? Would you like to know more about what answers to these types of questions might tell you? Ask us! Please feel free to leave a comment or question here, and we will be happy to help. you with any questions in your business search.

 

 

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com
12995 South Cleveland Avenue, Suite 249
Fort Myers, FL 33907

http://www.InfinityBusinessBrokers.com

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Adversity And Buying A Business – Why You Need To Be Tough

 

Buying a business can be tough.

 

You have to sign non-disclosure agreements, go through pages and pages of documentation, have seemingly endless meetings and conference calls, deal with bureaucratic red tape for licensing and permitting, negotiate with sellers and landlords – all while making the massive decision of whether or not this business is for you.

 

The process might seem difficult, but it’s not impossible. Businesses are inherently complex, and business transactions involve a lot of moving parts and people.

 

What happens far more often than it should is a buyer gets fully immersed in the process, decides it’s too aggravating and throws in the towel – leaving a perfectly good business ownership opportunity behind.

 

If you are considering business ownership, you should consider this – if you can’t handle the stress and rigors of buying a business, you probably can’t handle the stress and rigors of owning one either.

 

Entrepreneurship is just as tough as the business buying process, and it’s not for everyone. If you are considering the leap into business ownership you need to take a moment and decide if it’s the right move for you. Owning your own business is incredibly rewarding, but those rewards come with a lot of work. If you are ready, willing and able to do that work then you can easily survive the business buying process by having on major thing – patience.

 

Here’s why. It will take some time for you and your broker to decide what types of businesses and what industry sectors will best suit your goals for business ownership and your practical experience. Once you know what you’re looking for you and your broker will have to search for businesses that will fit your budget too. Once you’ve found a few promising candidates, you will need to sign non-disclosure agreements and then wait for the seller and seller’s broker to get you some cursory information on the business. If you like what you see, you can make an offer on a business – but then you will have to wait for the seller to either counter your offer or accept it. If the offer is countered, it will probably take some time to arrive a price both sides can agree on. An accepted offer means due diligence can start, but only when the seller has provided all of the requested documentation. Getting all of the requested documentation also takes time, as a seller is not only trying to round up all of the paperwork you’ve requested, they’re also trying to run their business too. After due diligence, the final purchase contract will take some time to put together and a new commercial lease will need to be worked out with the landlord. You will also need to deal with obtaining or transferring all of the licenses and permits the business needs.

 

See a trend? Everything takes time, and as such everything takes patience. If you can stay patient and focus on the goal of buying a business, then the process will work like it should.

 

Are you looking for businesses to buy but feel like the process might be too overwhelming? Would you like to know more about what it takes to buy a business? Please feel free to leave any questions or comments here, we would be happy to help.

 

 

 

 

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com
12995 South Cleveland Avenue, Suite 249
Fort Myers, FL 33907

www.InfinityBusinessBrokers.com

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Veteran? Why Small Business Ownership Is For You

Veterans make great business owners.

 

Your military career trained you for leadership, taught you discipline and gave you the mental endurance to put in the hours it takes to get something done. Guess what? Those are the skills and qualities great entrepreneurs need.

 

 

I’ve never owned a business before. I wouldn’t know where to begin.

 

We’ve got good news – you don’t have to start from scratch. There are a myriad of small businesses for sale, and there’s a good chance that you will be able to find one that fits your goals and one in an industry where you have some practical experience. Buying a business means you don’t have to start from the ground up. You get a fully operating business, complete with employees, equipment, inventory, operating procedures, vendor contracts – you get the idea. You can walk in on day one and be the owner of a business instead of starting with nothing more than an empty space.

 

Am I qualified to own a business?

 

Yes, absolutely! Many of the training programs and careers within the military transfer very well as the experience and practical knowledge needed for many industry sectors in the small business community. The type of business and industry sector that will be right for you will depend a lot on what jobs you did both before and during your time in the service as well as what you hope to get out of business ownership. Love working on cars in your spare time and spent your military career as an aircraft mechanic? Maybe an auto shop is for you. Looking to spend as much time as possible with your family? A bar or restaurant that will need your attention 7 days a week probably isn’t the best choice. Talk to a business broker about your goals and your experience – you might be surprised by the businesses that would meet both.

 

 

I don’t have a lot of money, how much money does it take to buy a business?

 

It depends. There are very small businesses that won’t cost much and larger businesses that run in the millions. The good news is that as a veteran you have special access to programs from the U.S. Small Business Administration (SBA) that can help you get the funding you need to buy a business (click here to learn more!). Talk to your business broker about what SBA programs you might qualify for and what businesses might qualify for SBA lending. If SBA financing is out of the question, many sellers will offer seller financing to the right buyer with a decent down payment.

 

Although it might seem like a daunting idea, small business ownership is very possible for veterans. Talk to a business broker today to explore your options and get you started on the path to entrepreneurship!

 

Are you a veteran and have questions about what SBA programs you would qualify for? Would you like to know what types of businesses would suit your goals and experience? Ask us! Please leave questions or comments here and we would be happy to help. Thank you for your service!

 

 

 

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com
12995 South Cleveland Avenue, Suite 249
Fort Myers, FL 33907

www.InfinityBusinessBrokers.com

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Is It Worth It To Wait? Deciding The Best Time To Sell

Should I wait?

 

If you own your own business and have thought about selling in the near future, you are probably watching the markets fluctuate with apprehension – especially if you are a business owner who survived the downturn of 2008. Business is booming right now, and your business is probably doing better than it has in years – but business was booming in 2007 too.

 

It can be excruciatingly difficult to pull the trigger and sell your business when there’s no real way to know if you’re leaving a bunch of money on the table because you’ve sold too soon. The healthy state of the economy is driving up the sale prices of businesses every quarter, but we all know we’re closing in on the top of that upward trend.

 

What to do? Sell now while the selling is good. Business owners that didn’t go under after the 2008 slide had to take what they could get from the tiny pool of buyers who still had capital to buy a business. Many scrambled to find buyers in their industry when there were no buyers to be had. If you leave some money on the table because you sold six months or a year before the market reached it’s peak you can comfort yourself by knowing that you didn’t have to sell after the tide turned and prices slid.

 

Taxes and regulations for business and industry are likely going to change, but only the future knows how those changes will affect small businesses. The economy is booming, and has been for quite a while. Housing prices are at bubble-like levels again, and many investment groups have slowed their rate of investing. A downturn is in the tea leaves – so if your tentative plan is to sell in the next five years – sell now.

 

Are you a business owner who is on the fence about selling? Would you like to know what businesses like yours are currently selling for? Ask us! Please feel free to leave any questions or comments here and we would be happy to help.

 

 

 

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com
12995 South Cleveland Avenue, Suite 249
Fort Myers, FL 33907

www.InfinityBusinessBrokers.com

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Buying A Business – How To Spot Less Obvious Signs Of Trouble

If you are looking at businesses to buy, then the first things you will encounter that will tell you about the business are the financial records – likely a P&L and/or tax returns.

 

While financial records can tell you a great deal about the stability and health of a business – there are some other less obvious ways to determine how a business is really doing.

 

Watch The Owner

 

Some owners mentally check out the moment they list their business, some mentally checked out long ago. Owners who are consistently late to meetings, consistently sluggish on answering questions or constantly procrastinating with requested information are probably that way in the day to day operations of their business. A business with an owner who habitually doesn’t stay on top of things probably isn’t in the best shape.

 

How does the owner treat you when you visit? If they are condescending or rude to a potential buyer – someone who may write them an enormous check in the near future, then they are probably even worse to their employees, vendors and customers.

 

Read Reviews

 

You might need to take these with a grain of salt, especially if it is a business with only a handful of reviews. The internet creates a veil of anonymity that some use to blast businesses for almost no slight at all. Some people just love to complain.

 

What reviews should you take seriously? If a business has 300 reviews and 80% are horrible, then there is definitely an issue. If there are only a few reviews that seem to be written by chronic complainers – but they all follow the same vein, like terrible customer service from wait staff, then that can give you a pretty good idea of what you’ll need to change the moment you get the keys.

 

Watch For A Mess

 

When you tour a business, you can find out very quickly if the current owner is someone who excels at attention to detail. A business that is filthy or has equipment in various stages of disrepair is probably lacking ownership attention in other non-physical areas of the business as well.

 

When you are in the market to buy a business, don’t just rely on the financial numbers when deciding whether to purchase or how much to offer. You can use other indicators, like owner behavior or the state of equipment, to determine if the business is right for the price and for the goals you are hoping to achieve.

 

If you are looking for a business that is more of a fixer-upper – then bad reviews, poor cleanliness and a disconnected owner might be good signs that you will be able to negotiate for a price that leaves you the capital you’ll need to turn it around. If you are looking for more of a turn-key business, then you’ll want to find the non-financial aspects of the business in good shape.

 

Do you have questions about other non-financial clues you should be watching for when considering businesses to buy? Do you have one that we didn’t mention that you’d like to share? Please leave your questions and comments here.

 

 

Michael Monnot

941.518.7138
Mike@infinitybusinessbrokers.com
12995 South Cleveland Avenue, Suite 249
Fort Myers, FL 33907

http://www.infinitybusinessbrokers.com

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Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

12995 South Cleveland Avenue, Suite 249
Fort Myers, FL 33907




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