Posted in Buyers Articles, Sellers Articles

This one happens all the time. We get a call from a real estate agent who is inquiring about one of the businesses we have listed on behalf of a buyer, or is looking for potential buyers for a business one of their clients wants to sell. Perhaps they are a trusted agent for a client, and the client asked that they inquire on their behalf. We even have potential buyers and sellers call and request that we use their real estate agent for their part of the transaction. 

We tell them how business transactions work. A real estate agent who refers a client to us will get a referral fee when the deal closes, all they have to do is get us the client’s contact info.

Sometimes an agent refuses to divulge their client’s information, demanding instead that we work with them on the deal. We refuse, so the agent moves on to a different broker to see if they can talk someone into working with them. Their clients don’t get access to business information or potential buyers, and are likely unaware that any of this is going on.

Why won’t business brokers work with real estate agents? Why do they require a referral of the clients instead?

It’s very simple. Real estate agents are very good at what they do – they sell property and homes. What they are not good at and likely know little to nothing about is selling businesses. You can liken the difference between a business broker and a real estate agent to the difference between a plastic surgeon and your general family physician. You would probably be very uncomfortable having your family doctor do reconstructive facial surgery – along the same lines a business broker specializes in the buying and selling of businesses. We would never try to help someone buy a house, it’s just not what we do.

What can happen if a real estate agent tries to help you buy or sell a business? Since they don’t know the ins and outs of the business transaction process, there is a good chance you will never see a closing table.

If you are a seller, a real estate agent will likely treat your business listing like a listing for a house. They will take pictures, gather some cursory financial information and then post this information on the MLS listing system. This is a complete disaster in the making. The most important part of selling an existing business is maintaining confidentiality. Without confidentiality, you stand to lose customers, employees, vendors and money. The only people who should know that your business is for sale are those who have signed the appropriate non-disclosure documents – not anyone with an internet connection who can search the MLS. A business broker knows how to confidentiality market your business, and they are also well-versed in negotiating leases, licensing and permitting concerns and will have relationships with other brokers and buyers who are currently in the market looking for a business like yours.

If you are a buyer, a real estate agent isn’t going to have access to any business listing information without talking a broker into letting them have it (which isn’t likely to happen). Many real estate agents also try to fill out the non-disclosure forms themselves, pretending to be the buyer, but all this does is garner mistrust with any sellers who will then feel like they’ve been duped when the truth is later revealed.

We understand your loyalty to your real estate agent – we have many friends in the real estate industry and we have used their expertise for not only our home purchases but also the sales and purchases for our family members. You shouldn’t feel like your real estate agent gets the short end of the deal if they refer you to a business broker – they get paid for handing over information and doing nothing more. They are doing you and your future business transaction a great service by putting you in more capable hands.

If you are looking to buy or sell a business, feel free to ask your real estate agent if they have a business broker they would recommend. Just be wary if your agent tries to talk you into letting them take the reins.

Have you tried to buy or sell a business using a real estate agent and have a story to share? Do you have more questions about the referral process? Ask us! Please feel free to leave any comments or questions.

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 Business Broker Why & How, Buyers Articles, Sellers Articles

Whether you’re in the market to buy a business or have a business that you’re ready to sell – your best bet for success and reaching a closing table is hiring the right help. In the business transaction world that help is a business broker. 

What do business brokers do? They help sellers list their business for sale. They put together marketing packages and business listings and then add those businesses on listing platforms. They keep the confidentiality of the for-sale status of a business in place by vetting buyers and having qualified buyers sign the appropriate non-disclosure agreements. They coordinate conference calls and meetings between buyers and sellers and act as an incredibly important buffer in the negotiation process. They help put together offers and help solidify purchase contracts. They give advice throughout the process, as their experience with business transactions can be invaluable for avoiding common pitfalls that can cause deals to fall apart. They help sort out commercial leases with landlords and property managers. They assist with permitting and licensing requirements. They assist with obtaining financing options. They coordinate with immigration attorneys to obtain Visas for international clients. 

It’s a long list. A list you probably don’t want to tackle with someone who is terrible at their job. 

How can you tell if a broker is a good broker? You can watch out for red flags.

Does this business broker have no online presence at all, or a website where the last post was 7 years ago? 

The business transaction process, like most things, has gone digital in recent years – from electronic signatures to virtual walkthroughs and the like. If a broker can’t even maintain a basic digital presence, then they probably aren’t up to speed on other aspects of their job either. 

Do the listings for a particular broker have a ton of spelling errors or always seem to be incomplete/incorrect? 

The business transaction process requires a great deal of attention to detail. If a broker is willing to leave mistakes all over their listings, how careful are they with everything else? A listing and a marketing package are an important first impression of a business for buyers. If all you’re getting is some over-copied tax returns and 15 spelling errors, it might be time to find someone else. 

When you contact a broker, does it take them an enormous amount of time to respond?

You can’t expect a broker to always pick up your call or immediately respond (they should have other clients and a life outside of work) but you should be able to get in touch with them in a reasonable amount of time. If you have to wait a week for a response, you might need to find another broker. 

Does a broker claim to have proprietary formulas or methods that no one else in the business has? 

Well, there’s probably a reason for that. Occasionally brokers will claim to have some magic metric (for example – for pricing businesses) that no one else in the industry uses. Every business is unique, so a big part of becoming a successful business broker is understanding that every transaction will be different and each business will require a different approach. There isn’t a better mousetrap – there’s only those who can adapt the process to get a transaction done and those who can’t. 

The message here is you want qualified and experienced help – and you aren’t going to get that from someone who is careless with the most important parts of their job. Keep an eye out for red flags as you begin the business transaction process. 

Another good metric? Ask any potential broker how much of their business comes from referrals. Someone who does a good job is going to get a great deal of their future clients from the referrals of past happy ones. 

Are you looking for businesses to buy and want to know more about how a business broker can help you? Have you considered selling your business and want to know what our marketing packages look like in comparison to others in the industry? 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 Sellers Articles

When we finally decide we are ready to sell our business, we’re ready now. We’re ready for the next chapter. We can already see ourselves in the next phase of life – retired and playing golf, sitting on a beach somewhere or onto our next entrepreneurial project – whatever the daydream is.

There’s a big problem with the desire for now in the business marketplace. It can take a really, really long time to sell your business.

Sure, there are occasions where a business lists and sells relatively quickly, but this isn’t always the case. This usually occurs when it’s a seller’s market in general – as seems to be the case in 2021. That being said, even in a seller’s market it can take a while to get to a closing table.

Why? There are basically two reasons for this. Two reasons that will require you to have patience as a seller.

First, business transactions are complicated. There are contracts and leases to be negotiated, training that needs to occur, large amounts of money changing hands, time for attorneys to review documents, financing that needs to go through a process with lenders, licensing and permitting requirements, (for some transactions) Visas that need to be processed by consulates – the list goes on and on and on. Those layers of complication can hang up deals for days, weeks or months – even with very motivated parties on both sides. If you want to be a successful seller, then you need to be mentally prepared for your deal to get hung up somewhere (or multiple times) during the process.

Second, you have to wait for the right buyer. Every business is unique, and as such it takes a buyer with a set of goals that your business uniquely fills to make a deal happen. Depending on how niche your business is, licensing requirements for a new owner, your location, the physical abilities required to run your business, etc. it can take a bit of time for you and the right buyer to connect. In a typical year it can take somewhere around 9 to 12 months to get a deal from listing to closing – so you are going to need a large dose of patience if you want to see the process through. 

It can be tempting to list your business for sale and then take your foot off the gas because you are more than ready for the next phase of your life – but this is an enormous mistake. Your business needs to look the best it can when you are trying to attract the right buyer, and it can’t look it’s best if you’ve stopped trying. Have patience, keep a focus on growth and keep your numbers strong until you actually reach the closing table.  

Are you considering selling your business and want to know how long it’s currently taking to sell a business like yours? Would you like to know more about how to attract the right buyer? Ask us! Please feel free to leave any questions or comments, 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

As the world recovers from long lockdowns and regular travel begins, the entrepreneurs who have put their dreams of business ownership on hold can start the process again. Here’s the thing. Buying a business is a process. One that takes planning. Lots and lots of planning. 

Why do we point that out? The angry whim buyer.

It happens constantly. We get a call or email from a buyer who is in town and wants us to drive them around to see a few businesses while they are here. Oh, and they leave tomorrow to go home so it has to be today. 

Guess what? Not going to happen – not because we don’t want to sell you a business, but because seeing a business on whim is utterly impossible. It can not be done. When we tell this buyer no, they inevitably get angry. Angry because they want to see a business and they would be spending a lot of money. Angry because today they have nothing to do and it fits into their schedule so it should also fit into ours. 

Here’s the reality. That angry whim buyer obviously planned their trip. They bought plane tickets. They packed bags. They took leave from work. They arranged pet sitters. They reserved a rental car.

If this buyer really wanted to see businesses while they were here – they absolutely could have if they had just planned ahead like they did with all the rest of their travel arrangements. 

Why can’t I just go see a business when I feel like it? Why do I have to plan ahead?

Operating businesses protect themselves while they are for sale by maintaining a shield of confidentiality about that for-sale status. No one except the seller, the broker and buyers who have signed the appropriate non-disclosure agreements know that the business is for sale. This keeps the staff from quitting en masse. It keeps vendors and clients from canceling contracts. Most people think that a business for sale is a business in trouble (hardly ever true), so it is vital that the for-sale status stays need-to-know.

What does that mean for a business buyer who wants to see a business? The process usually goes something like this:

You talk to a business broker about your goals for business ownership, the amount of capital you’d like to spend and about the types of industries you are interested in. They help you narrow down the list of all potential businesses for sale to just those that would be what you are looking for. You then sign NDAs for those businesses and get a cursory look at some financial information as well as the name and location of the business. That information is used to narrow your list further to just those businesses that you really like. Your broker will then contact the seller’s broker and set up a conference call between you and the seller. If you are still interested in the business after your initial conference call with the seller, you can set up a walk through of the business location. This visit will have to take place when the business is closed so no employees or customers will be around. It will also have to occur when you, your broker, the seller’s broker and the seller themselves are available.  

It should be obvious that this process can’t happen in a couple of hours. It just can’t. 

Here’s what you can do instead. When you start planning your trip – plan to see some businesses. Talk to a broker. Sign the NDAs. Talk with some sellers. Coordinate a few business visits long before you step on the plane. Using the process to your advantage will keep you from wasting your time looking at businesses that never would have worked for you in the first place. Start planning today. 

Are you thinking about traveling to see businesses and want to know more about the process that’s required? Would you like to know what businesses are for sale in a particular area? 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

1 Comment »

Posted in Become a Business Owner, Buyers Articles

If you are ready to jump into business ownership you may have a type of business in mind, you may have the capital raised for the purchase and you may even have a business broker searching for the perfect opportunity – but what you may not have is the right business mindset to truly succeed as an entrepreneur.

Here are a few of the ways you can change your mindset to set yourself up for success:

Actions speak louder than words.

Business plans are great, but you need to keep from spending all of your time focused on an idealistic plan. In most small businesses, the way you hope things will go and the way they actually go are two completely different things. Great entrepreneurs are good at adapting to their continually changing environment – and they don’t spend all of their time writing plans. It’s just better to do what needs to be done.

Don’t blow all of your money up front.

You might have what feels like a lot of capital the day you get the keys to your business, but it is really important to remember that it might take a while – think months – to get the business turning the kind of profit you will need to be in the black.

Don’t make a rookie mistake and try to change or renovate too much right out of the gate. Many first-time buyers walk into a functioning business and gut the place, spending a small fortune on aesthetics so the business can look the way they want it to right away. The most successful business owners wait to make changes until they are sure what (if anything) needs to be changed. Spend a few months learning why the business runs the way it does and why the previous owner did things the way they did. Use their experience to your advantage and save your capital for what really needs to be done – later.

Your customers are absolutely everything.

The most important rule in entrepreneurship is the customer comes first – always. Unless you are driving your clients around to appointments – it really doesn’t matter what kind of car you drive. If you bought a bar, then it doesn’t matter what the furniture in your office looks like. Only spend money on things customers see and touch, thereby investing all of your energy back into your business. The more you invest in your business, the more likely you are to get a return for your money and time.

This customer-first approach covers your goods and services too. If you have grandma’s meatball recipe on the menu, but customer feedback says they’re gross – then it doesn’t matter how much you like them. They have to go.

The message here is whatever your idealistic hopes are for owning your own business, a good dose of patience and the ability to pivot when things inevitably go sideways will serve you far better than your plans. Keep the needs of your customers at the top of your priorities and be smart with the ways that you invest in your new business venture.

Are you thinking about buying a business but have questions about what business ownership would be like? Would you like to know how much capital you would need to buy a business? Please leave us a comment or question 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

No Comments »