Posted in Become a Business Owner, Buyers Articles

Buying a business involves a lot of paperwork and red tape – what can sometimes seem like mountains of the stuff.

When mired in this sea of required documentation and applications, there can be times when you are tempted to skip a few steps and just bet on not getting caught.

This is a HUGE mistake, for a number of reasons.

Reason one? It could be considered fraud.

If you are filling out those mountains of applications for financing, fudging the paperwork could ultimately land you in very hot water. Lying about anything, even something small, will almost assuredly come up when the lending institution (be it a bank or the Small Business Administration) goes over everything with a fine tooth comb before they write you a check. It would be very bad for their own business if they were in the habit of overlooking items that would otherwise prevent a loan from happening. Cover yourself from fraud charges or denial of funding down the line and be absolutely honest.

Reason two? It could mean your licenses get revoked.

If you are buying a business that requires some type of licencing, like most do, your applications for those licenses will seem never-ending. Skipping necessary steps, fudging a bit in your answers, procrastinating and missing deadlines or just not applying for the license at all will likely mean you have to close the business doors when you get caught. Licencing agencies get paid to ensure everyone is following the rules, and they have the right to revoke your licenses and close your business if they catch you trying to bend or break those rules. Do yourself and your investment a favor and don’t skimp on your licencing requirements.

Reason three? Fines, fines, fines.

Even if you manage to escape fraud charges or license revocations, if you get caught or miss an important deadline you will absolutely be slapped with what can quickly add up to debilitating fines. Again, the bankers and agencies you are dealing with have punishments like fines in place to ensure everyone follows the rules. Don’t spend exorbitant amounts of money unnecessarily. Do the paperwork right the first time.

We aren’t trying to scare you, we are trying to give you an honest look at what can happen when you think you can bend or break the rules.

The paperwork might seem never-ending, but it’s very manageable if you stay on top of it – and every operating business out there got it done.

There is also help available if you feel overwhelmed. Ask your business broker for help, or you can hire someone who specializes in licenses for businesses. The message here is do it right so you won’t get caught.

Do you have questions about the licensing requirements for the types of businesses you are interested in? Would you like to know more about the services available to help you? 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 Become a Business Owner, Buyers Articles

Thinking about buying a business? The best way to go about buying a business of your own is to employ the services of a business broker. If you have already started your business search, you may find that it is difficult to get business brokers to pay attention to you. Why is this?

For most business brokers, dealing with buyers is frustrating. Up to 90% of potential buyers who enter the market never buy anything, and a big chunk of that 90% are people who are just kicking tires and have no real desire to ever buy a business.

If you are among the 10% who really do want to buy, separating yourself from the rest will be critical in getting a deal done.

How do you as a buyer get business brokers to take you seriously?

Ask questions.

Serious buyers ask great questions, and they ask lots of them. Buying a business is very different from buying a house because you aren’t buying aesthetics and a structure, you are buying cash flow. As such, the physical location and furnishings aren’t really important. Great buyers want to see the books and have conference calls with the owners, they don’t want to go on a walk through.

Be ready to answer questions.

Yes, personal financial information is intensely private, but when you are buying a business you are going to have to provide proof of funds and answer lots and lots of questions about your money and your work history – so just be willing and able to answer from the very beginning. Sellers don’t want to reveal proprietary information to potential buyers who haven’t proven they can afford the business and landlords/property managers won’t be willing to negotiate a new lease with buyers who don’t have the appropriate financial means.

Be patient.

Your business broker (if they’re a good one) has many clients and many listings to manage, so if they don’t immediately call you back – don’t call 17 times in a row. If you have shown that you are a serious buyer, you are important to your broker and they will work hard to get you the best business for you. Likewise, you also have to understand that business sellers are also small business owners, so you aren’t their top priority – the business is. Your questions will be answered, so be patient.

Be flexible.

You might think you really want to buy a bar, when in fact a completely different business would better meet your goals for business ownership. Entering the market with a flexible mindset will be instrumental in getting you the right business. You also need to be flexible with the process of a business transaction – negotiations and appointment requests may not always go your way.

If you are ready, willing and able to buy a business – stand out from the rest by asking and answering questions, having patience and being flexible. By showing your broker and sellers that you are serious you will be well on your way to business ownership.

Do you have questions about the business transaction process? Are you wondering if the business you think you want to buy is actually the right business for you? Ask us! Please feel free to 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 Become a Business Owner, Buyers Articles

If you are looking at buying a business, you may not have the full amount you would need to make an all-cash offer – so financing options might need to be considered.

If I need financing, what options are available? 

Traditional Loans

You may be thinking that you can just head down to your local bank and take out a loan to help you buy a small business, but this option will probably have to be taken off the list. Traditional lending institutions are very gun-shy about financing small businesses.

If you are entering the world of small business ownership you already know that starting a small business is a risky venture. You are trying an unproven product or service in an unproven location with unproven operating methods.

Buying an existing small business removes the “unproven” part of the equation – good news for business buyers – but a traditional lending institution is only looking at the risk. For most prospective business buyers, a traditional loan from a traditional lending institution probably isn’t on the table.

The Small Business Administration (SBA)

Some businesses on the market and some buyers who are considering those businesses will qualify for a loan from the U.S. Small Business Administration – just be aware that because this is a government program it comes with it’s fair share of paperwork and red tape.

Both the business and the buyer themselves will have to meet the qualifications necessary, but in some instances this can be a great financing option for those looking to buy a small business. If you would like to know more about financing options from the SBA, click here to visit SBA’s website or click here to contact us with questions about this lending option.

Seller Financing

Most small business transactions involve this third type of financing, where a buyer puts down a down payment (typically 50% or more) and the seller finances the rest.

This is a great financing option for several reasons. A seller who is willing to keep some skin in the game speaks volumes about their confidence in the future of the business – and it gives opportunities to future business owners who may not have been able to find more traditional lending options.

If you can’t get a traditional loan, and SBA financing isn’t in the cards – talk to your business broker about the possibility of seller financing and about what businesses on the market are currently offering this type of financing. Want to learn more about how seller financing works? Click here to read Seller Financing: The Business Buyer’s Guide.

The opportunity to buy a business can come in many forms. The financing option that suits you best and is available for the business you are interested in will vary – just ask your broker about your options.

Do you have questions about how to qualify for a loan from SBA? Would you like to know what currently available businesses are offering seller financing? Please feel free to leave comments and questions 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 Become a Business Owner, Business Broker Why & How, Buyers Articles

As a business buyer, the number that will be at the center of your attention throughout the business transaction is the purchase price.

How much are you willing to pay for the business, and how does the seller arrive at their asking price?

These are important considerations, and as you progress through the due diligence phase, you will be deciding if you think the price is fair. What parts of a business will you need to consider when determining the price you are wiling to pay?

Cash Flow and Contracts

In order to determine the cash flow of the business you will need to examine financial statements, sales records, and tax returns for the last few years.

This is a great time to enlist the help of your business broker and possibly an accountant who is familiar with analyzing business transactions. Both will have the experience necessary to determine what the records really show in terms of how the business has been doing. It is impossible to gauge the health of a business by simply looking at the bottom line of tax returns – more analysis will be necessary.

You can also have your business broker determine the operating ratios of the business, as these ratios can be a good indicator to compare against industry standards.

Examine any and all contracts and agreements the business currently has. These include purchase agreements, leases, contractor agreements, and any other legal instruments.

Inventory

What is the inventory? The inventory includes any materials and products that are used for resale or for client services.

It is very important that you personally and a trusted and qualified representative (like your business broker) are present for and participate in any inventory examination.

You will need to know the inventory status in order to give it a proper evaluation. You should also request the inventory counts from the end of the previous fiscal year.

You may need to have the inventory appraised if you are unable to properly appraise it yourself. The inventory counts as a hard asset, so you will need to know what dollar value to assign to it.

An important point to keep in mind is the value of the inventory is something that can be negotiated. If the inventory is incompatible with your future target market, or in poor condition – these are points to be brought up during negotiations.

Equipment and Furnishings

These parts of the business are important in terms of value because they are considered hard assets, so you will need to know what furnishings, equipment (like kitchen appliances in a restaurant), and vehicles are part of the deal.

For any equipment you will need the name and model number for each piece, the present condition, the value when purchased, the current value, and whether the equipment was leased or bought.

You will also need to consider what kinds of changes and improvements to the building will be needed in order to suit your future business plan.  Find out what the seller invested in terms of maintenance and leasehold improvements so you will know what it will take to keep the facility in good condition.

The price of a business may change based on the economic climate or on the motivation of the seller, but in all reality the price of a business is what a buyer is willing to pay for it. Take a good look at the inventory and other hard assets, along with the cash flow and records of the business before you head to the negotiation table with a number you consider fair.

Do you have more questions about how you as a buyer can determine if a price is fair? Would you like to know more about the importance of cash flow? 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
12995 South Cleveland Avenue, Suite 249
Fort Myers, FL 33907

www.InfinityBusinessBrokers.com

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Posted in Visa/Immigration

● President Trump’s most recent proposal to end the government shutdown also comes with some major changes to the policies regarding requests for asylum from the children of Honduras, Guatemala and El Salvador. The proposed changes will severely limit the number of applications for asylum from this group, as well as require that they apply for asylum in their home country and have a qualifying parent already living in the U.S. The severity of this new language will likely keep the proposal from passing, as Democrats are unlikely to agree to such changes.

● A federal judge reinstated the DACA (Deferred Action for Childhood Arrivals) program in it’s entirety – but then waked back his decision to include only those DACA recipients already in the program. No new applicants can start the process, but renewals can begin for those who already have DACA protections. The judge’s ruling stated the administration did not have sufficient reason to revoke the program entirely.

● The government says it has reunited all eligible migrant children with their parents. Some 2500 children were separated at the border, and the 700 that remain could not be approved for reunification because of concerns for the children’s safety or a parent’s criminal history.

● The immigration showdown in Congress and with the White House is far from over, with the polarization of each side spelling trouble for any potential compromise. At stake is the fate of DACA recipients who were accepted into the Obama-era program and the Dreamers at large who were brought to this country illegally as children and were either ineligible for DACA or did not apply. Also at stake is funding for the border wall with Mexico and increased spending on border security.

● The administration is also currently working on ending chain migration, where a current green card holder can sponsor someone like an adult child or parent to come to the US. The changes currently proposed would possibly limit sponsorship to spouses and minor children.

● Also on the chopping block is the Diversity Visa Program, where 50,000 Visas are issued annually to those coming from countries that have a low rate of migration to the US. This change will most likely influence those coming from African countries who currently receive the bulk of the Diversity Visas.

● USCIS (US Citizenship and Immigration Services) announced changes to the list of countries eligible for the H-2A and H-2B Visa Programs (non-immigrant temporary agricultural and non-agricultural worker Visas), adding Mongolia to the list and removing Belize, Haiti and Samoa. The removals occurred because these three nations were not meeting the requirements for eligibility – USCIS citied concerns over human trafficking (Belize), concerns that those granted the Visas were overstaying the terms (Haiti) or a home country refusing to accept the return of their nationals who were asked to be removed from the US (Samoa).

● The Attorney General of Washington State has sued Motel 6 over the handling of customer data. Motel 6 is accused of disclosing the private information of their guests to ICE (Immigration and Customs Enforcement) agents without proper legal warrants. It is alleged that the ICE agents used that private customer data to find and arrest hotel guests in the country illegally.

● ICE has also tripled the number of arrests of undocumented immigrants who do not have criminal records. The crackdown has been met with backlash, like the city of Philadelphia refusing to renew a data-sharing contract with the Immigration and Customs Enforcement agency.

Are you a foreign national who is considering a move to the United States, but have questions about what our current immigration news means for you? Are you a business owner who would like more information on how the possible immigration changes could affect the pool of foreign national business buyers? Ask us! Please contact us today! 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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