3 Tips For First-Time Business Buyers

If you are thinking about taking the entrepreneurial plunge by buying a business, you may be wondering where to start.

 

Here are 3 tips to get your business search going and put you on the path to small business ownership:

 

Get In Touch With A Business Broker

Many new buyers think that the services of business brokers are only for sellers, but nothing could be farther from the truth. A good local broker can help steer you in the right direction – both to the right industry and businesses that you can successfully afford.

In your first conversation with a good broker you will likely discuss what your goals are for business ownership, what capital you have readily available to invest in a small business, the industries where you have practical experience and the businesses you are considering. In some cases a buyer who is considering one industry may have more success meeting their goals for business ownership (like setting your own schedule or employing members of your family) by buying a business in an industry they hadn’t even thought of.

 

Do Some Self Searching

Owning a small business is a life-encompassing affair, and before you decide what type of business would be right for you, you need to think about what you want to get out of business ownership. Have you always dreamed of owning your own bar, but you’ve never worked so much as one day in the restaurant industry? Buying a business and becoming an owner overnight can come with a steep learning curve – you don’t want to add learning a whole new industry to the mix.

You also need to consider what you want your life as a business owner to look like. If part of your reason for transitioning to an entrepreneur is to give yourself more time with your kids – then owning a business like a bar where you will work seven days a week from 3pm to 3am probably isn’t going to leave a lot of time for coaching their little league team.

 

Do An Exploratory Search

Many prospective business buyers have a general idea in their minds of the type of business they would like to own, but after a cursory search they discover that there are business opportunities out there they’ve never even heard of or considered. Do a cursory search of the businesses available in the geographical areas that interest you and you may be surprised what you find. You can start your cursory search by clicking here, and then ask us about any interesting businesses you find by contacting us today.

 

If you are thinking about joining the world of small business owners – do some soul searching, talk to a good broker and do a little exploratory searching on your own. By opening the field of available and potential businesses you will have a greater chance of finding the perfect business for you.

 

Have you thought about buying a business but aren’t sure where to start? Do you have questions about how the business buying process works? 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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Buying A Business? 3 Ways To Find A Great Broker

If you are considering buying a business, then you’ve probably started looking for a business broker to help you. If you haven’t, you should, as the business transaction process can be dauntingly complex and rarely makes it to a successful closing without some qualified help.

 

If you are broker shopping, you will quickly discover that there are a lot of options.

 

How do you choose the right professional to help you?

 

First, avoid any “part time” brokers. Many, many business professionals like real estate agents, attorneys, accountants – we’ve even come across doctors – “moonlight” as business brokers. Their attempts in our industry are on a part time “dabbling” basis, and as such they rarely know what they are doing. You wouldn’t come to a business broker if someone was threatening you with a lawsuit, so why would you use an attorney to navigate a business deal? Look for business brokers who are only that – full time brokers.

 

Secondly, you want to avoid business brokers who have “proprietary methods”. Some brokers use their so-called proprietary methods as a selling point, but from an industry standpoint there really isn’t anything about what a broker does that could ever really be proprietary. Any broker who gives you the “I am the only one with the special sauce” routine is trying too hard to impress you instead of focusing on what’s important – finding you the right business.

 

Third, you want to avoid business brokers who spend a small fortune on advertising. Brokers who are spending money on multiple television ads, massive full-color mailers and dozens of radio spots are again spending too much of their time focusing on the wrong aspect of their business.

 

What should you use to find a great broker? Referrals. If you find a business broker who gets the vast majority of their business from referrals, then you’ll be in good hands. Referrals come from past buyers, sellers, other industry professionals like attorneys and accountants – and these referrals amount to a great review of that broker’s previous work. Those past clients and professionals trust this broker enough to send the people they know their way. If you are talking to a broker, ask them how much of their business is referral based. A broker with a ton of referrals will be someone who can get the job done and find you a great business.

 

Would you like to know more about how to decide on a business broker? Would you like to know about our referral rate here at IBB? Ask us! Please feel free to 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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Buying A Business? The Importance Of A Narrow Focus

Here’s one we see all the time. We get a call or an email from a buyer who wants to sign 15 NDA’s on 15 different types of businesses so they can see where each is located and then decide which ones they like.



First of all, any business broker worth their salt is not going to disclose that many listings to a buyer all at once. Why? A buyer looking at 15 different types of business hasn’t narrowed their search, so disclosing all of those businesses puts the confidentiality of those businesses at risk unnecessarily. It is also a colossal waste of both the buyer’s and broker’s time to fill out all of that paperwork for nothing.



You might enter the business marketplace with only a vague idea of the kind of business you want, but you really need to narrow the focus of your search right away if you want to have any kind of success with finding businesses that will actually help you achieve your goals. There are hundreds of potential listings out there, and it can be easy to get overwhelmed by the choices.



How do you narrow your search?



Talk to a business broker first.



We will ask you about your goals for business ownership. What do you hope entrepreneurship will bring to your life? The freedom to make your own schedule? More money than you make at your current job? More time to spend with your family? The ability to grow a business to sell a few years later? These goals will be very helpful in eliminating businesses that don’t fit the bill.



We will ask you about your prior knowledge and experience. What industries have you worked in? What did you go to school for? Taking over a new business is hard enough, you probably don’t want to add learning a whole new industry to the mix at the same time.



We will ask you about your financial situation. How much do you have to invest? Are you looking for financing? Knowing from the very beginning exactly how much you have to work with will be instrumental to ensuring you end up with a business you can afford.



After having this type of discussion with your business broker, you can focus on businesses that will fit all of your needs and not waste any of your time looking at businesses that don’t. Narrowing your focus early also helps you keep from feeling like your search never ends.



Are you starting your business search and need help with narrowing your focus? Are you curious about what businesses are available in your area? Do a cursory business search by clicking here or leave us any questions or comments below.

 

 

 

 

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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Selling On Your Own? Prepare For Disaster

You are an accomplished business owner, it’s just that the time has come to move on to the next chapter of your life – so you’ve decided to sell.

 

Why pay a business broker a commission to do something as simple as sell your business, right?

 

Well, you can try – but it’s probably going to end as an unmitigated disaster. A disaster that could spell the death of your business, forcing you to lock the doors and walk away with nothing. Here’s why:

 

 

In order to sell your business, you need to find a buyer. In order to find that buyer, you need to get the word out that you’d like to sell. So you snap a few pictures of the front of your store, clearly showing the address and post the listing for your business online. You might even go as far as to put a “for sale” sign up. The consequences of this marketing campaign? Your staff immediately knows you are looking to sell, and mistakenly assumes that it means the business is in deep financial trouble. Your entire staff quits, en masse, looking for more stable work – taking all of their regular customers with them. Your customers see your “for sale” sign and make the same assumption that your staff did – that you’re in trouble. They see the demise of your business as inevitable and so they take their business somewhere with a future.

 

If you manage to find a buyer without your staff and customers finding out – say a word-of-mouth, friend-of-a-friend kind of thing, you might think you’re out of the woods. This buyer seems great, so you start divulging all kinds of proprietary information because you believe they will be taking the helm in the near future. It turns out, however, that this buyer doesn’t have the cash they initially led you to believe they had, and they want you to seller finance an enormous part of the purchase price. Worse yet, you find out they are the brother-in-law of your biggest competitor, and because you never realized you should have asked them to sign non-disclosure agreements you have no legal recourse when they take your “secret sauce” to your competition.

 

Ok, so you’ve managed to avoid the blunders we’ve discussed so far. You have a buyer who doesn’t work for your competition and your staff is still in the dark. You’ve never written up a contract for a business sale, but you’ve written up contracts for other things so it should be easy, right? Your plan post-sale was to set up another shop that sells something different – but in the same area because this is where you and your family live. Unbeknownst to you, you misunderstood a non-compete clause and just signed a purchase contract that means you can’t open your new shop within 100 miles of where you currently live.

 

Selling your business doesn’t have to be a disaster or a nightmare. You may not want to pay someone for their help, but you have to think about the cost of a commission this way. Even if you don’t end up in one of the horrible situations we’ve discussed here, selling a business is a full time job. That’s why an entire industry of professional business brokers exists. You need to be paying attention to your business in the very critical time when your current numbers mean getting the most from the sale. You don’t want your business to be suffering when buyers are looking – the amount of money you stand to lose could be enormous. Get the right help.

 

A qualified and experienced business broker knows how to confidentially market your business so your staff and customers stay in the dark. They know how to spot unqualified buyers and make everyone signs the appropriate non-disclosure forms so you and your business are protected. They’ve helped write hundreds of purchase contracts, and they know when something isn’t right. They’re your buffer during negotiations and your sounding board to help with the decisions you need to make. And if you’ve ever tried to sell a business without one, you know they’re worth their weight in gold.

 

Get the most from your business sale without your business or your sanity falling apart. Hire the right help.

 

Are you thinking about selling your business and now think it might not be a good idea to go it alone? Do you have more questions about what business brokers bring to the table? Ask us! 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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Buying Or Selling A Business? The Right Help Makes All The Difference

Looking for a business to buy or thinking about selling the business you currently own? Either side of a business transaction is a tough and complicated road – and definitely one you shouldn’t travel alone.

 

 

So, who can help me with business transactions? Business brokers can.

 

A business broker is a professional who helps people buy and sell businesses. They are well versed in the transaction process, and know all of the potential pitfalls so you can avoid them.

 

Few people outside of the business transaction world truly understand what business brokers are and what they do – so here are the answers to some common questions about our industry:

 

What do business brokers do?

If you are a buyer a broker can help you search for businesses to buy, help you narrow down your choices, help you put together an offer, help you negotiate a purchase contract, help you with any necessary licensing and permitting and help you work with the seller as they show you the ropes.

 

If you are a seller a broker can help you prepare your business for sale, help you come up with an appropriate listing price, confidentially market your business, vet potential buyers and get non-disclosure agreements signed, show your business to potential buyers, help with negotiating a purchase contract, help you with the closing process and help you find your next business venture after you sell.

 

How are business brokers licensed?

Business brokers are typically licensed by their state’s real estate division, but what they do isn’t real estate. To put it simply state licensing divisions can’t possibly have a separate license for every applicable industry, so in some cases a profession is lumped in with an industry that is similar. That is the case with business brokers. They typically hold a real estate license or a real estate broker’s license.

 

Who is, and isn’t, a business broker?

The buying a selling of businesses and the buying and selling of property or homes are two completely different animals. Property and homes are sold by broadcasting the availability of the property/home to everyone, everywhere. Businesses, on the other hand, need to be sold confidentially – so the approach is completely different. Listings for businesses are extremely vague, and only after the signing of non-disclosure agreements will the name and location of a business for sale be divulged. It is this vastly different approach of sales techniques that makes it critical for business buyers and sellers to work with experienced and qualified business brokers and not real estate agents trying their hand at selling businesses.

 

Many professionals outside of the business transaction industry make ill-fated attempts to dabble in the buying and selling of businesses on the side. While unqualified real estate agents are the typical offenders – we’ve seen dentists, lawyers, accountants and the like they their hand and fail. The business transaction process is complicated, and to be successful you need to know what you are doing. Part-time business brokers aren’t business brokers, so avoid them. If your good friend or brother-in-law is a real estate agent who thinks they can successfully help you buy or sell a business, they can – by referring you to the appropriate professional. All your real estate agent needs to do is refer you to a qualified business broker, and when your transaction closes your real estate agent gets a referral fee for doing nothing more than making a phone call – and you get the right help.

 

Who does a business broker represent?

While your business broker is your advocate during the transaction process, they don’t technically represent one side or the other. They are transaction brokers, and therefore represent the transaction itself. For this reason it is possible in many states for a business broker to work for both the buyer and seller’s side.

 

How does a business broker get paid?

Business brokers make their money by earning a commission when a transaction closes, paid for by the seller’s proceeds of a sale. This is why buyers who spend years searching for businesses without ever taking any serious steps toward buying one (like making an offer) might have trouble getting an experienced broker’s attention. Serious buyers and serious sellers are easily distinguished from those who are just kicking tires.

 

How can I find a good business broker?

Finding a good broker can be a bit of a challenge, but there are some obvious signs that can distinguish the good from the bad. Great brokers get the vast majority of their business from referrals – from past buyers and sellers who were impressed with their work, from colleagues in other industries who’ve referred friends and family to great success – so ask a potential broker how much of their business comes from this good-review-based source. Good brokers also respond to calls and emails in a realistically timely fashion, have lots of connections within the industry and have some practical experience under their belt.

 

The message here is the road to buying or selling a business is best traveled with the right help – so finding an experienced and qualified business broker should be your first step!

 

Are you thinking about buying or selling a business and want to know more about what business brokers do? Do you have more questions about the transaction process? Ask us! Feel free to leave comments or questions 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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Experience Counts – Why You Need A Veteran Of The Transaction Process

You’ve just entered the business market with the intent of buying yourself a small business, and you are shopping around for a business broker to help you.

 

There are many factors that separate the good brokers from the bad – but one of the big ones is experience.

 

Rookie brokers make lots of mistakes, and if you’ve hitched yourself to their wagon for your transaction then you get to live those mistakes right along with them.

 

As experienced brokers, it can be very frustrating to try and work with these newbies, but it becomes increasingly difficult when they are trying their hand at the business alone and without any guidance – or if they have an experienced broker whom they work for who has given little to no training of any kind.

 

One of the major ways this lack of experience shows through? Too many showings.

 

What do we mean by too many showings?

 

If you’ve ever bought a house, you know that going to see a plethora of homes is part of the game, especially in a fast-moving market where a house has multiple offers the first day it lists. This is not, however, how business sales works – so newbie business brokers, especially those fresh out of the real estate industry, will sometimes try to play the same game by attempting to line up a litany of businesses for their clients to see. It doesn’t work.

 

First of all, when you are buying a business, you are buying an existing business – one that is open and running with staff and customers. The importance of confidentiality means that the staff and customers can’t know the business is for sale. Therefore, a business seller can’t have a parade of semi-curious buyers waltzing through the front door on a regular basis – it would make confidentiality impossible.

 

If done properly, the process to go see/tour a business is much more extensive:

 

It starts by having a conversation with your business broker about what you are looking for in a business and what your goals are. You will also talk about how much capital you have to invest in a business, and your broker will then take that information and find you a number of listings to look at that will be within your budget and meet your entrepreneurial goals. Out of that initial batch of potential businesses, you will typically be asked to narrow down the choices to just a few – think two or three – that peak your interest. You will then sign non-disclosure agreements for those listings in order to receive the marketing package, complete with the name and physical location of the business. After thoroughly reviewing the marketing materials for your few choices, you will probably prefer one business over the others. Your broker will help you form a list of additional questions you have for the sellers, and you will be given an opportunity to ask those questions during a conference call including the sellers, the brokers involved and you. After all of those steps have passed and you are still very interested in the business, your broker will set up a walk-through of the physical location of the business either before or after business hours when the staff and customers are gone.

 

What you can’t do in this process is decide that you want to spend a few days touring businesses and line up 5, 10 or more “showings” with your broker. No experienced broker worth their salt is going to waste their seller’s time by trying to coordinate a visit when the buyer hasn’t even bothered to narrow down their choices or ask any good questions. It’s just not going to happen. They’re also not going to put the confidentiality of the business at risk by having too many unfamiliar people coming to the business to meet with the seller during business hours as the staff will know something is up.

 

If you ask for this type of multi-tour approach and your broker says “Sure!”, beware that you probably have a rookie on your hands. The experienced brokers on the other side of the table aren’t going to play along, and you will be stuck seeing only the businesses listed by fellow rookie brokers.

 

If you are serious about buying, get yourself an experienced broker and go through the proper steps. You will end up only seeing the businesses that are right for you instead of wasting your own time looking at businesses that don’t fit the bill.

 

Are you a first-time buyer with more questions about the business buying process? Have you had an experience with a rookie broker that you’d like to share? Please feel free to leave comments or 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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Weighing Advice: How Business Buyers Should Deal With “Help”

Everyone is an expert, right?

 

We all have that person in our life who talks confidently about every subject while knowing little to nothing about the things they speak of. They string together urban legend, conjecture and memes from the internet into what sounds like a coherent piece of genuine information when, in fact, it is nothing of the sort.

 

If you are thinking about buying a business and you’ve told the people in your life about this new pursuit, then these fact-free advice givers will come out of the woodwork. Everyone, at one time or another has considered what life would be like as a business owner – and as such almost everyone feels qualified to offer their entrepreneurial advice. You will get unsolicited advice from seemingly everyone: your brother-in-law, the mailman, your dentist, your neighbors. While everyone’s intentions are good – to help you – the information you are given should be taken cautiously. Even the opinions of those you trust, like a very close friend, should be taken within the context of whether or not they actually know anything about buying or running a business.

 

Take, for example, the rent payments on a waterfront restaurant. If you are considering buying a large waterfront restaurant, especially one in a desirable location, then you should expect the rent to be high. That high rent, however, when compared to comparable businesses in the same area will probably be right in line with what you should expect to pay. Also, a desirable location means more customers in the door – meaning you will be perfectly capable of paying that high rent so long as you don’t run the business into the ground.

 

What unfortunately happens to many new buyers is they mention this high rent rate to someone who knows little to nothing about either the restaurant industry or the area in question and they balk at the number, exclaiming “That’s ridiculous!!! Don’t buy that business!” when the opposite is true. It’s a great business and falls right in line with both the buyer’s budget and their goals for business ownership.

 

There are many, many examples of instances where bad advice has driven a buyer from a perfectly good business – particularly when discussing matters of price. We’re not telling you that you shouldn’t listen to the opinions of those you trust, we’re just saying that you should consider their expertise in the matter before you take their advice as doctrine.

 

Who should you listen to? Your business broker is a good source of information because they eat, sleep and breathe business transactions and a good broker will know their local industry inside and out. Your business broker is also a reliable source of information because it is in their best interest if you succeed in your new business. You may refer them the business owners or business buyers you meet if you are happy in your business decision, and when the time comes to sell they hope you will use them again. A great business broker gets a great deal if their business from referrals and repeat clients.

 

You should also listen to the advice of your business transaction attorney and your business transaction CPA (if you end up using one) as they too know the industry well.

 

Notice we said “business transaction” attorney and CPA, not any attorney or CPA. Your friend who practices labor law and your uncle who does accounting for a rental car company aren’t going to be able to give you good advice about buying a restaurant because that’s not what they do. It would be similar to asking your car mechanic his advice about whether or not you should undergo back surgery – it’s not his area of expertise.

 

The most important person you should listen to? Your own common sense. Take the information you gather from all of your sources, weigh the validity of their opinions based on their real expertise in the matter – and then decide for yourself. You are the one buying the business, not the peanut gallery, so if the decision makes sense to you then that’s all that really counts.

 

Are you looking at businesses to buy and getting all kinds of advice at the same time? Do you have questions about some of the advice you’ve already been given? Please feel free to leave your questions and comments here, 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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Buying A Business? Why You Should Stick With One Broker

We’ll start this one by saying as a caveat that if you end up with a dreadful broker who never returns your phone calls, doesn’t show up to scheduled meetings on a regular basis and is all around just bad – by all means, find a new broker.



Caveat aside, many business buyers come to the business-for-sale marketplace and try to play the field, and this never ends up working in their favor.



What do we mean by playing the field? If you’ve emailed 30 brokers in a small local area to request information on potential businesses, then you are doing yourself and your prospects for business ownership a big disservice.



Why?



Your business search needs to be focused in order to be successful, and in order to have a focused business search you need to have a relationship with a good broker. This relationship should start with a conversation about several very important things – things that won’t come across if all you are doing is shooting email requests to everyone in the area.



Your initial conversation with a broker might start out as an inquiry into one specific business, but it shouldn’t stay that way for long. A good broker is going to ask you questions that will let them know your direction in your search and help them narrow your focus to just those businesses that would fit with your goals.



What should a broker be asking you?



They should ask you about what your goals for business ownership are. If what you are hoping to achieve is a very flexible schedule so you can spend more time with your kids, then some businesses are definitely out of the question. If schedule isn’t a priority, but making as much money as possible is – then a very different business would be for you.



They should be asking you about what your passions are. Entrepreneurship is no picnic. It can be an enormous amount of work, so you need to be doing something that you can be driven and passionate about or you will end up miserable.



They should ask you about your experience. If you’ve never worked so much as a single shift in the restaurant industry, then it would be a terrible idea to buy a bar or restaurant. Business ownership is tough, especially if you are brand new to entrepreneurship. You don’t want to add learning an entirely new industry on top of it – you will be setting yourself up for failure.



They should be asking you about your finances. You might think you have enough money to buy a particular business, but the reality of buying is that you need far more money than just enough to cover the listing price. You need enough to write the closing check, enough for the deposits for your utilities and lease, enough to buy new inventory, enough for licensing fees, enough for the first few rounds of payroll – the list goes on. A good broker doesn’t want to set you up for failure, so knowing your financial situation will allow them to find you businesses you can actually afford.



The point here is only by having a relationship with a single broker (who knows these very key things about you and about your business ownership goals) can you have any hope of finding the right business.



Approach you search for businesses by searching for a good broker first – then you can count on that relationship to bring you the businesses you should see.



Have you sent a ton of email requests but haven’t actually had a conversation with a broker yet? Do you want to know more about why a relationship with a good broker is so important for your success in purchasing a business? 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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Buying Or Selling A Business? Don’t Underestimate Training

Have you thought about what happens after the keys change hands and the buyer and seller walk away from the closing table?

 

The transaction process isn’t over yet – now the training period begins.

 

When a business is sold, part of the purchase contract will typically cover a training period of some sort where the seller will stay on with the business until the buyer can be sufficiently trained to take over the helm. This is an all-to-important part of the business transaction process, so it is in everyone’s best interest to keep the training period productive and amicable.

 

The best way to start the training period off right is to keep the negotiations during the sale process as friendly as possible. Both parties can do this by always using the business brokers involved as intermediaries. It might seem inefficient to always send questions or comments through a third party, but what starts as an innocent phone call to the other side can quickly devolve into a deal-killing fight. Keeping things friendly for the time period before your are stuck working together will make the start of training much easier.

 

If you are the buyer in the situation, it may be tempting to walk in on day one and completely change everything to your liking. This is a huge mistake for two reasons.

 

One, you shouldn’t make any changes to a functioning and profitable business until you know everything there is to know about the business. Then, and only then, will you know what parts of the business are making it profitable and successful and what aspects can be changed without causing any unforeseen damage down the line.

 

The second reason your should hold off on any changes is for the seller’s sake. The seller has a wealth of practical knowledge about the business you just bought, and it is absolutely in your best interest to get absolutely all of that knowledge before the training period is over. By coming in and changing everything, you are essentially telling the seller you don’t think anything they’ve done is worth learning about – a move so insulting that you will probably have an incredibly hard time getting any of that precious practical knowledge. Try to remember that this business was a huge part of the seller’s life, so treat them with a bit of compassion and wait until they are officially gone before you implement any big changes.

 

If you are the seller in the transaction, the training period can be difficult for a number of reasons. First, once you’ve left the closing table and the keys have changed hands, it can be very tempting to mentally check-out. This is a very bad idea, especially if your deal has seller financing involved (which many deals do). If you check-out and can’t properly train the new owner, the their chances of success (and you seeing the rest of your money) are probably not very good.

 

Another training pitfall for sellers is getting offended when the new owner wants to make changes. It can be extremely difficult to keep your emotions in check, but you must remember that this business no longer belongs to you, so the new owner can do what they please. Do your best to complete the training period amicably so that your business can carry on successfully without you.

 

Whether you are the buyer or the seller, it is critically important for the survival of the business in the long term that the training period happensso do your best to work together.

 

Have you bought a business and the training period wasn’t what it needed to be for you to successfully take over? Are you selling your business and you have questions about what the typical training period will be like? Please feel free to share your experiences or leave us questions here.

 

 

 

Michael Monnot

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

www.InfinityBusinessBrokers.com

No Comments »




Buying A Business? How To Handle Questions About Your Money

Talking personal finances with anyone, let alone someone you don’t know very well can be an intensely uncomfortable experience.

 

Conversations about how much money you have, how much money you make, what you can and can’t afford – these are typically considered off limits and rude in normal day to day interaction.

 

When you enter the business marketplace with the intent of buying a business, you will be confronted with these seemingly intrusive questions basically from the start, and that can make the process of finding a business somewhat uncomfortable if you aren’t ready to talk money.

 

Who’s asking about my money?

 

The first person who will be asking about your financial situation is your own business broker – but you will also likely have to disclose financial statements to sellers, their brokers and the property manager or landlord of the business location.

 

Why do I need to be ready to talk money? Why can’t I just look at businesses I know I can afford?

 

While you might feel that it isn’t anyone’s business how much money you have for the purchase of a business, it is critically important that your own broker in particular knows how much you are working with. One of the major mistakes that buyers make is misjudging how much capital they will actually need to buy, and then run, a business. For example, if you have $100,000 available to buy a business, you probably shouldn’t be looking at businesses that are listed in the $150,000’s with the hopes of negotiating down. You need to remember that in addition to the purchase price, you will need to have funds available for licensing and permitting, for purchasing additional inventory, for securing the commercial lease and for keeping yourself afloat long enough to get the business turning a profit with you at the helm. If you use every last cent of your available cash to write the check at closing, then you have set yourself up for immediate failure.

 

What should I do instead?

 

Be very open and honest with your business broker from the start, and then listen to their advice about what businesses you can and can’t afford. A good broker doesn’t want to see you fail because the success of the small business community is a broker’s bread and butter. Don’t be offended when your broker says “you can’t afford that”, as they are trying to keep you from sinking yourself from the start.

 

What about a deal with seller financing? Doesn’t that mean I can buy any business?

 

Definitely not. Many buyers come to the market expecting to put very little money down and have a seller finance the rest – but that isn’t how seller financing actually works. You typically need to put at least 50% down – if not more – for a seller to take your offer seriously. If seller financing is involved, a seller is also going to want to see that you have the right amount of cash to keep the business running and profitable long enough for you to pay them back, so you will need to reserve some of your capital for simply running the business.

 

Why does the landlord need to see financial information? The money the business makes is what will pay the rent, right?

 

Landlords and property managers want to see that you have the money to pay the rent, even if the business isn’t doing well. From the landlord’s perspective, they already have a lease with the current owners that guarantees them full payment of the remainder of the lease, so if you come to the table with anything less – they have no motivation whatsoever to approve you to rent the space.

 

The message here is if you really want to buy a business, you will have to get used to the idea that people are going to want to know how much money you are working with, and then they will want to see proof of that number. You will also need to get used to the idea that there will be some businesses that are simply out of your range, and that the person you have hired to help you through the business buying process (your broker) will need to be able to be honest with you about what those businesses are – without you getting offended.

 

Have you looked at businesses but can’t figure out how much capital you would need? Do you have more questions about what kinds of financial information you would need to disclose? Ask us! Please leave a comment or question 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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Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

12995 South Cleveland Avenue, Suite 249
Fort Myers, FL 33907




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