Do They Vacation? A Business Buyer Must-Ask Question

Sure, there are the big and basic questions you should ask when looking at a business to buy – but there are also some more unusual (but very telling) questions that will help you figure out if this really is the right business for you.

 

What do we mean by “the right business for you”? Entrepreneurship is tough, and along with a decent amount of personal drive a successful entrepreneur has to love what they do. Nothing other than passion is going to help you when the hours get long and the money gets tight. For this reason, it is critically important that you decide what your ultimate goals are for business ownership before you start shopping around.

 

You should ask yourself what you want your life as a business owner to look like. Are you willing to work crazy hours for a big financial return, or are you leaning more towards something a bit more managerial but not completely life-encompassing? Do you thrive on being in control, or do you like to delegate?

 

The answers to these questions will be important for determining what kind of business and even what individual business would be best for you.

 

Once you have the answers to your soul-searching in hand, you may be wondering where on a tax return or P&L you can figure out if a business fits with your entrepreneurial desires. The answer is, you probably won’t be able to discern something like the level of owner involvement from just the numbers.

 

Perhaps, then, you should just ask sellers how many hours they work a week, or how many employees they have? These answers will help, but the three questions that will truly get at the life you will have as owner of the business are these:

 

When was the last time the seller went on vacation?

How long was the vacation?

Who was in charge and were there any issues while they were away?

 

These questions might not seem profound, but the answers can tell you as a buyer a whole lot about what the seller’s day-to-day life is like.

 

If the answer is “never” to the last time the seller took a vacation, then as owner of this business – it will clearly live and die with you. This type of business would be good for someone very driven and passionate who is looking for a good financial return.

 

If the sellers do take vacation, but they only go for a day or two at a time, then this is likely a business that needs a fair degree of owner oversight and may even be a business that can’t function without you at the helm. This is great for those of you who love control, but probably not a good choice for those who want to be fairly hands-off.

 

If the sellers regularly go on vacation for a week or two without complaints about major issues while they are gone, then this business likely has a trustworthy and capable management structure that allows the owners this type of freedom. The downside to a great management staff? You get what you pay for, so in many cases this type of business sends the ownership home with less, but the trade off for time off may interest you.

 

When trying to decide on the right business, first decide what you want your life to look like, then ask the three vacation questions. They will tell you volumes about your life as the future owner of the business.

 

Are you a buyer who wants to know more about how to decide what business would be right for you? Have you ever asked the vacation questions? Please leave us a comment or question here, we would love to hear from you.   

 

 

 

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

 

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What’s Makes A Great Business Broker? Hiring The Right Help

 

If you are buying or selling a business, you will want a great broker by your side, as it will be instrumental in giving you the best chance for success.

 

How do you know if a broker is good? What should a great broker do? Here are a few of the things we do for our clients that mediocre or bad brokers just don’t do:

 

A great broker should answer the phone and return emails.

We know, this sounds crazy, but we get lots of clients simply because we were the first business brokers who actually answered the phone, returned their call or answered an email.

 

A great broker should talk to their clients.

Again, this might sound ludicrous, but we come across folks all the time (especially buyers) who have never had an actual conversation with their broker. Their communication has been limited to a few emails and non-disclosure agreements sent back and forth. We think it is critically important to talk to our clients. If we can talk to you and find out what you really have in mind, then we can save you time and target a search of businesses that fit with your goals. If you are selling, your broker should make themselves available to answer any questions that you have and should also know what your goals are. The only way a broker can really know this very pertinent information is to have a conversation with their clients.

 

A great broker should not be pushy.

Everyone has had the pushy-salesman experience, and it is never positive. Your broker is there to help you buy or sell your business, but all of the decisions in that process are yours alone. Your broker should never try to force you to make decisions that you are uncomfortable with. Many brokers behave like the quintessential bad used car salesman. They don’t get paid if the deal doesn’t close, so they force the deal at the expense of their clients. We think that’s just bad business. We get many of our new clients from referrals from past clients, and that wouldn’t happen if we didn’t keep our client’s best interest at the forefront of every transaction.

 

A great broker should follow through.

If a client needs information, needs documentation, wants to schedule a meeting or call – then a broker should follow through and make sure that those things are happening in a timely fashion. Business deals don’t close themselves, so a great broker needs to stay on top of what needs to be done, and needs to keep the deal moving.

 

If you are considering buying a business or if you are ready to sell the business you currently own, look for these qualities in the broker you work with. The difference between a great broker and a bad broker can mean success or failure for your transaction.

 

Would you like to know more about what we do for our clients that sets us apart from other brokers in the industry? Ask us! Please leave us a comment or question here, and we would be happy to assist you in any way we can.

 

 

 

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

 

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Yearly, Not Monthly: Understanding The Fluctuations Of A Seasonal Business

Southwest Florida (and all of Florida for that matter) is a very seasonal place. Starting in October our population swells with retirees and vacationers from northern climates where the weather has just turned cold. This is great news for our local economy as businesses are packed, wait times at restaurants climb exponentially – so profits rise. It stays this way until the spring when the weather improves for the northern latitudes. Then local businesses feel the pinch of the approach of the off-season summer. The tourists and retirees are gone, so the year-round locals are all that’s left.

 

 

This seasonal rise and fall in business happens in many places, so if you are trying to buy or sell a business, you will need to understand what this seasonality means in terms of a business deal.

 

Buyers

You will have to realize that the numbers during a peak month are not the numbers for every month, and likewise the months on the low end of the profit spectrum shouldn’t necessarily scare you away. Buyers who are coming to a seasonal area from an area without such fluctuation need to look at the numbers on a yearly basis instead of on a month-to-month basis. If every year the business is slow in July and August, but then rebounds and does well for the remainder of the year, then the business is probably in good shape.

 

Sellers

Most sellers want to sell their business in the slow months, just after the busy season has ended – thereby taking the lion’s share of the yearly profits when they go. Although this is a smart move financially, most buyers won’t agree to take the wheel with a handful of bad months directly in their path. As a seller, you will need to be realistic about a closing date and be willing to negotiate with a buyer so that both parties end up happy. This is especially true if you will be offering seller financing, as you won’t get paid if the business folds in the first few months after the ownership transition. You will likely need to give up a few lucrative months so the new owner will have enough cash flow to keep the doors open.

 

The message here is you will need to consider the cycles of businesses in a seasonal area before misinterpreting numbers or trying to set closing dates that will benefit you alone. By allowing some room for negotiation both sides can end up with a fair deal.

 

Do you have a seasonal business that seems to scare away buyers when they look at the slow months? Are you looking at businesses in a seasonal area and want to know what is acceptable in terms of fluctuation? Please feel free to leave us a comment or question, and we would be happy to help.

 

 

 

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

 

 

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Why Are Sellers So Difficult? Understanding The Other Side

If you have just entered the business market, you may have noticed that sellers are not falling all over themselves to court you and sell you on buying their business. Considering how much money you are about to spend, you may feel like sellers should be doing more to entice you – but business sales don’t work that way.

 

 

It’s not like buying a really expensive car or a really nice watch where sales people fight over you and do everything they can to close a deal.

 

When you own and run a business, it is a life-encompassing affair. Your business is your baby, so selling that business – which involves handing over the keys and walking away – can be a very emotionally difficult thing to do.

 

Whether it’s productive or not, many sellers look at buyers as the villain in the story. They see questions as a personal attack. They get offended when you find issues. They get easily insulted during negotiations. You get the idea. 

 

Another issue arises because most business information is inherently private and proprietary, so it can be hard for a seller to hand over that information to someone who is essentially a complete stranger.

 

When sellers first list their business, they put together a package of general information, and that information is probably all they are comfortable handing over. Trouble can start when you as a buyer want more information than a purposefully vague listing or a basic marketing package.  

 

As a buyer, you are entitled to all the information you need to make an educated decision, just try to see your requests from the seller’s point of view. Would you be willing to answer a 90 question list after you had provided the answers to those questions in a marketing package the buyer clearly hasn’t read? Would you love the idea of complete strangers digging around your financial records?

 

The key to working together with sellers is to have a bit of patience and to use your intermediaries (your brokers and attorneys) as a buffer between the two sides. A good broker, for example, will ask you to read any information already supplied and pare down that 90 question list so as not to offend the seller.

 

Working together with the seller is of the utmost importance if you want your deal to reach a closing table – and keeping things amicable will make the training and transition period (where both sides will be working together) from being an awkward disaster.

 

Are you a new buyer in the market and have had trouble finding cooperative sellers? Do you have questions about what information you will be able to access and what kinds of questions are appropriate to ask a seller? Ask us! Please feel free to leave a comment or question, and we would be happy to help you on your road to business ownership.

 

 

 

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

 

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BIG Changes Are A BIG Mistake: Why Smaller Is Better For Your New Business

We see this one all the time. A buyer walks into a functioning (and profitable) business and decides that they want to make changes – big changes.

 

 

They bought this business because it had some potential for growth coupled with a fairly successful track record. They gut the infrastructure, they completely remodel, they toss out all of the old operating procedures, they expand. In less than a year they are completely belly-up and have to shut the doors.

 

 

What happened? They went TOO BIG TOO FAST.

 

 

What do we mean by that?

 

We mean that as a new business owner, you need to be very careful about decisions that will drastically change the functioning business you bought. The reason the business functions is the current methods work – so instead of fixing what isn’t broken you will need to take some time and figure out what you should change before you change anything.

 

Here’s an example. If you bought a restaurant that serves pizza but hasn’t been turning the best profit, you shouldn’t change the menu to burgers and redo the décor to try and increase profits. You should spend some time figuring out why the profits aren’t where they should be. In this example, the reason the numbers are down is because the grumpy long-term staff have been driving customers away. Your new menu and fresh décor will only make the problem worse by driving away the faithful regulars who were willing to put up with a grouchy waitstaff for amazing pizza. All this business needed was a new set of employees, not a costly remodel.

 

Here’s another example. If you bought a small but profitable manufacturing business with the goal of expansion, you probably shouldn’t spend a small fortune expanding the manufacturing facility as soon as you get the keys. In this example, the reason the company is profitable is because they have stayed small. They are able to fill the niche they are in without the major overhead that a much larger facility would require. By spending a few months understanding why the previous owners never chose to expand you can save yourself the horrific and expensive failure of a facility too large to be profitable.

 

The lesson here? Don’t try to go big without understanding why going big hasn’t happened before. Learn from the mistakes (and the successes) of the previous owner before you try to implement any big changes of your own.

 

Are you considering buying a business and you have questions about what you should and shouldn’t change? Have you bought a business in the past and made too many changes too soon? Please feel free to ask questions or share your experiences here!

 

 

 

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

 

 

 

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What Do We Do About The Employees? Suggestions For Business Buyers & Sellers

A business is for sale, and this business has employees. The employees have been kept in the dark about the for-sale status in order to protect the integrity of the business throughout the transaction process, but now that a buyer and seller have come to an initial agreement and the sale is moving forward – how do you handle the employees?

 

 

This is one of the most important (and by nature carefully handled) aspects of the sale of a business. The sale of any business that has employees (especially a business with critical “key employees”) will need to be handled delicately.

 

As a buyer, do you demand that you meet with employees before closing as you feel they are critical to the business? As a seller, do you let this happen? What if the buyer walks away or approaches the employees the wrong way?

 

Although a seller might feel that their employees will only be loyal to their ownership and won’t accept a new boss, in most cases employees can view a new owner as a positive – if the transition is handled properly. 

 

How? Focus your discussions with employees on the benefits a new owner will bring – and wait to tell them until after the sale.

 

Here’s a few thoughts:

 

Long term businesses often become stale as sales efforts and marketing may have lagged or become non-existent leaving the business just gliding. A new owner can bring that new energy, marketing ideas, additional employees, new clients and just a new way of doing things which can invigorate a business and push it to the next level. As the business grows and changes for the better those employees who stay can reap the benefits of those changes. This is especially true if the business is being acquired by a larger firm or if the business is ripe for expansion.

 

One of the reasons why you don’t tell employees too early is most of the time the employees really do want or need to keep their job. Telling employees too soon can make them feel very insecure and can leave them wondering if they will have a job after the sale closes. They might worry that they will be replaced, they might have concerns about getting along with a new owner or they may worry that they won’t be able to handle the changes a new owner will make. These worries can cause an employee to panic and quit – which is bad news for both sides of the deal. This is why both sides should wait until after the sale to tell the employees. Knowing that they’ve made it past the end of the transaction will assure an employee that their job is safe. Buyers should let their new staff know that no major changes are planned and immediately set expectations. 

 

The message here is typically the loyalty of employees is to the business or their job and not necessarily to the seller. It’s also critically important to wait until after the sale to tell employees anything.

 

Instead (after the sale), both sides should focus on open and honest communication, ask for input about what the business can do better, be clear on new roles and reinforce that the new owner is counting on the existing staff. Hopefully that will build confidence and loyalty on both sides, thereby creating a positive environment as the business moves forward to the future. 

 

Have you sold a business and told your employees too early about the sale? Are you buying a business and want to know more about why it’s a bad idea to talk to the key employees before closing? Please feel free to share your story or ask questions here.

 

 

 

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

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This Research Can Make Your Brand Appealing to Your Target Customers

Guest post by Grant Polachek

 

 

Branding and solid positioning are the most effective tactics for getting potential customers’ attention and reassuring them that your products or services are outstanding and can be trusted.

Notably, the goal of branding is to give your company a voice to express its uniqueness to your target audience. And this method still is, by far, the most successful for communicating with your audience and improving brand reputation.

However, in order to effectively communicate your company’s brand, you must first thoroughly understand the relevance of brand positioning and how it affects the way your key audience perceives your products. Understanding this can help you create a fantastic brand.

In our survey, we investigated how customers react to firms with a classic brand tone versus those with a contemporary and modern brand tone.

 

Why Was This Research Done?

 

We wanted to find out what sorts of businesses certain clientele like and how this differs by age group.

As an entrepreneur, you must understand that being able to connect your company’s name and other branding aspects to the needs of your clients will improve and increase the chances of your venture’s success.

And to achieve the study’s objective, we asked American customers whether they preferred doing business with companies that take a traditional approach to branding or those with a modern one.

 

Why Did We Pose Such an Important Question?

 

Every entrepreneur should understand that selecting the proper brand approach is one of the most important decisions you’ll have to make when starting or rebranding your firm because it has a significant impact on brand positioning.

Understanding your core demographic and your organization’s identity is critical for building an exceptional brand.

And, just as every entrepreneur must devote time to developing creative business names, whether through brainstorming or working with a company name agency on crowdsourcing company names, you must devote time to selecting the appropriate tone because it will strengthen your brand’s positioning and influence how the public perceives you.

Your chosen brand tone affects both your client’s interests and your firm’s reputation. You cannot afford to overlook this since it is critical to the development of your brand image.

 

The Key Findings of Our Survey

 

We grouped the information we got into different age categories so we could communicate our findings better. And while our poll results were hardly earth-shattering, the responses we got were intriguing.

After surveying 301 people, here’s what we discovered.

  • Customers below the age of 30, according to the report, are more likely to be drawn to firms with a new and modern brand tone than those with an older and classic approach.

 

 

 

Images are courtesy of Squadhelp

  • Customers aged 35 to 45 are evenly divided between the two options, making it less probable that one would be preferred over the other. With this age demographic, using either option is fine.

 

 

  • According to the data, consumers aged 45 to 54 choose a more traditional business.

 

 

  • The difference between the two choices is especially noticeable among people aged 55 to 65, who favor traditional businesses far more than modern ones.

 

 

  • According to the report, men have no preference for current or classic businesses.

 

 

  • Females, on the other hand, prefer traditional businesses over new and innovative ones.

 

 

  • 148 of the 301 respondents favored modern, current brands, while the remaining 153 favored historic and traditional brands.

 

 

Based on our findings, you could decide to give your brand a modern or traditional approach, as long as it meets the demands of your target demographic.

 

How to Use the Survey Results

 

Developing a strong company brand takes time and work. As you can see, the most straightforward approach to doing it right is to undertake extensive research on your target audience.

This poll can help you decide which path to take when deciding what approach to use for your brand name, value proposition, commercials, and so on, as well as the demographic you should expect if you adopt it.

Every entrepreneur should understand that selecting the proper tone is one of the most important decisions you’ll have to make when starting or rebranding your firm because it has a significant impact on brand positioning.

 

 

 

 

Grant Polachek is the head of branding for Squadhelp.com, 3X Inc 5000 startup and disruptive naming agency. Squadhelp has reviewed more than 1 million names and curated a collection of the best available names on the web today. We are also the world’s leading crowdsource naming platform, supporting clients such as Nestle, Dell, Nuskin, and AutoNation. 

 

 

 

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

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A Business Buyer’s Options For Corporate Structures – Which Is Best For You?

There are a lot of important decisions to make when you are buying a business, but one you may not have considered is choosing the corporate structure. You will need a corporate structure in place before you do many of the licensing/permitting applications that will be necessary for you to officially take over the reins. Your corporate structure also defines who owns the business and how the business will be taxed. 

 

 

What are my options?

 

Corporation

Probably the most frequently used and preferred type of structure for forming a company is the corporation. By presenting the Articles of Corporation to the Secretary of State, you can form a corporation fairly quickly. If you are forming the company in Florida, then the registered office is also in Florida and the corporate structures are governed by the laws of the state of Florida. A corporation formed in Florida can carry out business in every state, although all of the states require a registration. Foreign nationals can also form a corporation in Florida. A registered agent (a person headquartered in Florida) has to be named to receive and deliver documents.

 

Limited Liability Company (LLC)

The Limited Liability Company is not accepted in all states, but it is in Florida. The shareholders are personally liable for taxation and the accountability is limited to the assets of the business. Just like the corporation, an LLC requires the filing documents to be registered with the Secretary of State. In most cases at least two shareholders are required for a Limited Liability Company.

 

Sole Proprietorship

If the business is privately owned, it is a Sole Proprietorship. In the majority of cases a single person is the owner of the business. This type of corporate structure does have some downsides. The owner is liable with all of their personal assets and the owner is also liable for taxation.

 

General Partnership

In this type of corporate structure, the partners lead the business together and all of the partners are absolutely liable for accounts payable. This setup usually requires more administrative effort and can be more cost-intensive.

 

Limited Partnership

The Limited Partnership consists at least of 2 people, a General and a Limited Partner. The Limited Partner has a supervisory role, both available and limited. He or she can’t be part of the management and acts as an investor. The General Partner leads and is liable for the business. A shareholder contract has to be prepared for the forming of the business. With this type of corporate structure, you have to request a Certificate of Limited Partnership from the Secretary of State.

 

 

Before you make a decision it is important to contact a certified public accountant familiar with corporate structures and small businesses, a business attorney or a business broker because they will be able to advise you about what type of structure would be right for the business you want to purchase. Are you a business buyer or budding entrepreneur who would like help? Please feel free to contact us or leave a question here and we will be happy to help or refer you to one of our partners.

 

 

 

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

 

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Why A Realistic (And Fair) Buyer Will Always Win

If you are entering the business-for-sale marketplace, then you may have already come across the phenomena that happens when some small, usually family or individually owned business go up for sale. The prices can seem high, even ridiculous in some cases.

 

 

Why are they priced so high?

 

 

The owners of these businesses are setting a listing price based on their emotional attachment to the business instead of pricing it to sell. In the business market, there are brokers who will tell an owner what they want to hear, allowing a crazy initial listing price just so they can get the listing.

 

 

This is a major disservice to the seller and to any potential buyers who have an interest in the business. By allowing an owner to think they will be able to get whatever amount they want, these brokers shut down any real chance of negotiating for a fair price before negotiations can even begin.

 

 

The harsh reality of the business marketplace is that a business is only worth what someone is willing to pay for it. While the tug of war between heartstrings and financial reality is the subject for another article entirely (one for those emotionally-attached business owners), as a buyer you need to tread this path carefully.

 

 

First, you are not dealing with a large corporation with a dozen board members, you are probably dealing with one person, a person so personally invested in this business that one wrong move from you can become a deal-killing offense. If you understand this personal investment, and then act accordingly, you will have a far greater chance of getting a deal done.

 

 

Should you pay them whatever price they are asking for? Certainly not, but the super-low-ball offer, just to kick a tire and see how low a seller is willing to go is a big mistake.

 

 

A low-ball offer tells a seller that you have no regard for all of the time, energy and money they have invested in their business. Anyone (including you) would be offended by such a move. Once a seller is offended, there is usually little chance of getting them to cooperate and agree to work with you on a deal, no matter how much you want the business or how much you are willing to pay.

 

 

With that said, use the advice of your business broker when putting together those crucial first offers. You want to open negotiations at a reasonable point. When you start at a fair number, you are saying a great deal about yourself as a buyer – letting the seller know you will treat their business and the deal you are about to negotiate with respect.

 

 

Are you a buyer who has questions about what a good initial offer should look like? Would you like to know more about how to negotiate with sellers? Ask us! Please feel free to leave us a question (or comment) here, and we will be happy to get you an answer.

 

 

Michael Monnot

 

941.518.7138

Mike@InfinityBusinessBrokers.com

 

 

 

 

 

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Business Buyer: What’s In An Offer?

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

941.518.7138
Mike@InfinityBusinessBrokers.com

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Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

9040 Town Center Parkway
Lakewood Ranch, FL 34202




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