Posted in Become a Business Owner, Buyers Articles

Yes, we know. Obviously, a business is not a house. Here’s the point we’re trying to make:

Some prospective business buyers approach the business buying process as if they were buying a house or maybe even a car. This is an enormous mistake. 

They typically call us when they’re already in town, a trip that’s been planned for weeks or months. Did they have the foresight while planning this trip to think of talking to someone about looking at businesses? Nope. They just call to say they’re here. They want us to drop all of the clients we already have meetings and calls with that day to drive them around so they can look at the physical locations of all of the businesses that are currently on the market. They then expect that we can waltz into any business that seems to interest them, introduce ourselves to the staff and management – and ask why the business is for sale.

This is NOT how you go about buying a business.

You can’t treat a business like a house for a lot of reasons. An operating business is just that – operating. It has a staff, vendors and competition. It has customers on site.

There is a misleading perception that any business for sale is a business on the brink of failure. It is this perception that can cause catastrophic losses and serious ramifications if the for-sale status of a business is disclosed to the wrong people (think the staff, vendors, the general public and the competition). An entire staff can quit. Customers can cancel contracts. The list goes on. Confidentiality in business sales is key, so anyone who is serious about buying a business needs to play by the rules of confidentiality. Those rules take planning and they take time. 

How should you buy a business?

If you’re looking for businesses that aren’t in your current area, you should call and talk to a local business broker while you are buying your plane tickets or setting up your travel plans to visit your future relocation spot. Talk to the business broker about your goals for business ownership, the industries that you’re interested in and the areas where you have practical experience. You and the broker can spend a few weeks researching and searching – looking for the right business opportunities in your new area.

Once you have found a few businesses that interest you, you will be required to sign non-disclosure agreements before you are allowed to know the business name or location. The non-disclosures will also give you access to further information, things like P&L statements and past tax returns. You can use that information to narrow down your choices and then request a conference call with the sellers of the businesses that still interest you. By looking at the cursory financial information and talking to the other side you can decide if any of the businesses on your list will still fit with your goals. Those that do will be your final list, and these are the businesses worth seeing in person. 

Some buyers have a hard time with this concept – that they can’t tour physical locations as the first step. Here’s what you need to remember: an operating business has value because an operating business creates cash flow. You are buying this cash flow – not a physical space, so seeing it in person isn’t as important as it would be for something like a house.

The veil of confidentiality is also so crucially important, even for you as a buyer. You wouldn’t want a business that you are seriously considering to be destroyed by someone else’s careless disclosure of the for-sale status – so understand that the process is built to protect the business that might be yours someday. You will need a bit of patience to see the process through to the end.

Don’t treat buying a business like buying a house. Remember that you are buying yourself a future life, and for such an enormous endeavor some pre-planning must take place – so call a business broker long before you get to town.

Are you thinking about buying a business and have more questions about the business buying process? Would you like to know what types of businesses are currently for sale in the areas you’re considering? Ask us! Please leave any questions or comments, 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

You think you’re ready to buy. You’ve researched the market and found that in the industry you’re considering there is room for growth. This industry will suit you because you already have practical experience and familiarity. You’ve searched for businesses and discussed the options available for sale with your business broker, and you’ve settled on one choice that really interests you. The next step is to make an offer – but that idea seems terrifying. What if it turns out this isn’t the business for you?

It’s hard to make big decisions. You can research, ponder and then research some more – but at the end of the day the only way to move forward is to act.

Here’s the good news.

There are two types of offers that you can make, and you should consult with your business broker to determine which would work better in your unique situation. One is a Letter Of Intent (LOI) and the other is a Purchase Contract (sometimes just called an Offer). Either way you choose to proceed – you can walk away from the deal if you decide (for whatever reason) that this business isn’t for you. It’s that simple. You will also get ample time to go through the business (financial records, contracts, commercial leases and the like) during a process known as due diligence.

Once you’ve submitted your offer you will have both the time and information you need to make an educated and carefully considered decision about a business.

What happens if you don’t make an offer? Well, nothing. You don’t get a chance to really look at a business because no owner is going to allow a due diligence level investigation of their business if you don’t have ay intention of actually buying it. If you never make offers you end up in a business buyer purgatory with everyone who is just there to kick tires.

If what you really want is to own your own business, you have to start taking those next steps and being decisive. Making an offer tells everyone involved in the deal that you’re a serious buyer and deserve to be treated as such.

Do you really want to buy a business, but making an offer seems like a daunting step? Are there questions about the types of offers you’d like answered? Have you made an offer on a business that you ended up not buying and have an experience to share? Please feel free to leave any questions or comments, we would be happy to help.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

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Posted in Sellers Articles

Selling your business can be tough. There’s the to-do list of getting the business and your books in order, the extra workload of providing everything a buyer asks for during due diligence and the stress of negotiations. At the end of the transaction process you have to hand over the keys to a business that has been your blood, sweat and tears – usually to a buyer who is essentially a complete stranger.

This last bit of the process, the part where everything becomes final, can bring out an emotional response that sometimes surprises business sellers. Those big emotions can be exacerbated when you really, really don’t like the buyer. Sometimes the distaste for a buyer can even derail a deal.

Here’s how to keep that from happening:

Is the problem is the buyer, or you relinquishing control?

Business owners are a particular breed. They’re decisive, strong-willed and hard working. Most have a type-A personality. This is a great personality while you’re in charge of your business, but it can cause issues when the time has come to hand over the reins. In the vast majority of cases buyers are going to come into a business and make changes. Changes that maybe you as an owner would never make – and the relinquishing of all control over the fate of your business can cause a seller to balk. You need to understand that not only are changes likely to happen, you are probably going to have this kind of negative reaction. Remember that just because the choices this buyer wants to make don’t align with your own – they are likely still a good buyer, perfectly capable of purchasing and running your business. Sellers who aren’t prepared to let go will often project their strong emotions onto their buyer, deciding that it’s the buyer who’s the problem. If you know going into the process that you might feel this way you can be better prepared to keep your big emotions from impacting your deal.

Is the problem a clash of personalities?

The transaction process can be a long one, sometimes forcing together two people who really struggle to maintain a professional relationship. Maybe you and your buyer have differences of opinion on how the business should be run. Maybe you and your buyer fundamentally disagree about everything under the sun. Wherever the clash of personalities comes from, it can be really difficult to remain objective during meetings, negotiations and the like when your buyer is someone you would never engage with in any other situation. If this is the case for you, slow down and take a breath. Remember that point of this transaction isn’t for you and your buyer to be best friends or work together forever. The point is to get to a closing table and get a financial return on all of your investment of time, energy and money that you’ve put into your business. It can be really helpful in the high stress moments to keep your eye on the prize. This type of situation is also where your business broker can be instrumental in the success of the transaction. If you don’t like interacting with the buyer – don’t. Use your broker as a buffer between you for as many situations as possible. 

It can be difficult to get a deal to closing when the parties involved aren’t fond of one another- but it’s not impossible. Think about where the animosity is coming from for you, remind yourself that this process doesn’t last forever and keep your broker in the middle.

Have you tried to sell a business and had personality issues with a buyer? Do you have questions about how a business broker can act as a buffer during the transaction process? Please fell free to share your experiences or ask questions. We would be happy to help.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

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Posted in Become a Business Owner, Business Broker Why & How, Buyers Articles

There are a litany of decisions in any business transaction. Some are small. Some are huge. If you’re going to successfully navigate the process and end up at a closing table you’re going to have to be able to make these decisions – without second guessing yourself to the point where you can’t make a decision at all.

Here’s how:

Listen To Reason And Keep Your Emotions Out

Staying reasonable and rational in a highly stressful situation can be tough. It can be easy to let the stress of big decisions overwhelm you and let reason give way to panic – but here’s why you can’t. Choices made while you are in a panic-state can be knee-jerk and purely emotionally driven. The decisions you need to make during a business transaction need to be informed and rational. Go into the process of buying a business knowing the stress will be there – and get the right help. At the very least you should have your own experienced and qualified business broker who can talk you through each step in the process. You can also use their expertise and advice as you think about the decisions you have to make. If you are feeling overwhelmed about a decision or by the sheer number of decisions – talk to your business broker. They know how stressful this process can be and are an objective third party who can help you see your choices from a rational and experienced point of view.

Trust You Gut

You made the decision to start on a path to business ownership, so while the prospect of actually seeing that vison through to completion can be a bit scary at times – you know in your gut it’s the right path for you. With any monumental life change like buying a business cold feet, nerves and the like should be expected. There’s a difference, however, between decision jitters and a gut feeling that something isn’t right. If you feel like something is amiss, talk to your business broker. Any good broker is going to tell you if they think a particular business would be a mistake for you – and they also are going to agree with you if your gut (and not your nerves) are telling you to walk away. 

The message here is although the process of buying a business can be stressful, you shouldn’t allow that stress to keep you from following your path to business ownership. Enlist the right help, stay rational and trust your gut.

Have you always wanted to own a business but are nervous about making that dream a reality? Do you have questions about the process required to buy a business? Would you like to know more about the role of a business broker in a transaction? Ask us! Leave us any questions or comments, we would be happy to help.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

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Posted in Sellers Articles

The decision to sell your business is a big one. Is the timing right? Is the market in a place where I’m going to get the best possible return on all of my investment? Am I ready to sell?

Once you’ve crossed all of those mental hurdles and actually listed your business for sale it can be tempting to enter the same mode one does when you’ve put in a two-week-notice. It’s time to coast and then move on, right?

Not really. It can take a long time to sell a business. Typically something like 9-12 months. Longer if your business is something in a niche market.

We get that ideally you’d like your business to sell right away. Some businesses do sell on an accelerated timetable. Most don’t. If it takes a long time to find the right buyer, you’re in good company. Most sellers have to wait.

It can be frustrating when your business doesn’t immediately sell and it can be tempting to pull your business back off the market because of that frustration. Don’t do that. It takes the right buyer and the right moment – so you need patience.

Even if you’ve found a decent buyer the process itself can seem to drag on. Conference calls, meetings and sight visits scheduled and then rescheduled. Lists of questions to be answered. Due diligence periods. Extensions. Issues with commercial lease negotiations. Issues with licensing. It can seem never-ending – but it’s not. If you stay the course you will eventually reach that closing table.

If you feel like your frustration with the length of time it’s going to take to get you to a closing table is making you rethink selling at all – remember what the alternative is. Working at your business until you’re dead or locking the doors and walking away with nothing. If all that stands between you and a return on all the investment of time, energy and money you’ve put into your business is a process that can feel a little long – is it worth it to pull out? Definitely not.

Are you thinking about listing your business for sale and want to know the average time from listing to closing for your industry? Do you have questions about the length of time each phase of the process typically takes? 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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