Posted in Buyers Articles

We see this one all the time. A buyer walks into a functioning (and profitable) business and decides that they want to make changes – big changes.

They bought this business because it had some potential for growth coupled with a fairly successful track record. They gut the infrastructure, they completely remodel, they toss out all of the old operating procedures, they expand. In less than a year they are completely belly-up and have to shut the doors.

What happened? They went TOO BIG TOO FAST.

What do we mean by that?

We mean that as a new business owner, you need to be very careful about decisions that will drastically change the functioning business you bought. The reason the business functions is the current methods work – so instead of fixing what isn’t broken you will need to take some time and figure out what you should change before you change anything.

Here’s an example. If you bought a restaurant that serves pizza but hasn’t been turning the best profit, you shouldn’t change the menu to burgers and redo the décor to try and increase profits. You should spend some time figuring out why the profits aren’t where they should be. In this example, the reason the numbers are down is because the grumpy long-term staff have been driving customers away. Your new menu and fresh décor will only make the problem worse by driving away the faithful regulars who were willing to put up with a grouchy waitstaff for amazing pizza. All this business needed was a new set of employees, not a costly remodel.

Here’s another example. If you bought a small but profitable manufacturing business with the goal of expansion, you probably shouldn’t spend a small fortune expanding the manufacturing facility as soon as you get the keys. In this example, the reason the company is profitable is because they have stayed small. They are able to fill the niche they are in without the major overhead that a much larger facility would require. By spending a few months understanding why the previous owners never chose to expand you can save yourself the horrific and expensive failure of a facility too large to be profitable.

The lesson here? Don’t try to go big without understanding why going big hasn’t happened before. Learn from the mistakes (and the successes) of the previous owner before you try to implement any big changes of your own.

Are you considering buying a business and you have questions about what you should and shouldn’t change? Have you bought a business in the past and made too many changes too soon? Please feel free to ask questions or share your experiences here!

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

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Posted in Buyers Articles, Sellers Articles

A business is for sale, and this business has employees. The employees have been kept in the dark about the for-sale status in order to protect the integrity of the business throughout the transaction process, but now that a buyer and seller have come to an initial agreement and the sale is moving forward – how do you handle the employees?

This is one of the most important (and by nature carefully handled) aspects of the sale of a business. The sale of any business that has employees (especially a business with critical “key employees”) will need to be handled delicately.

As a buyer, do you demand that you meet with employees before closing as you feel they are critical to the business? As a seller, do you let this happen? What if the buyer walks away or approaches the employees the wrong way?

Although a seller might feel that their employees will only be loyal to their ownership and won’t accept a new boss, in most cases employees can view a new owner as a positive – if the transition is handled properly. 

How? Focus your discussions with employees on the benefits a new owner will bring – and wait to tell them until after the sale.

Here’s a few thoughts:

Long term businesses often become stale as sales efforts and marketing may have lagged or become non-existent leaving the business just gliding. A new owner can bring that new energy, marketing ideas, additional employees, new clients and just a new way of doing things which can invigorate a business and push it to the next level. As the business grows and changes for the better those employees who stay can reap the benefits of those changes. This is especially true if the business is being acquired by a larger firm or if the business is ripe for expansion.

One of the reasons why you don’t tell employees too early is most of the time the employees really do want or need to keep their job. Telling employees too soon can make them feel very insecure and can leave them wondering if they will have a job after the sale closes. They might worry that they will be replaced, they might have concerns about getting along with a new owner or they may worry that they won’t be able to handle the changes a new owner will make. These worries can cause an employee to panic and quit – which is bad news for both sides of the deal. This is why both sides should wait until after the sale to tell the employees. Knowing that they’ve made it past the end of the transaction will assure an employee that their job is safe. Buyers should let their new staff know that no major changes are planned and immediately set expectations. 

The message here is typically the loyalty of employees is to the business or their job and not necessarily to the seller. It’s also critically important to wait until after the sale to tell employees anything.

Instead (after the sale), both sides should focus on open and honest communication, ask for input about what the business can do better, be clear on new roles and reinforce that the new owner is counting on the existing staff. Hopefully that will build confidence and loyalty on both sides, thereby creating a positive environment as the business moves forward to the future. 

Have you sold a business and told your employees too early about the sale? Are you buying a business and want to know more about why it’s a bad idea to talk to the key employees before closing? Please feel free to share your story or ask questions here.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

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Posted in Buyers Articles, Sellers Articles

Guest post by Grant Polachek

Branding and solid positioning are the most effective tactics for getting potential customers’ attention and reassuring them that your products or services are outstanding and can be trusted.

Notably, the goal of branding is to give your company a voice to express its uniqueness to your target audience. And this method still is, by far, the most successful for communicating with your audience and improving brand reputation.

However, in order to effectively communicate your company’s brand, you must first thoroughly understand the relevance of brand positioning and how it affects the way your key audience perceives your products. Understanding this can help you create a fantastic brand.

In our survey, we investigated how customers react to firms with a classic brand tone versus those with a contemporary and modern brand tone.

Why Was This Research Done?

We wanted to find out what sorts of businesses certain clientele like and how this differs by age group.

As an entrepreneur, you must understand that being able to connect your company’s name and other branding aspects to the needs of your clients will improve and increase the chances of your venture’s success.

And to achieve the study’s objective, we asked American customers whether they preferred doing business with companies that take a traditional approach to branding or those with a modern one.

Why Did We Pose Such an Important Question?

Every entrepreneur should understand that selecting the proper brand approach is one of the most important decisions you’ll have to make when starting or rebranding your firm because it has a significant impact on brand positioning.

Understanding your core demographic and your organization’s identity is critical for building an exceptional brand.

And, just as every entrepreneur must devote time to developing creative business names, whether through brainstorming or working with a company name agency on crowdsourcing company names, you must devote time to selecting the appropriate tone because it will strengthen your brand’s positioning and influence how the public perceives you.

Your chosen brand tone affects both your client’s interests and your firm’s reputation. You cannot afford to overlook this since it is critical to the development of your brand image.

The Key Findings of Our Survey

We grouped the information we got into different age categories so we could communicate our findings better. And while our poll results were hardly earth-shattering, the responses we got were intriguing.

After surveying 301 people, here’s what we discovered.

• Customers below the age of 30, according to the report, are more likely to be drawn to firms with a new and modern brand tone than those with an older and classic approach.

Images are courtesy of Squadhelp

• Customers aged 35 to 45 are evenly divided between the two options, making it less probable that one would be preferred over the other. With this age demographic, using either option is fine.

• According to the data, consumers aged 45 to 54 choose a more traditional business.

• The difference between the two choices is especially noticeable among people aged 55 to 65, who favor traditional businesses far more than modern ones.

• According to the report, men have no preference for current or classic businesses.

• Females, on the other hand, prefer traditional businesses over new and innovative ones.

• 148 of the 301 respondents favored modern, current brands, while the remaining 153 favored historic and traditional brands.

Based on our findings, you could decide to give your brand a modern or traditional approach, as long as it meets the demands of your target demographic.

How to Use the Survey Results

Developing a strong company brand takes time and work. As you can see, the most straightforward approach to doing it right is to undertake extensive research on your target audience.

This poll can help you decide which path to take when deciding what approach to use for your brand name, value proposition, commercials, and so on, as well as the demographic you should expect if you adopt it.

Every entrepreneur should understand that selecting the proper tone is one of the most important decisions you’ll have to make when starting or rebranding your firm because it has a significant impact on brand positioning.

Grant Polachek is the head of branding for Squadhelp.com, 3X Inc 5000 startup and disruptive naming agency. Squadhelp has reviewed more than 1 million names and curated a collection of the best available names on the web today. We are also the world’s leading crowdsource naming platform, supporting clients such as Nestle, Dell, Nuskin, and AutoNation. 

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

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Posted in Sellers Articles

Business sellers are typically ready for questions from buyers, but they sometimes don’t realize the importance of their answers in terms of the successful sale of their business. How you answer pivotal questions can greatly impact the price a buyer is willing to pay (or even affect whether a deal happens at all).

The biggest of these pivotal questions from buyers is also typically the first. They are going to ask you why you are selling – and you need to have a good answer.

Say you are a business owner who has been in the game for a long time. You built your business over the last few decades into what it is today. You may be approaching retirement age and looking forward to slowing down a bit from the hardy day-to-day experience of being an entrepreneur.

You may want to retire. Perhaps you need to focus on a health issue for yourself or a family member. Maybe you are just burned out and ready to spend every day on the golf course. Most of your reasons focus on the fact that you need to be finished in the entrepreneurial world. The reasons you are leaving your business have nothing to do with the health or future of the business itself – so you need to covey that to any prospective buyers.

So how should you answer the “why are you selling?” question?

Let’s answer this question by first telling you shouldn’t answer this question. If you are burned out and ready to retire, you shouldn’t let a buyer know. Telling a buyer you are tired of your business and hate going to work can give the impression that you have let things slide because you just don’t care about the business anymore. Instead, you should tell buyers that you are ready for retirement, but that you will miss owning your business.

What if you aren’t a retirement seller?

If you are a young and investment-driven entrepreneur, building a business with the intention of selling it may be your focus. Here’s the caveat. Be careful not to answer the question “why are you selling?” in a way that would make a buyer think you are trying to sell your business at its peak.

Instead, put the emphasis on your excitement for your next business venture. Showing that you will continue to be a motivated entrepreneur in the near future will tell a buyer that you are a motivated entrepreneur in your current business venture. You can also talk about ideas for growth within the business that you haven’t had the time or resources to put in place yet. 

Whatever your reason for selling, you need to show that you have what it takes to stay in the game – you’re just ready for a new chapter of life that doesn’t include your current business. Answering the “why are you selling?” question carefully will help instill confidence in buyers that your business has room to grow and a great future ahead. 

Are you ready to sell, but you want to make sure you answer this and other big questions in the best way? Have you chased away a buyer in the past by answering this question in a way that created concerns? Please share your experiences here or ask us any questions and we would be happy to help.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

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Posted in Buyers Articles

There are a lot of important decisions to make when you are buying a business, but one you may not have considered is choosing the corporate structure. You will need a corporate structure in place before you do many of the licensing/permitting applications that will be necessary for you to officially take over the reins. Your corporate structure also defines who owns the business and how the business will be taxed. 

What are my options?

Corporation

Probably the most frequently used and preferred type of structure for forming a company is the corporation. By presenting the Articles of Corporation to the Secretary of State, you can form a corporation fairly quickly. If you are forming the company in Florida, then the registered office is also in Florida and the corporate structures are governed by the laws of the state of Florida. A corporation formed in Florida can carry out business in every state, although all of the states require a registration. Foreign nationals can also form a corporation in Florida. A registered agent (a person headquartered in Florida) has to be named to receive and deliver documents.

Limited Liability Company (LLC)

The Limited Liability Company is not accepted in all states, but it is in Florida. The shareholders are personally liable for taxation and the accountability is limited to the assets of the business. Just like the corporation, an LLC requires the filing documents to be registered with the Secretary of State. In most cases at least two shareholders are required for a Limited Liability Company.

Sole Proprietorship

If the business is privately owned, it is a Sole Proprietorship. In the majority of cases a single person is the owner of the business. This type of corporate structure does have some downsides. The owner is liable with all of their personal assets and the owner is also liable for taxation.

General Partnership

In this type of corporate structure, the partners lead the business together and all of the partners are absolutely liable for accounts payable. This setup usually requires more administrative effort and can be more cost-intensive.

Limited Partnership

The Limited Partnership consists at least of 2 people, a General and a Limited Partner. The Limited Partner has a supervisory role, both available and limited. He or she can’t be part of the management and acts as an investor. The General Partner leads and is liable for the business. A shareholder contract has to be prepared for the forming of the business. With this type of corporate structure, you have to request a Certificate of Limited Partnership from the Secretary of State.

Before you make a decision it is important to contact a certified public accountant familiar with corporate structures and small businesses, a business attorney or a business broker because they will be able to advise you about what type of structure would be right for the business you want to purchase. Are you a business buyer or budding entrepreneur who would like help? Please feel free to contact us or leave a question here and we will be happy to help or refer you to one of our partners.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

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