You Don’t Need To Be The Next “Meta” – Why Small Businesses Are The Perfect Fit For Your Dreams
Posted in Become a Business Owner, Buyers Articles
Many cubicle-bound professionals daydream of one day becoming their own boss and launching themselves into fame and fortune – the likes of a Zuckerberg or Gates – but notions and ideas that lofty can actually prevent you from having a profitable and satisfying career as the owner of a small business.
The American economy was built with small businesses and the entrepreneurial spirit of main street, and although some small businesses do become mega-corporations, most don’t. This isn’t a bad thing – for most small business owners a profitable time can be had without exponential growth.
Why should you keep your business ownership dreams out of the clouds? If you are realistic about your expectations as a business owner, then you are more likely to find the happiness and success that can come from a sensible entrepreneurial vision. Still need convincing that you should keep your goals a bit lower than “the next Meta or Google”? Here’s a few reasons while a small business can be far better than a mega-business:
Too many cooks in the kitchen.
If you’ve ever worked for a large company or even sat in a large meeting, you will know that the more people involved, the slower the process will go and the more resistant to change they will be. Large businesses are like large ships at sea – they take an enormous amount of time and effort to change direction. As a small business, you will be better equipped to shift with market trends, pivot with your customer’s needs and be able to implement changes without the enormous task of getting the approval of a large number of people before anything can happen. This can be critical in times of crisis, like the pandemic, when a quick pivot in your business model can save you.
Sustainability isn’t just for farms.
A massive company also comes with massive infrastructure and expense. You might be racking up massive sales, but a large chunk of the money coming in will have to be allocated to keeping the bones of the company supported. A very large business needs a very large location, a location that likely comes with a very high lease payment. There are the bills to keep the lights on, to keep the wireless working, to provide benefits to employees, to buy office supplies – the list of expenses can go on and on. If a very large company isn’t able to keep profits growing, it can be incredibly hard to support that massive infrastructure. If you are a small business, on the other hand, you can easily maintain a small but functioning location with a low monthly cost in terms of lease and utilities. If you have a bad quarter, unlike your massive counterpart, you have a sensible and sustainable monthly expense that will give you the ability to stay in the game long enough to get the numbers back in the black.
Corporate life is not for control freaks.
If controlling your own destiny is something that is very important to you, then life on a mega-corporate ladder can be tough. By owning your own business the responsibility and decisions are all yours, so any successes you achieve are that much more satisfying. You have complete control of where your professional life goes, and for some this alone is desirable enough to stay off the corporate ship.
The message here is if you are considering entrepreneurship, dream big – but not so big that you talk yourself out of ever owning a business. Small business owners are driven and happy – so if you think this is a path you want for your life, make some realistic goals and then set them into action.
Have you thought about buying your own business, but aren’t sure entrepreneurship is for you? Do you have questions about how much money you could make by owning your own business? Ask us! Please feel free to leave a comment or question here, and we will be happy to help.
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Honesty Vs. Telling You What You Want To Hear – Selling Your Business With A Broker
Posted in Sellers Articles
If you really tried to add up all the hours you’ve put in, every penny you’ve spent, all the stress you’ve endured – it would probably mean your business is worth an absolutely insane amount of money. It would be great, right?
In reality your business is only worth what someone is willing to pay for it, so pricing your business correctly when you list is extremely important. Price it too low and you’re leaving money on the table. Price it too high and buyers probably won’t attempt to make an offer. You need to be in that sweet spot where you’re price reflects the actual cash flow of the business but isn’t delusional.
How do you figure out the sweet spot for your listing price? Talk to an experienced and qualified business broker. They’ll help you consider cash flow, your equipment and inventory, upcoming contracts, debts the business holds, your commercial lease, what comparable businesses have recently sold for, etc. and guide you to a listing price that gives you your best chance for the highest return on your investment.
Here’s the most important point. If you’ve chosen the right broker their goal is to help you sell your business successfully. The only way that’s going to happen is if the listing price is right. If you’ve got a broker who will let you list for whatever you want – that’s a problem.
Letting a client list their business for whatever they want is a way for some brokers to get listings – listings they know won’t sell. Why would they do this? Any listings they have will generate calls from buyers, so when a buyer inquires about your substantially overpriced listing that broker will use the opportunity to steer your potential buyer to another of their listings they can actually sell. Your business languishes on the market indefinitely and you don’t see the benefit of the listing – the broker does.
How do you keep this form happening to you? Hire a broker who tells you the truth. You might not like what you hear, but a broker who actually wants to sell your business isn’t going to let you list for an astronomical price. They’re going to help you hit that sweet spot – even if it’s less than you would ideally want. A good broker bases their listing prices in reality, not with the goal of getting the listing at any cost.
Ask lots of questions in your initial conversations with brokers. If you’re requesting a specific listing price and they don’t agree, ask why. If they are willing to let you choose any number you want – remember in that scenario you aren’t the one who benefits.
Have you tried to sell your business without any luck and now think it was because you listed it for the wrong price? Do you want to know what businesses like yours have recently sold for? Ask us! Leave any questions or comments and we would be happy to help.
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Stay In Your Wheelhouse: Why You Shouldn’t Buy A Business You Know Nothing About
Posted in Become a Business Owner, Buyers Articles
Sometimes it seems like a good idea. A hard about-face in life. Choosing to buy a business in an industry that interests you, but one where you’ve never spent a single, solitary second. How exciting, right? A whole new chapter of life – a new adventure.
Don’t do it. Here’s why.
Life as a business owner is tough. Really tough. It’s long hours, lots of responsibility and constant challenges. That toughness translates into rewards if you have the grit, experience and passion to be a successful entrepreneur. Notice we included the word experience. We’re not saying you need to have owned a business before. The romantic notion that the only requirements for success as a business owner are grit and passion just isn’t reality.
The reality is taking over a small business as the new owner comes with a sharp and steep learning curve. There are so many aspects of owning and running your new business that you will have to learn – quickly. How the operating procedures work and why they are the way they are. The nuances of your new staff. What needs to be where and when. How to place orders. How to manage inventory. How to stay on top of licenses, taxes, payroll. The list is long. What you don’t need in this mix is trying to learn an entirely new industry. If you want to be successful you’re going to have an exponentially easier time taking over a business where you have some real, practical experience.
Here’s an example. Say you went to school to be an accountant, then you spent some time working as the accountant for a small manufacturing company. Like most people you’re a fan of a good happy hour and have always had a daydream of owning a tiki bar on the beach. When a 200 seat beach bar near you goes up for sale, you put in an offer and are able to work out a purchase contact with the seller. After closing on the sale you struggle with your now 24/7 work schedule. You’ve never worked anything but a classic 9 to 5, so having to open the bar at 10am and stay until 3am every day is rough. The huge staff you’ve inherited to run this large establishment are a constant source of drama you’ve never had to contend with. You fire one employee and then 9 more quit, including your weekend bar back. Now you’re juggling trying to fill the schedule and trying to hire someone who will actually show up to be the bar back on Saturday nights. So for 5 Saturday nights in a row you’re the one hauling kegs and refilling ice. And you didn’t realize how fast you’d go through lemons so you’re driving around at 4am looking for a 24 hour grocery store because there isn’t any time to order from your vendor and get lemons by tomorrow. Then your line cook calls in sick so you have to jump in and work the line for 3 days, cooking food you’ve never cooked at what seems an insane pace – much to the displeasure of your customers who keep sending the food back.
If you’re someone who has experience in the restaurant industry, that scenario probably seems pretty normal. You know what it’s like to work late shifts and have to jump in and cover for people who’ve called in that night. You’re familiar with the drama that exists in every food industry staff. You understand that a 200 seat anything is huge, and not for anyone who’s a rookie. You know what food cost is and you understand what a bar needs (lemons) to function properly.
The point here is you really need to know what you’re getting into before you make the life-altering decision to buy a business. The only way to really know what owing a business is going to be like is by working in that industry at some point in your life. Our accountant from the example above could have bought a small manufacturing business or a small accounting firm and done quite well. Instead they are immediately overwhelmed and quickly burned out.
Don’t do this to yourself. Talk to a business broker about the practical experience and education you have. You might be surprised by the business and industry options available that would compliment the things you’ve done in the past. Set yourself up for success, not burnout.
Are you rethinking buying a business you know nothing about and want to know what industries and businesses would fit with your experience? Did you buy a business cold and have a story to share? Contact us or leave any questions or comments, we would be happy to help.
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When You Can’t Make The Rent – Why Business Owners Need An Exit Strategy
Posted in Sellers Articles
It happens. You own a small business and something gets in the way. A recession. A pandemic. A family emergency. Whatever the root of your business woes – it sometimes gets to a point where your only choice is to lock the doors and walk away.
It doesn’t have to get there. If you plan ahead you can sell your business and get a return on all of the investment you’ve made long before you have to make any fatal moves.
A big, big caveat here. It takes time to sell a business, even one deeply discounted out of desperation. Most buyers aren’t going to want a train wreck – so if you foresee a struggle approaching it’s better to cash out before the situation becomes unfixable. If you’re feeling nervous about the future of your business talk to an experienced and qualified business broker now. Tell them what’s happening and ask if it’s time to list or if your exit strategy can wait a bit longer.
If your heart isn’t in it anymore, if your personal life needs way more of your attention than you can successfully give while still maintaining your business, if the metrics are telling you that you are no longer making enough for the business to sustain itself – it’s time to have that serious conversation. No one wants to admit defeat, but it’s better to admit defeat before there’s nothing left.
Selling your business or walking away doesn’t mean your life as an entrepreneur is over. It just means this path isn’t the right one at the moment. You can take the proceeds from your sale and invest in a different business or you can take some time to deal with whatever issues forced you to leave. There are very few successful business owners who got it 100% right the first time out of the gate, so be realistic with yourself and don’t give up on your goals because this time something got in the way.
If you are past the point of no return and are left with just liquidating assets, you probably need to do that before the landlord takes over. Read your lease carefully to see where the line in the sand is – where the landlord has the right to lock you out. Once that happens anything inside that business now belongs to them.
The message here is failure happens, but failure doesn’t have to cost you more than it should. You can get back a return and move on to something else.
Are you a struggling business owner who isn’t sure if it’s time to pull the plug? Have you owned a business you should have sold and have an experience to share? Leave any questions or comments here, or feel free to contact us if you feel like it’s time for that serious conversation – we’re here to help.
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Why You Should Keep Politics Out Of Your Business Transaction
Posted in Buyers Articles, Sellers Articles
This one probably seems pretty obvious. Two people who are essentially strangers are trying to put together a deal for the sale of a small business from one party to another. There are seemingly endless moving parts and points to negotiate, so just getting to a closing table sometimes feels like it takes a herculean effort. All throughout this process everyone needs to try their best to stay objective and keep their cool – but with someone’s blood, sweat and tears being exchanged for someone else’s hard earned money it can be tough to stay emotionless and not be offended.
Then someone starts talking politics.
We all know how divisive political conversations can be. They upend family gatherings and have turned into brawls on the street. Why are we talking about them? A simple political comment can snowball and end a deal.
You don’t have to be madly in love with the person on the other side of your transaction. What you do have to do is get along with that person long enough to put a deal together, close that deal and then go through a training period on the other side. The relationship between a business buyer and a business seller is so delicate intermediaries (business brokers) are needed to keep the deal on track and act as a buffer between the parties involved.
Why then would a person trying to make a deal happen for themselves throw a political grenade on the whole process? Just don’t. It’s a bad idea.
Everyone is entitled to their own political opinions. What you don’t need to do is share those opinions in an already tenuous situation that has big ramifications if the two parties reach a point where they can no longer communicate.
Ok, but what if I’m not the one who is always bringing up politics?
If you really want your deal to happen your best bet is to ignore those comments from the other side. Change the subject, walk away and communicate through your business broker as much as possible.
Are you buying or selling a business and want to know more about how business brokers can act as a buffer in a business transaction? Have you been a part of a business deal that went south because of a political clash and have a story to share? Please leave questions and comments here.
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