How To Avoid 6 Big Business Buyer Mistakes
Posted in Become a Business Owner, Buyers Articles
If you are considering buying a business for the first time you’d probably like to avoid any mistakes. No one wants to walk into their new business and immediately mess something up, right? One of the best ways to avoid mistakes is to learn about common missteps and then work to avoid the blunders of those who have come before you.
What are some typical blunders that inexperienced entrepreneurs make? Here’s six:
Naming the business after yourself:
When deciding on a name for your business it can be tempting to just name it after yourself. Here’s why you shouldn’t. Your business name is pubic information, and will also become your brand. While that might be fine for a social media influencer it can be an issue if you have a business that you want to be able to sell. You don’t want to work forever, so when the time comes to retire or move on to another venture you might have to also sell your name to a new owner. You can avoid this by coming up with an original name instead.
Buying a business you know nothing about:
First-time business ownership is hard enough without having to start from zero. If you have always wanted to buy a restaurant, but have never worked in one – it would be a big mistake to choose that industry. Choose a business in an area where you have practical experience because as the owner of a business, you need to know what the business needs.
Not doing your homework:
Why is the business for sale? Is it just because the owner is retiring, or are they jumping off a sinking ship? You will have the due diligence phase to determine what the problems are, and then you will have the opportunity to amend your offer or walk away from the deal all together. This is a critically important step, as you don’t want to discover problems after the business is already yours.
Changing too much too soon:
Unless you are buying a business with a horrible reputation, a new owner should tread carefully with regards to changing the business. You bought the business because it was an established company with a good reputation, and you don’t want to drive away customers familiar with the brand by immediately dismantling everything they know about the business. The established image may have more to do with the bottom line than you know, so make changes slowly.
Not leaving yourself enough cash:
It may take several months to get a business transitioning to a new owner in the black, so leave yourself enough operating capital to keep the doors open. Many new owners walk into a functioning business and immediately spend far too much on unnecessary improvements, digging themselves a very deep financial hole in the process.
Not understanding the importance of marketing:
You may have bought an already established business, but that doesn’t mean that you can forgo the push to keep the business growing. Most established businesses already have a customer base, but keeping those customers coming back and bringing new ones in is a responsibility that now falls to you. Advertising and marketing need to be a top priority as the new owner.
The most important thing you can do as someone who wants to become a business owner is find the right help. If this is a process you’ve never gone through before, find a good business broker to help you along the way. Having assistance through this process will save you from making many of the mistakes that first-time business buyers make.
Are you thinking about buying a business for the first time, but want to avoid the blunders listed above? Do you have additional questions about the business buying process? Contact us or leave a question here and we will be happy to assist you on the road to business ownership.
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Buying Or Selling A Small Business? How Automation Can Help
Posted in Buyers Articles, Sellers Articles
Business ownership isn’t always fun. Think of a repetitive, mundane administrative task that a business requires. As an owner you make time for it and do it because you have to, but that time could absolutely be spent accomplishing something else more productive – like growing your business.
When you think of automation, you probably think about huge corporations who automate manufacturing or delivery routes – but small businesses can benefit from automation too. Many entrepreneurs are either unaware of or discount the potential benefits automation can bring to their business lives.
Ok, what can a small business automate?
Your marketing strategy:
Marketing is the lifeblood of your business – it’s what brings new customers in through the door. Your email marketing and social media exposure are incredibly important – and can absolutely be automated. There are a myriad of companies that can creatively automate your email marketing to ensure you stay active in a customer’s inbox, and there are are also services available that can help manage and schedule your social media posts so you don’t have to.
Keeping track of invoices, managing your financial records and tracking expenses can be very time consuming – but with accounting software you can automate many aspects of your business accounting. Once you have systems set up and in place your new transactions can be easily categorized, filed and paid.
Long gone are the days of physical signatures and fax machines – now most of the paperwork, sales documents and contracts you need can be sent and signed electronically in seconds. Copies are immediately sent to all parties involved, taking another task off your plate.
If your business is big enough to have employees but small enough that a full-time payroll person isn’t in the cards – there are many services that can take the payroll pressure off of your plate. Set it up and it can run on its own.
A caveat here. There are many, many services/companies/software options out there. It is incredibly important that you do your homework when selecting an automated service to ensure that the time it saves you will be worth it.
Ok, I’ll look into automation – but how can automation help business owners and business buyers?
Another major bonus to automating some of the administrative tasks within your business? When the time comes to sell, buyers will see that you’ve taken the “work smarter, not harder” approach when it comes to your business. This will speak volumes about how you see a business owner’s time as valuable and about how you have placed a priority on streamlining the business to make it successful.
As you look at how prospective businesses are run and how the current owner spends their time, think “how can I automate this so I can turn the time I would have spent on this task into growth for my new business?” By thinking about the aspects of the business you can automate, you will be better prepared to see the potential of a new business opportunity instead of just what’s currently there.
If you’ve never considered how automation could help your current or future small business, now is as good a time as any to start. Thoroughly research your options – then decide what could help you take some of the drudgery of business ownership off your plate.
Do you own a business and would like to know more about how streamlining your business may impress buyers? Are you considering buying a business and want to know what types of automation would best suit the industries you are interested in? Please feel free to leave any questions or comments and we would be happy to help.
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How Your Military Career Primed You For Business Ownership
Posted in Become a Business Owner, Buyers Articles
Are you a veteran? Your military career trained you to be a leader, 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’ll 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 zero. 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 into the entrepreneurial sphere. The experience and practical knowledge you gained during your service are exactly what you need to successfully operate a small business.
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 military 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 visit the Office of Veterans Business Development). 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.
The message here is if you have always wanted to own your own business – your military service can help make that possible. Talk to a business broker today to explore your options for 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!
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The Pros Of Buying An Existing Business
Posted in Become a Business Owner, Buyers Articles
If you’ve dreamed of starting life as an entrepreneur then you’ve likely conjured images of the startup in your garage, endless hours and scrounging for capital while you work as hard as you can to get your business idea off the ground. While many a Fortune 500 company began this way, it isn’t the only path to entrepreneurship.
What’s another path? Buying an existing business.
Wait, people sell businesses? Yes, existing businesses are bought and sold every day. Sometimes it’s because an owner has reached retirement. Maybe they’ve decided to undertake a different venture. Perhaps there’s something in their life that has created a situation where they can no longer own and operate their business the way they’d like to.
In other cases a seller has reached a particular metric – maybe they bought a smaller business that needed new growth strategies and now the business is at the point where they’re ready to sell and start again with a new project.
Whatever the reason for the sale, there are great businesses on the market every day – businesses that would meet the goals you have for business ownership.
But I have a couple of my own business ideas, why should I consider buying an existing business instead? There are many benefits to buying an existing business that just don’t exist if you’re starting on your own.
What are the pros?
A proven concept. While you might have a great idea, it’s just that – an idea. It hasn’t been proven. This is why the failure rate of startup businesses is so high – sometimes a great idea just falls flat when it’s introduced to the world. With an existing business someone else has laid the groundwork for you. The fact that the business exists today means the concept works.
An existing customer base. Customers are the obvious life blood of a business, and with an existing business you will still have new customer acquisition as a priority – but you don’t have to start from square one. A loyal and established customer base exists the day you take over.
Better financing opportunities. Traditional lending institutions are very gun-shy about supporting start-ups. You’ll likely have a hard time getting funding. When you buy an existing business there tend to be better options for financing your purchase, like the Small Business Administration (SBA) or seller financing.
Immediate cash flow. When you start out on your own you end up spending a ton of money before you ever generate any kind of cash flow. When you buy an existing, operating business the cash flow is there the day you get the keys.
The message here is business ownership and an entrepreneurial life don’t have to start in your garage. You can buy an existing business and reap the benefits of someone else laying the groundwork for you.
Have you always wanted to start your own business but the idea seems too daunting? Would you like to know what businesses currently for sale could meet your goals for business ownership? Ask us, or search current business listings here! Leave any questions or comments and we would be happy to help.
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Buying A Business? Why Research & Questions Should Be Your Top Priority
Posted in Become a Business Owner, Business Broker Why & How, Buyers Articles
We get it. Once you’ve decided that you are ready to make the leap and buy a business it can be hard to keep from going directly to the shopping phase. It’s fun to look at business listings and envision yourself as the owner. Guess what? Shopping for businesses in this way is unproductive and ultimately won’t get you what you’re hoping for from business ownership.
Any business, large or small, can be condensed down to one major thing. A business is cash flow. You are providing goods or services that you pay for and then your customers pay you. It’s the money in and money out that makes a business successful, and hopefully you’re making more than you’re spending.
If a business is essentially just cash flow it really doesn’t matter what color the walls are. Looking at pictures of businesses on the internet isn’t telling you much of the story. Neither is perusing vague P&L statements.
What you really need to know about a business is does it generate (or have the potential to generate) the amount of cash flow I need to live day to day as the owner – and is it possible for me to be successful in this industry.
How do you figure that out? Research and questions.
Research the areas where you’d like your business to be. Can you afford to live there? How much would you need to make to have that be possible? Will the area work for you and your family? If you’d love to live on the beach, but your target area has zero schools for your kids you might need to redirect your target area.
Research the different industry sectors possible in that area. Do you have any practical experience or education that would make a particular industry better for you than another? Will the industries available in your target area match with your skills? If you’ve always wanted to own a big restaurant but have never spent a single day in the restaurant industry, then looking at food service industry business is likely a mistake.
Once you’ve done some research, start asking questions. Have a conversation with an experienced and qualified business broker about the areas you’re considering, your practical experience and education, your goals for business ownership and the amount of capital you have to invest. Ask lots of questions – about the area, about the industries that do well in that area, about what types of businesses would both fit with your experience and with what you hope to get out of owning your own business.
Notice something? So far we haven’t said “look at listings” because it isn’t helpful until you know where you want to be and what you need to be successful.
Don’t waste a ton of time scouring the internet for your future business. Do some research and then get in touch with a business broker.
Do you have questions about the process to buy a business? Would you like to know what types of businesses would match your practical experience? Ask us! Leave any questions or comments and we would be happy to help.
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