Posted in Become a Business Owner, Buyers Articles

We all have that daydream. You sit at your desk at the accounting firm where you’ve worked, well, it feels like forever – and your mind begins to wander. In your daydream you own your own business, like a famous downtown bar. You, the charming owner – are a friend to every regular. You spend your evenings sitting in a bar stool with your name on it, casually having a beer and mulling over the receipts for the day.

Everyone has this daydream. It’s a pleasant break from the drudgery of the day. The problem with this daydream, however, is it can quickly become a nightmare if you try to make it a reality. We talk people out of this scenario all the time, and for good reason.

What? Aren’t you someone who sells businesses? Why would you try to talk me out of my dream bar?

For starters, owning your own business and owning a business in the restaurant industry are not for the faint of heart. Entrepreneurship is hard work. Successful bar owners aren’t having a beer and casually going over receipts. They are behind the scenes grinding out new marketing strategies, dealing with vendors, filling in behind the bar when it gets busy, making schedules, training new staff, tweaking the menu, fixing broken equipment – the list goes on and on.

Secondly, if all of your work experience is at an accounting firm and you’ve never spent a single day of your working life in the restaurant industry – you have no business buying a bar. Business ownership is tough, and that road becomes impossibly tougher when you compound the problems you will face as a new owner by adding the learning of a whole new industry to the mix. Think of all of those reality shows where they go into failing restaurants and bars and try to turn things around. In almost every episode where the business is in catastrophic free-fall, the major problem is the owners had zero restaurant experience when they took over.

We don’t want to talk you out of your dream, we just want you to think of it in a realistic light. What is your dream really about? It’s not really about the bar itself. It’s about the freedom to be your own boss. It’s about having a personal connection with your clients. It’s about doing something different than you are right now. Guess what? You can have all of those things without buying a bar. As a matter of fact, owning a bar would be the exact opposite of those things if you are walking into bar without experience.

There are a myriad of businesses for sale, and many will meet those all-important goals for business ownership while also being in industries where you have experience. Talk to us today about the types of businesses we would recommend for someone with your resume and goals. You might be pleasantly surprised what’s out there that’s just right for you.

If, by the way, you do have loads of restaurant and bar industry experience – by all means, buy a bar. Finding the right business instead of the wrong business is all about matching goals and experience.

Are you curious about what type of business would meet your goals and match your experience? Do you have more questions about the business buying process? Please feel free to leave any comments and questions, 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

Living in southwest Florida definitely has its perks, even in the middle of a pandemic. We still have year-round summer, white sand beaches and a relaxed lifestyle.

Our small businesses have adapted to the new normal and the business market has many new opportunities for those who may be ready to make the jump to entrepreneurship. If this year’s events have you rethinking your life choices, now is a great time to buy a business. 

If you live outside of the area and are considering a move to the sunshine state as an entrepreneur, here are a few pointers you should consider before you make a trip down.

Buying a business is absolutely nothing like buying a house.

Many folks come to the business market with the mindset that the process will be very much like buying a house – but nothing could be farther from the truth. If finding a home is the goal of your trip, you might call a local real estate agent and ask them to set up a dozen or so homes to see a day or so before you jump on a plane, but if you try to do the same thing with buying a business you will be completely out of luck.

You must, must, must plan ahead.

The process to buy business has many steps, and starts with contacting a business broker. This first step should come long before you’ve even bought your plane ticket. You and the local broker should have a conversation about your goals for business ownership, your work experience, how much capital you are planning to invest and the industries that interest you. Your broker will then send you listings that fit with your goals and will ask you to review those listings and narrow down your choices. Once you have two or three listings that appeal to you, you will be asked to sign a non-disclosure agreement (NDA) for each listing. Once the NDA is signed and submitted to the listing broker, you will be sent the marketing package – complete with the name and address of the business in question. You and your broker will review each package and come up with a list of questions to ask the sellers, which you will have an opportunity to do once a conference call is set up. After the conference call, if you are still interested in the business, a tour of the physical location can be arranged but will have to be coordinated between your travel schedule, the schedule of the business (for confidentiality reasons buyers can only see a business before or after hours when no employees or customers are present), the schedule of the sellers, the schedule of the brokers involved and considering the social distancing measures that must be in place. 

Doesn’t sound like something that can be done or thrown together in a day, does it? That’s because it can’t.

It is very common for a buyer to call us on a Friday to say they are catching a plane the next day to visit some businesses over the weekend – and then they are upset when we tell them their request is impossible. If you are serious about buying a business you will need to go through the proper steps and plan visits to businesses long before you set foot on a plane. Business transactions are inherently complex and require lots of moving parts, so you need to both plan ahead and be flexible.

But I’m planning on writing a very big check to buy a business, why can’t you accommodate me?

It’s not that we are trying to be difficult; it really is that last minute requests are completely impossible – especially right now. We also don’t want to waste your time taking you to businesses that don’t fit with what you are hoping to get from business ownership. The process works, and if you follow it you will be better set up for success in your new business venture.

Are you considering a move to southwest Florida? Do you have more questions about the process and want to know how to get started? Would you like to know what measures we currently use to ensure safety during site visits? Ask us! Leave us 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, Business Broker Why & How, Buyers Articles

If you’re new to the business buying marketplace you will probably notice something right out of the gate as you begin your search – listing prices seem like they’re all over the map. 

How are you supposed to figure out if the listing price is fair?

While initially confusing, the listing prices of businesses can and do make sense in most cases – you just need to know how to look at the number the seller wants objectively.

Your best bet as a new buyer is to get some professional expertise on your side. Talk to a qualified business broker about some of the business prices you’ve seen and ask for their input. The listing price of a business can be a very nuanced thing. It’s often based on cash flow, but sometimes metrics like industry standard multiples, values of equipment and inventory, what comparable businesses have recently sold for, etc. can be part of the equation that leads to a listing price. Experienced eyes will be necessary to tease out the important details and help you decide if what a seller wants is fair – or well beyond the realm of reality. 

Why would someone list a business for a crazy high price? Sometimes those sellers are more interested in being told what they want to hear than they are interested in selling. Sometimes they are listing just to see if someone will make them an offer. In some cases these sellers will negotiate with buyers who come up with a fair and justifiable offer, but if they won’t – it’s probably time to move on. An extreme price can be a red flag that it will be very difficult to put a deal together. 

A realistic seller will be able to back up the number they’ve asked for. They will have the financial documentation that shows their request is legitimate. These sellers are willing to negotiate when presented with a fair offer, because ultimately a business is only worth what someone is willing to pay for it. This does not mean that you as a buyer should throw extreme low-ball offers to see if they stick. A small business is someone’s blood, sweat and tears. The personal attachment to all of that work means that it is relatively easy to offend a seller to the point that they will refuse to work with you. Just as you would like the listing process to be fair – you need to return the favor and offer a fair price. 

The message here? Enlisting some professional guidance will be essential in helping you navigate the listing prices of the businesses on the market. Once you’ve determined that a business is what you want – put together a fair and justifiable offer. 

Are you just starting your business search and want to know what’s out there? Click here to search for current listings! Would you like to know more about how businesses are priced? Ask us! Please feel free to 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

We all have big dreams. A bigger house. A nicer car. Lavish vacations. Your own private island. What keeps these wonderful flights of fancy in the realm of dreams is the fact that we just can’t (currently) make them happen.

Big dreams can become a big problem in the small business market. Why?

New buyers will often consider businesses that are completely out of their price range – like drastically so.

Why do many new business buyers have unrealistic expectations? It may be, in part, because of the way people buy homes.

When you go into a bank to get a mortgage, you might walk out with a pre-approval for $750,000. Does that mean you have $750,000 in the bank in cash? Nope. It just means the bank is willing to loan you that amount because they can take back your new house as collateral if you don’t pay them back.

Small business transactions don’t work that way. There are financing options if you don’t have a huge amount of cash available – but that financing is very different than what you see in the housing market. You might be able to get a loan from the Small Business Administration (SBA) or from the seller of the business via seller financing – but no matter where you get your loan you are going to have to put up a large down payment and prove that you have the capital to both get through the transaction process and sustain yourself as the new owner of the business.

What do we mean by that? The business buying process can be expensive. If you get a loan from the SBA, they are going to require an appraisal of the business – one you as the buyer have to pay for. There are application fees for SBA, as well as application and licensing costs associated with the licensing requirements for your new business. If your future business is in a commercial space, your new landlord is going to want first-last-security and to see your financials to assure them you can not only pay those initial costs, but be able to pay your rent going forward. You might need capital for payroll in the first few weeks or months. The list can be long and pricey.

This doesn’t mean you can’t fulfill your dream of buying your own business. It just means you need to be realistic with what you can afford. If you only have $50,000 to spend, you shouldn’t even look at a business that is $750,000. It can’t happen. What you can do is find an affordable business that you can grow. Smaller, more affordable businesses can be very successful – and have lots of room for that all-important growth.  

If you want to know what you can realistically afford, ask an experienced and qualified business broker. They can look at your current financial situation, your goals for business ownership and your previous experience – then assist you with finding the right business to buy. The right business will both meet your goals and keep you from extending yourself beyond what is currently financially possible.

Have you always wanted to buy a business but aren’t sure what you could afford? Would you like to know what types of businesses are currently on the market in your price range? 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

No Comments »

Posted in Sellers Articles

You might think you are ready to sell your business, but very few small business owners actually are. Do you have all of your books in order? Have you made any necessary repairs?

Preparing a business for sale can be a lot like preparing a house for sale. You need to make it look aesthetically pleasing and fix what’s broken.

There is, however, one major difference. Due diligence.

Once you have accepted an offer from a buyer, the due diligence period begins and you will be opening up your financial records, contracts, leases – everything – for that buyer to inspect.

Any problems found during due diligence can lead to one of two outcomes. Either the deal is dead and the buyer walks away, or they come back to you with a lower offer to compensate for the problems they’ve found.

No seller wants a perfectly good deal to fall through, and you want to get the best possible price for the business you’ve worked so hard to build – so how do you avoid due diligence issues?

Do due diligence on yourself.

Before a buyer has a chance to peek behind the scenes and go over your books with a fine-tooth comb, you should do this yourself. By performing due diligence on yourself you will see your business through a buyer’s eyes and will be able to address any potential problems long before a buyer finds them.

Don’t think you have any issues that will come up in due diligence? Think again. All small businesses have a few skeletons in the closet, and they can’t be hidden. Buyers always find issues, so the best way to deal with this eventuality is to solve the problems before they are found.   

How do you do due diligence on yourself? Ask your business broker for guidance and perhaps employ the services of a business transaction CPA. In most cases, you as a business owner know what the problems are. Figuring out the best way to deal with those problems will be where those experts come in handy. Is this an issue you can conceivable solve? How can you solve it? Is it a better tactic to just be upfront with the issues that exist when communicating with a future buyer or try to implement changes that will resolve those issues before the due diligence step in the process? 

Performing the due diligence process on yourself will help you and your business to stay ahead of the game during the transaction process and will also help you get the biggest return on your business sale. Ask your business broker for help. 

Do you have questions about what buyers will want to see during due diligence? Would you like to know what problems we’ve seen in due diligence in the past? Ask us! Leave any questions or comments and we would be happy to assist you.

Michael Monnot

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

www.InfinityBusinessBrokers.com

No Comments »