Become a Business Owner Archives - Page 5 of 20

Published October 17, 2022

Hurricanes. They’re an inevitability of living in Florida (or anywhere on the Gulf or East coast of the United States for that matter). If you’re in the market to buy a business, how much should hurricanes factor into your decision? It depends.

If you’ve decided that Florida is where you’d like to end up then hurricanes will just be something that happens. Your house will contain hurricane supplies and you’ll watch the advisories from the National Hurricane Center whenever a storm approaches.

If you are considering businesses, then factoring in hurricanes will depend on where you’d like the business to be and how your business might be affected by prolonged power/utility/internet outages. For instance, if you are looking for a beach bar on a barrier island you’ll need to be sure you consider that a bad hurricane that makes landfall where you are might cause catastrophic damage to your business. If you would be more comfortable with a business located in a more inland zone, you’ll still need to see where your business location stands in terms of evacuation and flooding zones. You need to think about how you will keep your business functioning if you lose power, water and/or internet access for days or weeks on end. If you’re considering that same beach bar, what is your plan if the business loses power and you can’t run the refrigerators that hold your inventory? If you can’t run your point-of-sale system without the internet, will you just revert to paper accounting or will you have a hot spot on standby? The point here is although hurricanes are typically an infrequent problem – the damage they can cause is something you need to think about when you are choosing a business based on location (and you need to consider your game plan if a storm comes you way).

When a storm does approach, you should be ready – long before the weather gets ugly. If your business requires power to run refrigerated storage systems (for example) you should invest in an on-demand generator system long before your first hurricane season. It can be difficult, if not impossible, to gather and install hurricane protections for your business if you wait until everyone is panicking and the store shelves are empty. If you think you want to secure windows with shutters or wood, get those installed or ready to be quickly installed outside of hurricane season. You also need to prep your business early as you will need to give your employees time to storm prep their homes before the storm rolls in.

You should also ensure you have the proper business insurance should the worst happen. You will need insurance for wind and water/flood damage, as well as enough coverage to replace your equipment, inventory, etc. should you need to or want to rebuild.

You should also be ready for the cascade of cancellations that typically happen when the forecast cone falls on your area, whether the storm ends up impacting you or not. You should also come up with a set of protocols – like when you’ll close up shop, how you’ll secure the business, what you’ll do post-storm and then go over that information with employees so everyone is on the same page at the start of every hurricane season.

Should hurricanes dissuade you from buying a business in Florida? No, not at all. Like earthquakes in California or tornadoes in the Midwest every area has it’s own unique natural disasters to consider and prepare for. Choosing a business in a hurricane prone area probably means that you’ve picked a business where there’s heavy tourist traffic (like the beach bar example) – so you need to weigh the potential for all the money you can make with the preparations necessary should a hurricane roll in.

Are you thinking about buying a business and are worried about the potential for hurricane damage? Would you like to know more about what Florida businesses can do to prepare for storms? Please leave any questions or comments and we would be happy to help.

Michael Monnot

Business Buyer: What’s In An Offer?

Published July 18, 2022

If you’ve found a business you really like, and you are ready for the next step, congratulations!

The next stage in the business transaction process is the initial offer, sometimes called a “purchase contract” or an “offer to purchase”.

Once a buyer makes an offer, the seller decides if they are willing to accept the offer. If they are, then the business transaction heads into a period called due diligence. Just like you can’t do an inspection on a house until you’ve had an accepted offer – in business sales an accepted offer will give a business buyer a chance to look over every aspect of the business and decide if they want to go ahead with the sale.

What goes into an offer?

This document will contain the terms, conditions, non-compete conditions, financing, inventory, transition details like training, warranties and any other aspects of the purchase.

Should I write my own offer?

In most cases, you will want to have a business broker put together an offer to purchase for you, although there are some standardized versions you may be able to use in the most simple of transactions. Business transactions are inherently complex, so having someone who writes these types of contracts all the time to help you will keep you from having issues (like if you unknowingly leave out what could be a crucial part of the contract) down the road. If you really want to write your own, just make sure you have your broker look it over before it gets handed over to the seller.

Is an offer set in stone?

Absolutely not! Your initial offer is contingent upon what you discover in due diligence. If what you uncover during this period makes you unwilling to go ahead with the purchase, you will have the opportunity to back out. If what you find during due diligence isn’t enough to kill the deal, but you discover, for instance, that the business is earning 15% less than was initially stated , you will be able to adjust your offer accordingly.

The moral of the story? An offer is an important part of the business transaction process, so use the experience of your business broker to guide you through this step.

Are you a buyer with your eye on a particular business but you aren’t sure what will need to go into the initial offer? Was your initial offer rejected by the seller and you need to know what to do next? Please leave us a comment or question and we would be happy to help you.

Michael Monnot

Is It Too Ugly? Why You Need To Look Beyond The Mess

Published June 27, 2022

When you first start searching for a business to buy you might have an idea in your head of what that business will look like. In your mind the location is perfect, the windows are clean and everything is new and organized. When you are shopping for something like a house or a car this is often the case – as a clean home shows much more successfully than a dirty one. In the small business market, however, this expectation of perfection is going to be problematic.

Why?

Most small businesses are a mess because a small business is complex by nature. Sure, the parts that the customer sees are usually tidy – but walk into most back offices, kitchens, garages – and the reality will show itself. And the mess might not be just physical. As you start to peel back the layers on most small businesses problems will spill out. There might be interpersonal issues with the staff. The financial records might be an unorganized disaster. You get the idea.

Here’s the good news. If your first impression isn’t great it doesn’t mean it’s not a great business. It just means you need to dig a little deeper to see if the mess that’s in front of you is something manageable or something you aren’t going to want.

Here’s a few examples:

You walk in and it’s ugly.

The equipment is really old. The décor is really dated. The vehicles look worn out. When your first aesthetic impression of the physical parts of a business isn’t great, it doesn’t necessarily mean the business itself is bad or doesn’t make money. Instead of instantly deciding the business isn’t up to par – ask why the current owner keeps things the way they are. To you the outdated décor in a café isn’t appealing, but perhaps it’s the old school charm that keeps the loyal clientele coming back. The vehicles might look worn out, but upon further inquiry you discover that the vehicles always look like that because this construction business is rough on their equipment and the internal parts of the vehicles are very well maintained. You can’t let aesthetics alone sway your decision about a business.

You find out there’s a ton of employee drama.

If the business you’re considering requires employees then you’re likely going to encounter some sort of staffing issues (particularly when you first take over). If it seems like there’s an issue among the staff, ask the current owner why they haven’t dealt with it. Maybe what seems like drama is simply a culture that works as this staff has been working together successfully for a very long time. Maybe the employees who have issues with each other are able to keep it professional in front of customers and are really great at their jobs. In this case the issues don’t actually impact the business itself. Perhaps the current owner is a bit burned out and has become apathetic to employee issues that could be easily handled by you as a new owner laying some new ground rules.

You have to understand going in that a small businesses is going to be messy. Parts of it will likely be ugly. The mess and ugliness probably don’t tell you the full picture. Make sure you are delving a bit deeper to understand why things are the way they are – before deciding to walk away from what could be the perfect business for you.

Are you starting the search process for businesses and want to know what you should look for during site visits? Do you have questions about the kinds of small business issues that are relatively easy to fix as a new owner? Ask us! Leave any questions or comments and we would be happy to help.

Michael Monnot

Why “Any Business That Makes Money” Is A Bad Idea

Published June 20, 2022

Don’t set yourself up to hate your new business.

This one happens more than it should. A prospective buyer calls a business broker and asks for “any business that makes money” – a colossal mistake.

Here’s why:

Business ownership is tough. It usually requires long hours, a fair amount of grit, resilience and enough passion for what you’re doing to sustain you long term. Sure, entrepreneurs own businesses so they can make money, but the making money part can’t be the only thing keeping you in the game. You have to have a business you won’t hate that allows you to maintain a life you don’t hate or there’s no way this path will be sustainable.

If you call a good broker and ask for any business that makes money they should immediately tell you you’re approaching the process from the wrong direction.

Here’s a better approach:

Why do you want to own your own business? Is it because you have a deep passion for something? Is it because you’re tired of working for someone else and want to be your own boss? Do you want your own business so you can be more in control of your schedule? Are you looking to incorporate members of your family into the business so you can work together? These broad, sweeping questions about your motivation for business ownership are very important. If you are buying a business because you want to have more control over your schedule (so you can spend more time with your kids) a large restaurant that requires you to work 7 days a week isn’t going to give you the flexibility to be the soccer coach for your kid’s team. A different type of business could. This initial soul-searching of sorts is critical for deciding what your most important goals for business ownership are and then focusing only on businesses that will fit those goals.

Once you have some goals and priorities in place – what are you good at? What kinds of practical experience do you have that could help you with your new business? Going back to the restaurant example above – if you’ve never worked so much as a minute in the restaurant industry you are going to have an almost impossibly hard time owning and running a large restaurant. The learning curve for an entrepreneur is a steep one, and if you add learning a whole new industry to the mix you are setting yourself up to to fail in spectacular fashion. Tell your broker about your education and experience. When combined with your goals information about your experience can be used to find great businesses that will set you up for success.

Have you always wanted to own your own business but aren’t sure what type would meet your goals and fit with your experience? Do you have questions about businesses currently on the market? Ask us! Leave any questions or comments here and we would be happy to help.

Michael Monnot

Should I Buy A Franchise Location Or Build One?

Published June 13, 2022

Why a franchise? If you’re considering franchise ownership you already know the answer. A franchise is an established brand. The concept is already proven, there’s an established customer base, operating procedures are laid out and functional, etc. There are costs and drawbacks to franchise ownership that you wouldn’t incur if you have your own unique small business, but for some business owners those costs and drawbacks are outweighed by the benefits of becoming a franchisee.

If you think franchise ownership is the right path for you – your first major question will be should you buy or should you build?

Here are some things to consider:

If you build out a new franchise location?

The first cost you will incur will likely be the franchise fee. Franchise companies charge this upfront fee as a way of recouping the costs of branding, training and the support they will provide. The average franchise fee is somewhere in the neighborhood of $30,000, but they can range from less than $10,000 to over $100,000. The franchise fee will depend on the size of the franchise you are buying into, and each individual franchise will have specific requirements to become part of the brand.

There will also be costs related to setting up a location. You will likely have to build out, furnish and equip a space while fulfilling franchise requirements. There will be costs associated with licensing and permitting. You may have to purchase a commercial property – or if you are going into a commercial space as a tenant, there will be costs associated with taking over the space, like rent and deposits.

Any new business will also need to bring in initial inventory and purchase supplies. There may also be operational costs like advertising and payroll, so you will need to be certain that after all the initial expenses of your build out are covered, there is still enough capital left to cover you until you are able to turn a profit.

If you buy an existing franchise location?

Buying an existing franchise location can be a great option for those who are looking to own their own business but don’t want to risk the massive amount of capital it takes to start a new location (without knowing if that location will be successful).

You will still need to meet the qualifications required of the particular franchise you are looking to buy, and there will be fees associated with becoming a franchisee. These fees and requirements will vary, so ask you business broker for the range of fees associated with a specific franchise. The benefit of buying an existing location is you will remove the additional costs of a build-out, initial inventory and permitting fees. You will also remove a good deal of the risk associated with starting a new franchise in an unproven location, as an existing location has the numbers to prove it has been successful.

Which path is right for you? It depends on the amount of capital you have available and the level of risk you are willing to incur. Talk to your business broker about your options and they will be able to help guide you on the best path for you.

Does buying a franchise seem like the right path for you, but you have additional questions? Do you have more questions about franchisee requirements? Ask us! Leave a question or comment here and we will be happy to help.

Michael Monnot

Don’t Download – Why You Need To Make Up Your Own Questions

Published June 6, 2022

You’ve found a business or two that you really like. You’ve filled out the NDAs and have the marketing packages in front of you. You’ve scheduled a conference call or a meeting with the sellers and the brokers, and your broker has asked you to come up with a list of questions.

So, what do you want to know?

It can be tempting in this situation to just Google “lists of questions for business buyers” and then bring that list of questions with you. Don’t do that. If you need to look up a list of questions to ask it’s likely that you haven’t done any research on your side.

Here’s what we mean:

Have you thoroughly read the marketing package you received once you signed the NDA? This one becomes blatantly obvious once you start asking boiler-plate questions that were clearly answered in the material you were already given. This tells the seller that you don’t really care about details and are willing to waste everyone’s time. If you were selling a business that was your blood, sweat and tears would you be willing to give the keys to someone who can’t be bothered? Probably not.

Have you researched the local market, the industry in general, the area where the business is located, etc.? If you are serious about buying a business you should want to know everything about not only the business but the industry and local area as well. Again it will show your lack of dedication to the process if you go into that first meeting and ask something a simple internet search could have told you or that you probably should already know if this is the business you’re hoping to buy.

Have you read the list of questions you’re going to ask? This one might sound crazy but it happens with frankly alarming regularity. People will either ask or send a list of questions to be answered that are from a completely different arena. Like a person looking at a small café who asks about the stock options available to investors. Once again this shows everyone involved that you probably don’t care.

See the recurring theme? Your meetings and calls with a seller are critically important opportunities to gather the information you need to make an informed decision about whether this business will be right for you. These interactions are also pivotal in terms of showing a seller that you’re a serious buyer and someone capable of taking over the business that they care about. Don’t waste your own time by not taking the opportunities to ask great questions.

Are you looking at businesses to buy and aren’t sure what types of questions you should ask? Do you want to know what kinds of information you would need for a particular industry? Ask an experienced and qualified business broker for help! You may also leave any questions or comments here and we would be happy to help.

Michael Monnot

Want To Be An Entrepreneur? How You Should (And Shouldn’t) Start

Published May 30, 2022

Ready to become an entrepreneur and work for yourself? How do you start the process of buying a business and decide what business would be right for you?

First, let’s look at how you SHOULDN’T start.

The majority of would-be entrepreneurs start their business search by perusing various online business listing sites for that dream businesses they’ve always seen themselves owning. While it may seem counter-intuitive at first, this is absolutely the wrong way to start.

How SHOULD you start?

Do some soul searching and talk to the people who care about you first. Trust us when we say that owning your own business is a life-encompassing affair. Those dream-state visions of running a business from the beach with a cold drink in your hand are extremely far-fetched. When you work for yourself, you work all the time. Nights, weekends, early mornings, few if any vacations – and you need to be ready to make that kind of commitment. If you think that type of life is the one for you because it allows you to fulfill your own destiny and make all of your blood, sweat and tears work for you instead of for someone else, that’s great. Now you need to clear this semi-extreme lifestyle with your spouse, your kids – anyone who you have a commitment with. If you are becoming a one-man shop and you used to work 9 to 5, it can be hard to balance your longer hours with your loved ones – especially if they are used to having you home for dinner and used to having you coach their little league team every spring.

Once you have the support of those you are closest to, you need to figure out what your goals for entrepreneurship are. Do you just want to make as much money as possible? Do you want to work in a specific industry that’s always been your dream and passion? Do you want a flexible schedule? Do you want to be home for dinner every night? Is it important to have weekends off? What financial goals do you have to meet in order to support yourself and your family? These questions will be pivotal in choosing what business will be right, both for your entrepreneurial goals and for your life.

Now that you have these basic questions answered, you need to get some professional help. Find and talk to a good business broker. A good broker will immediately ask you many of the same questions we just outlined above, and then they will use that information to help guide you to businesses that will meet those goals. Notice that we didn’t say a good broker will just ask you what type of business you are interested in and show you only that. As brokers who care about the success of our clients, it is in our best interest (and yours) if you succeed, as a healthy local small business market is our bread and butter. We will use the classic bar example. If a new buyer comes to us and says “I want to buy a bar“, we should be asking questions instead of just emailing every bar listing in the area. Has this new buyer ever worked in the restaurant industry? If not, then buying a bar will likely be a huge mistake. Starting off as a new business owner and trying to learn an entirely new industry at the same time is setting yourself up for an epic failure. Does this buyer have a family that wants or needs them home in the evenings? If so, then working every afternoon and into the night is going to cause more family upheaval then it’s worth.

Deciding on a small business is a very big decision, and will need to take into account a variety of factors. The best way to weed through the choices that are currently on the market is to first do some soul searching and then figure out what your business ownership goals are. You will also need to use the assistance of a business broker. A good broker will not only help you find businesses that would be right for you, they can help you narrow the field to those businesses that will help you fulfill your goals.

Have you always had a dream business in mind but aren’t sure it would fit your goals for business ownership? Would you like to know what businesses are available that would work with your family schedule? Ask us! Leave questions or comments here and we would be happy to help.

Michael Monnot

How To Avoid 6 Big Business Buyer Mistakes

Published May 23, 2022

If you are considering buying a business for the first time you’d probably like to avoid any mistakes. No one wants to walk into their new business and immediately mess something up, right? One of the best ways to avoid mistakes is to learn about common missteps and then work to avoid the blunders of those who have come before you.

What are some typical blunders that inexperienced entrepreneurs make? Here’s six:

Naming the business after yourself:

When deciding on a name for your business it can be tempting to just name it after yourself. Here’s why you shouldn’t. Your business name is pubic information, and will also become your brand. While that might be fine for a social media influencer it can be an issue if you have a business that you want to be able to sell. You don’t want to work forever, so when the time comes to retire or move on to another venture you might have to also sell your name to a new owner. You can avoid this by coming up with an original name instead.

Buying a business you know nothing about:

First-time business ownership is hard enough without having to start from zero. If you have always wanted to buy a restaurant, but have never worked in one – it would be a big mistake to choose that industry. Choose a business in an area where you have practical experience because as the owner of a business, you need to know what the business needs.

Not doing your homework:

Why is the business for sale? Is it just because the owner is retiring, or are they jumping off a sinking ship? You will have the due diligence phase to determine what the problems are, and then you will have the opportunity to amend your offer or walk away from the deal all together. This is a critically important step, as you don’t want to discover problems after the business is already yours.

Changing too much too soon:

Unless you are buying a business with a horrible reputation, a new owner should tread carefully with regards to changing the business. You bought the business because it was an established company with a good reputation, and you don’t want to drive away customers familiar with the brand by immediately dismantling everything they know about the business. The established image may have more to do with the bottom line than you know, so make changes slowly.

Not leaving yourself enough cash:

It may take several months to get a business transitioning to a new owner in the black, so leave yourself enough operating capital to keep the doors open. Many new owners walk into a functioning business and immediately spend far too much on unnecessary improvements, digging themselves a very deep financial hole in the process.

Not understanding the importance of marketing:

You may have bought an already established business, but that doesn’t mean that you can forgo the push to keep the business growing. Most established businesses already have a customer base, but keeping those customers coming back and bringing new ones in is a responsibility that now falls to you. Advertising and marketing need to be a top priority as the new owner.

The most important thing you can do as someone who wants to become a business owner is find the right help. If this is a process you’ve never gone through before, find a good business broker to help you along the way. Having assistance through this process will save you from making many of the mistakes that first-time business buyers make.

Are you thinking about buying a business for the first time, but want to avoid the blunders listed above? Do you have additional questions about the business buying process? Contact us or leave a question here and we will be happy to assist you on the road to business ownership.

Michael Monnot

How Your Military Career Primed You For Business Ownership

Published May 9, 2022

Are you a veteran? Your military career trained you to be a leader, taught you discipline and gave you the mental endurance to put in the hours it takes to get something done. Guess what? Those are the skills and qualities great entrepreneurs need.

I’ve never owned a business before. I wouldn’t know where to begin.

We’ve got good news – you don’t have to start from scratch. There are a myriad of small businesses for sale, and there’s a good chance that you’ll be able to find one that fits your goals and one in an industry where you have some practical experience. Buying a business means you don’t have to start from zero. You get a fully operating business, complete with employees, equipment, inventory, operating procedures, vendor contracts – you get the idea. You can walk in on day one and be the owner of a business instead of starting with nothing more than an empty space.

Am I qualified to own a business?

Yes, absolutely! Many of the training programs and careers within the military transfer very well into the entrepreneurial sphere. The experience and practical knowledge you gained during your service are exactly what you need to successfully operate a small business.

The type of business and industry sector that will be right for you will depend a lot on what jobs you did both before and during your time in the military as well as what you hope to get out of business ownership. Love working on cars in your spare time and spent your military career as an aircraft mechanic? Maybe an auto shop is for you. Looking to spend as much time as possible with your family? A bar or restaurant that will need your attention 7 days a week probably isn’t the best choice. Talk to a business broker about your goals and your experience – you might be surprised by the businesses that would meet both.

I don’t have a lot of money, how much money does it take to buy a business?

It depends. There are very small businesses that won’t cost much and larger businesses that run in the millions. The good news is that as a veteran you have special access to programs from the U.S. Small Business Administration (SBA) that can help you get the funding you need to buy a business (click here to visit the Office of Veterans Business Development). Talk to your business broker about what SBA programs you might qualify for and what businesses might qualify for SBA lending. If SBA financing is out of the question, many sellers will offer seller financing to the right buyer with a decent down payment.

The message here is if you have always wanted to own your own business – your military service can help make that possible. Talk to a business broker today to explore your options for the path to entrepreneurship!

Are you a veteran and have questions about what SBA programs you would qualify for? Would you like to know what types of businesses would suit your goals and experience? Ask us! Please leave questions or comments here and we would be happy to help. Thank you for your service!

Michael Monnot

The Pros Of Buying An Existing Business

Published May 2, 2022

If you’ve dreamed of starting life as an entrepreneur then you’ve likely conjured images of the startup in your garage, endless hours and scrounging for capital while you work as hard as you can to get your business idea off the ground. While many a Fortune 500 company began this way, it isn’t the only path to entrepreneurship.

What’s another path? Buying an existing business.

Wait, people sell businesses? Yes, existing businesses are bought and sold every day. Sometimes it’s because an owner has reached retirement. Maybe they’ve decided to undertake a different venture. Perhaps there’s something in their life that has created a situation where they can no longer own and operate their business the way they’d like to.

In other cases a seller has reached a particular metric – maybe they bought a smaller business that needed new growth strategies and now the business is at the point where they’re ready to sell and start again with a new project.

Whatever the reason for the sale, there are great businesses on the market every day – businesses that would meet the goals you have for business ownership.

But I have a couple of my own business ideas, why should I consider buying an existing business instead? There are many benefits to buying an existing business that just don’t exist if you’re starting on your own.

What are the pros?

A proven concept. While you might have a great idea, it’s just that – an idea. It hasn’t been proven. This is why the failure rate of startup businesses is so high – sometimes a great idea just falls flat when it’s introduced to the world. With an existing business someone else has laid the groundwork for you. The fact that the business exists today means the concept works.

An existing customer base. Customers are the obvious life blood of a business, and with an existing business you will still have new customer acquisition as a priority – but you don’t have to start from square one. A loyal and established customer base exists the day you take over.

Better financing opportunities. Traditional lending institutions are very gun-shy about supporting start-ups. You’ll likely have a hard time getting funding. When you buy an existing business there tend to be better options for financing your purchase, like the Small Business Administration (SBA) or seller financing.

Immediate cash flow. When you start out on your own you end up spending a ton of money before you ever generate any kind of cash flow. When you buy an existing, operating business the cash flow is there the day you get the keys.

The message here is business ownership and an entrepreneurial life don’t have to start in your garage. You can buy an existing business and reap the benefits of someone else laying the groundwork for you.

Have you always wanted to start your own business but the idea seems too daunting? Would you like to know what businesses currently for sale could meet your goals for business ownership? Ask us, or search current business listings here! Leave any questions or comments and we would be happy to help.

Michael Monnot