Posted in Become a Business Owner, Buyers Articles

If you are thinking about buying a business, then one of the many early decisions you will have to make is whether you should buy an independently owned small business or a franchise.

Both routes to business ownership can bring a buyer success, but it will be a matter of personal choice as to which path will be better suited for you.

Let’s take a look at the four major differences between an independent small business and a franchise to help you decide which camp will suit you best.

Branding

If you decide to go it alone and opt for an independently owned small business, you will most likely be going without the large-scale name recognition and branding that are associated with a large franchise. This can be detrimental in that a strong brand will automatically bring you customers loyal to the parent brand without having to try very hard. On the flip side of the branding coin, however, are the problems that can arise if the parent company or another franchisee makes a big negative splash in the media. Any of that bad press will automatically fall onto anyone within the franchise group.

If you are a marketing machine and love to create buzz about your business, then perhaps an independent business is for you. If you would rather focus your energy elsewhere and leave the branding to the parent company professionals, then a franchise would be a good choice.

Ownership

Yes, a franchisee owns their business in the same way that an independent owner does – the difference lies in the decision making abilities of these two owners. If you are part of a franchise then decisions on product choices, renovation decisions and operating procedures may be made for you.

If you are a first-time business buyer, this might be a good bet because you don’t have to make every decision right away. If you are a complete control freak by nature, you might have issues with having the parent company tell you what to do.

Total Cost

Although debatable and entirely dependent on each individual business and each individual franchise, there are a few generalizations about cost that you can use to help with your decision about becoming a franchisee.

In general, the upfront costs for buying a franchise can be a bit lower than buying an independently owned business, but in return the independent business owner has more control over their cash flow than a franchisee would. For instance, a franchise can require a renovation and you would have to comply where an independent owner can delay renovations until the cash is more readily available.

Operations

This one is also helpful for a first-time business buyer. If you opt for the franchise route, then the day-to-day operations of your business will be established and tested. You will not, however, be able to make major changes to the standard operating procedures if one or more parts don’t suit the way you like to run your business.

Buying an existing independent small business also means that you inherit a set of operating procedures – the difference is that these procedures are not so set in stone. As you learn the ins and outs of running your new business, you can make any changes you see as necessary.

If you are considering a franchise over an independent business or vice versa – the best thing to do is have a chat with a business broker experienced with both franchise and independently owned businesses. Using your experience and your goals for business ownership you and your broker will be able to sort out which option would be best for you. 

Are you considering a franchise and have more questions about what it would mean to be a franchisee? Do you think an independently owned small business would be better for you and want to know what businesses are currently available? Please feel free to leave any questions or comments and we will be happy to help.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com
12995 South Cleveland Avenue, Suite 249
Fort Myers, FL 33907

www.InfinityBusinessBrokers.com

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Posted in Buyers Articles

You’ve made the plunge, you’re buying a business – welcome to the fantastically tough but fantastically rewarding world of entrepreneurship. You may just be starting your search, or the closing table is next week – but wherever you are in the process of buying a business there is a very big change in your life that is approaching at light speed. Life as a small business owner.

Many new buyers (and sometimes veteran buyers too) have a roads-paved-with-gold attitude when it comes to what happens after the closing table. They have visions of happiness in their newfound investment, visions of getting the keys and starting in a brand-new and wonderful life.

Life as a business owner can be very wonderful, but it’s also very hard – especially in the first few weeks.

A buyer who wants the smoothest transition possible into entrepreneurship needs to remember two all-important things.

There will be an extremely steep learning curve.

Regardless of your experience in the industry, any new business is going to come with a very steep learning curve. Why? Unlike an employee at a new job who only really needs to learn their own responsibilities when they get hired, a new owner has to learn EVERYTHING. Not only do you have to learn the day-to-day logistics and operational procedures, you need to learn how to do payroll, how to pay taxes, how to make a schedule that won’t cause a mutiny, how to order new inventory, how to get licenses and permits, how to acquire new customers, how to keep your customer base happy through the transition of ownership, how to pay the rent and deal with your new landlord – the list goes on and on.

This steep learning curve should in no way freak you out or dissuade you from small business ownership, instead it should help you mentally prepare for a tough few weeks ahead. Once you get the hang of things it will obviously get a lot easier. Just don’t set yourself up for failure by thinking it will be a walk in the park.

Your new business isn’t perfect.

You may come out of the due diligence phase thinking your new business is perfect every way. Reality, however, will rear her ugly head in the first few weeks or months of ownership and turn your perfect little business into what it really is – a business. There is no such thing as a perfect business. They all have flaws. They all have skeletons in the closet. The only thing you can know for sure as a new small business owner is you are going to find something (or many things) that make you unhappy. There are two ways to react to imperfections. One is to completely freak out and try to sue everyone who was a part of the business sale, then lock the doors and walk away. That is not, of course, the productive solution.

The other, and far better way to react is to take a deep breath and figure out a way to solve your problem. Owning a small business means having to constantly be ready to deal with issues – so treat the unearthing of skeletons as the first real test of your entrepreneurial grit.

Entrepreneurship is hard, but it is also a great way to earn a living. Think of the transitional time ahead of you as a challenge to be conquered and not a mythical field of roses.

Have more questions about the path to business ownership? Are you curious about what businesses would meet your goals for life as an entrepreneur? Ask us! Please leave questions or comments here and we would be happy to help.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com
12995 South Cleveland Avenue, Suite 249
Fort Myers, FL 33907

www.InfinityBusinessBrokers.com

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Posted in Buyers Articles

When most first-time business buyers first call us, they have only one request – they want to go see some businesses. They want to drive by, pop in and take a tour.

This is exactly the opposite of what a new buyer should ask for. You are buying a business, not a house – and the differences between the two are huge.

A house is four walls and the stuff inside. To make a judgement about whether or not a particular house is a good investment, you need to walk around and have a look at those four walls and the stuff inside.

An operating business is not four walls and the stuff inside.

The four walls are usually leased from someone else and the equipment and furnishings are the assets of the business – not the business itself. Yes, when you buy a business you also buy the assets, but that isn’t all you are getting. You are getting cash flow.

You can’t drive by, pop in or take a tour of cash flow. You learn whether or not a business is a good investment by looking at the numbers, by talking to the seller, by going over inventory lists and by examining contracts.

The depreciated value of the equipment, the furnishings, the vehicles, even the color of the paint have very little to do with how a business is priced and should have very little to do with how you judge the price of a business. As such, tours are really not that important. Aesthetics can be easily changed once you take over – so focus on how the business makes money instead.

A better way to look at businesses starts with a conversation with an experienced and qualified business broker. In this initial conversation you and your broker will talk about what your goals are for business ownership and then search for businesses based on those goals. Once you have a few businesses in mind your broker can help you decide if the price is fair based on the numbers and also help you decide if you want to pursue more information.

Want to take a quick peek at what types of business are currently for sale? Use our Business Search Tool by clicking here.

Have more questions about buying a business? Ask us! Please leave any questions or comments here and we would be happy to help.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com
12995 South Cleveland Avenue, Suite 249
Fort Myers, FL 33907

www.InfinityBusinessBrokers.com

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Posted in Buyers Articles

We’ve talked about this issue a handful of times, but it is so prevalent in the day-to-day of buying and selling businesses it merits revisiting from time to time. A great business broker spends their work day keeping business deals on track and moving towards a closing table, but they are only one part of a very complicated process.

As such, you as a buyer may get frustrated by the pace of your transaction – but in many cases there is absolutely nothing your broker can do.

What you need to remember is the only cure for tied hands is patience.

Here’s an example:

You are a motivated buyer who is very interested in a particular business and have put a decent offer on the table. You request through the seller’s business broker that the seller send over the information required for due diligence, like financial records, tax returns, etc.

Then you wait. And you wait.

Then the seller sends over partial records, which get forwarded to you from your broker, but the rest of the information you requested has yet to be produced. So you wait.

You constantly call and email your broker, and all they can tell you is they haven’t received the information from the seller so their hands are tied. 

Why does this happen?

Some sellers go on the market with the initial intention of reaching a closing table, but once they are in the process they realize that selling their business requires a ton of work on top of what is already required for the day-to-day operation of their business (producing information and being available for questions/meetings). Then they completely panic because are shortly going to be out of a job.

These realizations can cause some sellers to develop a decent case of cold feet. It can also cause a seller to be defensive, as constant requests for more financial information can give the impression that the buyer is trying to dig up dirt on the business.

This, of course, is not the case. Buying a business is a huge decision, and most buyers are going to want a thorough look at any business before they pull the trigger.

So how do you figure out if the problem is your broker or the seller?

If your broker is really good about answering your questions, is prompt with returning phone calls and emails and has been forthcoming about the issues they may be having with the other side – then their hands are probably are tied. If it takes your broker ten days to return your phone calls, then the problem is probably the broker.

As with everything in a business transaction, a good dose of patience will go a long way. This does not mean, however, that you have to sit around and wait for a seller to deliver information they have no intention of ever giving you. Talk to your broker if you have concerns about time frame issues, and understand that sometimes there really isn’t anything a broker can do to speed up the process.

Are you a buyer who is having a hard time getting information out of sellers? Are you concerned that the issue may be with your current broker and not with the seller? Please feel free to leave us a comment or question here, and we will be happy to assist you.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com
12995 South Cleveland Avenue, Suite 249
Fort Myers, FL 33907

www.InfinityBusinessBrokers.com

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

When you think about famous entrepreneurs, it often brings thoughts of a person who came up with an inspired idea and built a successful and thriving business from the ground up – with the romantic twist of doing so out of a garage with little to no seed money. While this may be the path for a few very driven and lucky individuals, the path for most entrepreneurs begins quite differently, with the purchase of an existing business.

Wait, what? Buy an already existing business? Why would I do that instead of starting my own business?

Typically, buying a business is a safer bet than building one from scratch. You get to take over as owner of an already built-out and proven location with trained employees and a ready-to-go set of operating procedures. This can be a great way to get into business ownership because it skips all of the disadvantages a start-up will encounter – like establishing a customer base, building cash flow, paying for build-outs, establishing marketing practices, training a brand-new staff, obtaining initial permits and licenses – to name just a few.

It is not, however, a fool-proof way to enter the world of business ownership. You need to choose a business that is profitable, or one that has easily-remedied issues that will make it profitable quickly. You need to choose a business that will fit with your goals for business ownership and one where you have some practical knowledge or experience. You also need to choose a business that has room for growth.

I have a lot of questions, who should I ask?

The smartest step any budding entrepreneur can make is to hire an experienced and qualified business broker. A broker will be a great asset, as they can help you find businesses that are right for you.

In your initial conversation with your broker you should talk about your previous work experience. You don’t want to have to learn a whole new industry at the same time you are learning how to operate a business.  You should also talk about your goals for business ownership. Your goals will determine what industries would be best for you. For instance, buying a bar with the goal of having evenings off isn’t going to work. Be a bit opened minded about the businesses that are available – you might be surprised to find a business that perfectly fits your goals in an industry you would never have thought of on your own.

The message here is entrepreneurship isn’t an impossible goal, and you don’t have to come up with a genius idea in your garage to get there. There are a myriad of businesses available everyday, and with help from a good business broker you can find the right one for you.

Have you always wanted to own your own business, but were unsure of where to start? Do you have questions about what a business broker does? Ask us! Leave any questions or comments here, we would be happy to help.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com
12995 South Cleveland Avenue, Suite 249
Fort Myers, FL 33907

www.InfinityBusinessBrokers.com

No Comments »