Posted in Become a Business Owner, Buyers Articles

The short answer? Preparation is everything.

Think about buying a house. A home buyer doesn’t just drive up to the first house they see with a for sale sign in the yard and write a check. A home buyer researches the local neighborhoods, school districts and property taxes. They hire a real estate agent to help them with their search. They look at various options online and then schedule times to see homes. They also talk to banks so they can get pre-approved for a mortgage.

The process of buying a business is much more complex than the process of buying a house, yet business buyers come to the market overwhelmingly unprepared every day. They want to be driven around town by a business broker to scope out the local business market with no real thought about what they want or need from a business. If you are serious about buying a business, this is not the path to take. Instead, start with these 3 steps:

1. Have a conversation with an experienced and qualified business broker about your goals for business ownership. For instance, if the reason you are considering buying your own business is so you can spend more time with your kids, then buying a large bar that will require your presence for 12 hours a day 7 days a week is probably not a good choice. A good broker will be able to match your goals with the right types of businesses.

2. Talk to your broker about your work history and experience. Your choice of industry will need to take into account what kind of practical experience you have. If you’ve spent the last 20 years as an auto mechanic, then buying a large salon is probably not the best option. Business ownership comes with a steep learning curve so you don’t want to add learning a new industry to the list.

3. With your broker’s help, figure out what you can afford. If you’ve got $80,000 of capital to invest – you have no business looking at $80,000 businesses. It may take you several months to begin turning a profit, and during those months you will still need to pay your lease, payroll, pay for new inventory – not to mention the extra cash you will need during the closing process for things like licensing and attorney fees. Your business broker will be able to tell you what your budget for the purchase of a business should be based on how much money you have. An important note here – don’t lie to your broker about the amount of capital you actually have. Your deal will absolutely fall apart when the time comes to provide proof of finances.

Once you know what you can afford, know what industries would match with your practical experience and have an idea of what kinds of businesses would meet your goals – you can start the business search process, the right way.

Have you thought about buying a business but don’t know where to start? Do you have more questions about the business buying process? Ask us! Leave any questions or comments here and we would be happy to help.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com
5111 Ocean Boulevard, Suite E
Siesta Key, FL 34242

www.InfinityBusinessBrokers.com

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Posted in Become a Business Owner, Buyers Articles

How much education do you need to own your own business?

Ask a college recruiter that question and you’ll likely end up with a MBA degree. Ask a successful business owner and they’ll tell you that nothing trumps practical experience and hard work. So who’s right?

The entrepreneur. Some of the most successful business owners out there, like Richard Branson of the Virgin Group, don’t have a formal education. They had a vision that they fought for and built into a success.

Our society places a high value on higher education – as it probably should – but this has another, perhaps unintended consequence of convincing everyone that without a degree you can’t be successful. That’s just not true, especially in the small business world. You definitely don’t need a degree to own a business.

Small business ownership does require a few things. Grit and determination. Passion. The ability to hustle and never give up. The insight to see failures as lessons that can be learned from.

None of these things require a college degree because entrepreneurship is a mindset – not a major.

Should business schools even exist? Sure, but attending and graduation from a business program is not a prerequisite for business ownership.

You know what else isn’t required to be an entrepreneur? Starting from scratch. You don’t need a garage and a brilliant idea, you just need a little capital and the desire to own your own business. There are always existing businesses on the market, from a litany of industries. Industries where you have practical experience that you can translate into business ownership success. Buying an existing business also removes a lot of the guesswork. You know that the idea, the location, the operating procedures, the products and services – they all work because the business is open and turning good numbers.

If you are apprehensive about buying or starting a business because you feel like you are unqualified – don’t. Talk to a business broker today about your goals for business ownership, about what industries might fit those goals and what businesses are currently on the market. You might be pleasantly surprised that your years of practical experience can turn you into a business owner today.

Have you always wanted to own your own business but don’t think you’re qualified? Would you like to know what industries would fit with your career goals? Please leave any questions or comments and we would be happy to help.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com
5111 Ocean Boulevard, Suite E
Siesta Key, FL 34242

www.InfinityBusinessBrokers.com

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Posted in Sellers Articles

Selling your business is a monumental decision, one that carries with it some very big (and often very unexpected) emotions. While these emotions are completely normal, they can (if allowed to do so) completely derail a great business sale – so here’s how to keep that from happening: 

Be patient with the deal.

It can take months and months to find the right buyer, and then once you do the transaction itself takes time. Lots and lots of time. It can be easy to get lost in your post-sale-life daydreams and want to push the deal to go faster – but that isn’t a good idea. Your buyer is about to write a very big check, and they will absolutely be nervous. That nervous buyer is going to want to go over your books multiple times, rework the contract, renegotiate with the commercial landlord, have their attorney and CPA look at everything, rework the contract again – it’s a process that can be frustratingly long for a seller. Here’s the thing. You can’t force this process to move at the speed you’re ready for. It needs to go at the buyer’s pace because you don’t want their nerves to be coupled with feeling rushed – causing a perfectly good deal to fall apart. Patience with the process and patience with your buyer will serve you far better than trying to ram the deal through. 

Be patient with yourself.

Your business, even if you’re burned out and can’t wait to sell, is your baby. There’s a lot of blood, sweat and tears invested. You’re excited for the post-sale future, but it can be surprisingly hard to hand over those keys when the time comes. Be ready for this. Buyers are going to comb through all of the work you’ve ever done and look for problems, then they will try to leverage those problems for a better price. While a completely normal part of the business transaction process, it can be very difficult for a seller to keep from feeling personally insulted. Remember that you absolutely must stay objective, no matter how hard it is. If you were the buyer in this situation, you would be doing the same things. Mentally preparing to have both things happen – your work criticized and then giving your business to a stranger – will help you step back from the brink of killing your own deal when those big emotions show up.  

Get ready for dealing with the emotions that go hand in hand with such a huge life change. Take a breath, be patient with the transaction process and give yourself some grace. There are more exciting things ahead!

Have you considered selling your business, but aren’t sure you could walk away? Do you have questions about how long the transaction process takes for a business like yours? Ask us! Leave any questions or comments and we would be happy to help. 

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com
5111 Ocean Boulevard, Suite E
Siesta Key, FL 34242

www.InfinityBusinessBrokers.com

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Posted in Become a Business Owner, Buyers Articles

If you are like most small business buyers you don’t have a ton of cash on hand to purchase a business outright, so you’re going to need some financing. While they are some more traditional lending options like bank loans or financing through the Small Business Administration (SBA) – the most common form of financing in the small business world is seller financing. 

Seller financing can be a great option for a buyer for a number of reasons. The most important reason? A seller who is offering to finance their business deal is so confident in the future of the business that they are willing to keep some skin in the game. It’s a win-win for a business buyer. 

This win-win scenario doesn’t come without a cost, so to speak. You as a buyer have to hold up your end of this sweetened deal. If you want a seller to be comfortable offering you seller financing – here’s a few things you need to do:

You need a hefty down payment.

No seller in their right mind is going to finance 80%, 90%, 100% of their deal. You are going to have to put a large percentage down payment on the table if you want a seller to help you with the rest. A large down payment shows a seller you are serious and gives them peace of mind that you can afford the business you are about to buy. The amount you’ll need as a down payment will vary from industry to industry and from business to business, so talk to your business broker about what you’ll need to bring to the table.

You need to be able to prove you can successfully run this business.

If you aren’t in love with sharing proof your financial means, providing a resume, telling a seller your credit score and the like – then seller financing might not be for you. A seller is going to want to know that you know how to run their business, either by past practical experience or by education/licensing. There’s already a steep learning curve when you first take over as a new owner – no one wants you to add learning a whole new industry to the mix. A seller is also going to want to see that you have more than $5 in the bank before they loan you money, as any business owner knows that you need some capital in the bank to be able to run a business successfully. A note here – even if you don’t end up getting seller financing a commercial landlord is absolutely going to want you to prove experience and financial means before they let you sign your lease. 

You might have to pay more.

If a seller is not only willing to wait to get paid and also taking the risk that they might never get paid, you might have to pay a bit more for your new business than if you were offering all cash up front. Remember that seller financing is an agreement where you benefit, so that benefit might come at a cost. How much it costs will be specific to each deal, so if you find a business you like where a seller is offering financing you can have a discussion with your broker about how taking that seller financing option will affect how much you should offer. In some cases, a seller is offering financing because they are very motivated to sell, and sell fast – and in those circumstances there might not be much difference in all cash offers and seller financed offers.

If you want a seller to trust you with their business and their money – you need to come to the table prepared. Have a decent down payment ready, be forthcoming with your information and be ready to make a fair deal.

Are you considering buying a business and want to know more about how seller financing works? Do you want to know how much of a down payment you might need for a particular type of business? Leave any questions or comments and we would be happy to help.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com
5111 Ocean Boulevard, Suite E
Siesta Key, FL 34242

www.InfinityBusinessBrokers.com

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Posted in Buyers Articles

When you are considering buying a business and joining the entrepreneurial world, there will be many challenges along the way.

The process itself can be complicated and frustrating, but the key to success is patience. If you are ready to begin the buying process, here are 3 things you should keep in mind:

#1: Stay calm

Buying a business is a daunting, time consuming and challenging process – particularly if you are new to the game and have never bought a business before. When you are negotiating with business sellers, working through complex contracts, ironing out the details of your new commercial lease, dealing with the bureaucracy that is required to obtain the proper permits and licenses –  what might start as a minor frustration or hiccup can morph into a big problem if you let it. Deals can fall apart because a buyer is impatient with the process, and instead of working through each issue they throw in the towel instead. In small business buying, patience is the key. So is working out small issues before they become big ones.

#2: Let go of looking for “perfect”

One of the major challenges we deal with is breaking the false assumption that somewhere out there is a gold, gleaming and perfect business. The perfect business is a myth, and chasing that myth will keep you in business search purgatory forever. All businesses have underlying issues, skeletons in the closet and the like. If you are looking at businesses with the goal of actually buying one, you will have to decide which issues you are willing to deal with and which ones you aren’t – instead of eternally searching for “perfect”.

#3: Get some help

If you are buying a business for the first time you will have a far better chance of success with someone who knows what they’re doing by your side. That person is a business broker. Business brokers can help you figure out which industry, size of business, location, etc. will meet your goals – then find you businesses that fit the bill. They can also garner cooperation from other brokers (a nearly impossible thing to do on your own), assist with all facets of the transaction, negotiate with sellers and commercial landlords, help with licensing and permitting, put together your purchase contract – the list goes on and on. Don’t go it alone.

There are very few situations that cannot be overcome in a business deal with a good dose of patience and a bit of negotiation. Stay calm, be realistic and let your broker lead the way.

Are you thinking about buying a business and have questions about the process? Have you been in the business market before and have a suggestion or advice for first time business buyers? Please feel free to leave a comment or question here!

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com
5111 Ocean Boulevard, Suite E
Siesta Key, FL 34242

www.InfinityBusinessBrokers.com

No Comments »