Posted in Become a Business Owner, Buyers Articles

If you think you might be ready to take the entrepreneurial leap, but don’t have a genius start-up idea you can work on in your garage – you don’t need one! Existing businesses get bought and sold everyday, some 500,000+ a year (a number that is on the rise as baby boomer owners enter retirement and list their businesses for sale). These existing businesses can instantly turn you into an entrepreneur, no start-up required. 

If you’ve always wanted to be your own boss and think buying an existing business might be for you – the process is fairly straightforward. You can read more about the initial steps you’ll take here – but the last steps you take before the day you get handed the keys can be some of the most important.

Here’s a few to consider:

Complete a thorough and final round of due diligence on the information provided by the seller. Review all relevant documents, contracts, financial records and legal obligations to ensure there are no surprises or undisclosed issues. This step is crucial to confirm the accuracy of the information and ensure that the business is in the expected condition.

Work closely with your business broker and business transaction attorney to negotiate and finalize the purchase agreement/contract. This document outlines the terms and conditions of the sale, including the purchase price, payment terms, assets included and any contingencies. Ensure that the agreement reflects the agreed-upon terms and protects your interests as the buyer.

Identify and obtain any necessary approvals, permits or licenses required to operate the business legally. This may include licenses for specific industries or local permits. Talk to your business broker about what you’ll need from state and/or local regulatory agencies to ensure compliance with all legal requirements. You can read more about that here.

Develop a comprehensive transition plan with the seller to ensure a smooth handover of the business operations. Identify key employees involved in the transition process and communicate the plan effectively. Prepare any necessary training materials, transfer important documents and information, and ensure a seamless transfer of responsibilities. Use the entirety of the training period outlined in your purchase contract to your advantage and learn everything you possibly can from your seller.

Schedule a final walkthrough of the business premises with your broker to assess its condition and ensure that all assets included in the sale are in the expected state. Check that all equipment, inventory and fixtures are accounted for and in working order. Address any outstanding issues or discrepancies before the closing.

The last steps before reaching the closing table are crucial in finalizing the purchase of a small business. Completing due diligence, finalizing the purchase agreement, obtaining approvals and licenses, preparing for the transition and conducting a final walkthrough are all essential tasks. By carefully completing these steps, buyers can mitigate risks, address any outstanding issues and set the stage for a successful transition into their new business.

Are you new to the business buying process and have questions about these pre-closing tasks? Would you like to know more about what the transaction process looks like for the type of business you are interested in buying? Ask us! Feel free to leave questions or comments here and we would be happy to help!

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

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Posted in Sellers Articles

You are ready for a new chapter in life, so you’ve listed your business for sale. Your thoughts are on a much needed vacation, sipping drinks in a beach chair – but there are good reasons to focus on your business now more than ever.

The biggest reasons?

It can take a long time to sell your business.

It typically takes 9 to 12 months to sell. How much damage can you do by mentally checking out for that long? Probably a lot. Sellers who mentally check out months before they’ve even found a buyer can do real damage to the bottom line. A sudden downturn in sales, losing a major account or falling profits can cause buyers to decrease their valuation of the business when the time comes to negotiate a price. A business with a disconnected seller tells a buyer that no one cares about the stability or future of the business – so why should they?

It might not sell.

It is an unfortunate truth of the business market that some businesses just never sell. It might be because of a lofty listing price that scares buyers off, it might be because the business is too niche, it could be because a seller has a change of heart or a change of circumstance that causes them to pull the business off the market – or it might even be because a seller has let the business slide to train-wreck levels. Whatever the reason for languishing on the market, once you’ve decided not to sell and return to ownership for the foreseeable future, you don’t want to leave yourself with a mess. You should always assume, whether you’re selling or not, that you will always be the owner of the business and maintain full responsibility until the day you hand over the keys.

The moral of the story? Even if you are completely burned out – you need to see your business through to the closing table. If you can push through the sale process while keeping your business in good shape, you will get a far better return on your investment than if you didn’t.

Are you a seller who feels like you need to sell now? Do you want to know how long it would take to get from listing to closing? Ask us! Leave us a comment or question here and we would be happy to help.

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Posted in Become a Business Owner, Buyers Articles

Coming up with a brand new business idea is a big challenge. You have to figure out a concept, find a location, come up with operating procedures, hire and train a staff, build out your space – the list is a long one.

If you’ve ever wanted to own your own business there’s a way to do so without having to start at ground level. You can buy an existing business instead – one that has a proven location, concept and track record. 

If this sounds like it might be the right path for you, here’s your next question.

How are you going to pay for it? 

In the small business world there are essentially 4 ways to finance the purchase of a business. Let’s take a look at your options:

Seller Financing

This one is probably the most common. A buyer comes up with a substantial down payment and then the seller of the business finances the rest. This option is popular because small business funding can be difficult to get from a traditional lending institutions like a bank, so sellers will offer creative financing to open up the pool of buyers for their business. This is also popular among buyers because a seller who is willing to keep some skin in the game tells you volumes about how they view the future profitability of their business. They don’t get paid unless you succeed. A few caveats for this financing option. You will need to bring a large down payment, 10 or 15% isn’t going to cut it. Also, if you do end up defaulting on this loan the seller will get the business back.

SBA Loan

The Small Business Association (SBA) does offer loans in the right situation to people buying a small business. There will be a fair share of bureaucracy with this financing option, as well as certain metrics both the buyer and the business itself will have to meet in order for the loan to happen.

Investor/Family Funds

In some situations a buyer is able to procure funds from loans made by family, friends or investors. This option should include a contract or written agreement by all parties that spells out every aspect of the loan – how it will be paid back, what metrics are necessary, how one or more parties can be bought out of the agreement should the need arise, etc.

Your Own Cash

Lastly, you can always use your own cash to fund the purchase of a business. Perhaps you have a decent amount of money in savings, maybe you’re considering refinancing your home or pulling funds out of investment accounts. This option will alleviate you from owing money to others but must be considered carefully if you are going to be investing all of your available cash into the purchase of a business.

If one or more of these financing options seem doable for you, the next step you should take is to have a conversation with an experienced and qualified business broker. They will be able to talk you through the options available to you and help you decide which option will best meet your goals for business ownership.

Have you always wanted to own your own business but weren’t sure how you would fund such an endeavor? Would you like to know more about how seller financing works? Do you have questions about the process required for a loan from the SBA? Ask us! Leave any questions or comments here, we would be happy to help.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

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Posted in Become a Business Owner, Buyers Articles

If you want to own your own business there are basically two avenues to make that happen. You can start your own original business from the ground up or you can purchase an existing business. The path you choose will depend on many factors that relate to the risks involved in starting a business versus the risks for buying one. 

In general it’s probably easier to buy an existing business. The concept, location and operating procedures are all proven because the business is currently open and running. The employees have already been hired and trained, the licensing and permits needed have already been approved, the inventory or goods for sale will work because they are currently selling – you get the idea. A tried and true method almost always works better than an unknown. 

If it’s easier to buy a business, is it always a better choice than a start-up? No, it depends on what your vision for business ownership is. 

You might be someone who just wants the flexibility and control business ownership affords you, and while you do have industries and types of businesses that would suit you in mind you aren’t stuck to one particular idea of how a business must be. Good financials, a good location, a good reputation – these are the things that matter to you. If your desire to be a business owner is born out of wanting to reach life goals but the path doesn’t need to be a certain way – purchasing an existing business is probably the right idea for you.

On the other hand if you have an entirely new business idea and the means to bring it to fruition coupled with needing that business to be exactly the way you envision it – a start-up is likely a better route. 

A caveat to the start-up route. Say your dream is to open your own café to sell the baked goods from your grandmother’s recipes and coffee. Sure, you could find an empty commercial space and build it out to your liking – but you’ll have no idea if the location and concept are going to work. A likely safer bet is to find and purchase an existing café that is similar to what you envisioned and then make small changes (after you’ve run it for a while and have a gauge on what your current clientele will accept as far as changes) until it’s exactly the way you want it. 

Whichever path you think might suit you a great first step is to have a conversation with an experienced and qualified business broker. They will be able to point you in the right direction, either by finding you listings that would suit your needs or by referring you to a commercial agent to find your new space. 

Do you have a vision for business ownership and aren’t sure which path is right for you? Would you like to know what businesses currently for sale might work for your goals? Ask us! Leave any questions or comments and we would be happy to help.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

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Posted in Buyers Articles

The people who buy and run businesses are a strong bunch. Lots of drive, lots of passion and typically a very type-A personality. When you get two people in a room with this personality type it can sometimes go south in a big way without a lot of provocation. This is an enormous problem if the people having issues are the buyer and seller of a business.

You aren’t going to like everyone you meet, and if you are buying a business you’ve fallen in love with you might very well hate the seller. Maybe the two of you have drastically different world views. Maybe you have drastically different visions for the future of the business. Maybe the negotiation of your deal got a little ugly at times. Whatever the reason you and the seller aren’t fans of each other it is absolutely in your best interest to maintain an amicable relationship with the seller. 

Why? You will need them for a bit. 

Business deals take a long time to get to a closing table. You might need to work with this seller for months on a deal and that will be vastly easier if you can be cordial to each other and keep things professional. It will also be easier to find points of compromise within the purchase contract. 

In addition to the time it takes to put a deal together, most purchase contacts contain language spelling out the terms of a training period for a new owner – usually two weeks of training after the closing happens. If you can keep your relationship with the seller peaceful this training will be pivotal to a smooth transition and ensuring you know how to successfully run your new business. If a clash of personalities causes major problems you probably won’t have a very useful training experience. 

The good news is if you aren’t a fan of the person selling your business – you don’t have to be. You just need to be able to keep it professional throughout the negotiation of your deal and then through the training process.

Have you considered some businesses for sale but weren’t a fan of the owners? Would you like to know strategies for dealing with a seller you don’t like? Ask us! Leave any questions or comments here, we would be happy to help.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

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