Buyers Articles Archives - Page 26 of 40 - Infinity Business Brokers

Published March 4, 2019

Once upon a time, it was the American dream to own your own business.

Kids grew up in world where the example of entrepreneurial blood, sweat and tears was the only path to a better future for yourself and for your family.

Fast forward to today. Today’s kids get roped into enormous amounts of student loan debt because the new path to the American dream is a higher education. An expensive higher education. An expensive higher education that doesn’t necessarily mean a job on the other end. Que the trend of college grads moving back into mom and dad’s place.

This push for higher education at the expense of all other walks of life hasn’t made anyone any happier or any richer than the generation before. In fact, it’s put a large part of the millennial generation in a financial hole they might never come out of.

What has this push for higher education done to the entrepreneurial spirit? It’s choking the life out of it. If you come out of four, six or eight years of higher education you are probably in no financial position to take on the financial risk of owning your own business. You’ve also spent the last handful of years outside of the workforce. You may have learned a lot, but the learning wasn’t of the practical nature best suited for business ownership.

We’re not saying that higher education is a bad thing. What we are saying is it doesn’t have to be everyone’s path. If you see yourself 10, 20 years down the road as the owner of your own business – there’s no need to wait. You don’t need a lofty or expensive degree to be a great entrepreneur. You need drive and passion.

Instead of asking your folks to send you to college, maybe the better path would be to invest in a business. Buying an existing business can be less risky than starting from scratch and it allows you to take the reins from a seller who will be able to train you.

If your parents aren’t thrilled with the idea of you going-it alone, then maybe a family partnership is in the cards. There are also ways for a millennial entrepreneur to fund a business purchase through the Small Business Administration (SBA). Ask a business broker about what opportunities would be available. You might be surprised with what’s possible!

If entrepreneurship is for you, there’s no need to saddle yourself with student debt to get there. Talk to a business broker today about your goals for business ownership and the capital you have available – and they will be able to help you decide on the best entrepreneurial path for you.

Do you have more questions about how to get funding for the purchase of a business? Would you like to know what a family partnership might look like? 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

Dishonesty, Procrastination And Red Tape – A Cautionary Lesson For Business Buyers

Published February 25, 2019

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

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

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

Reason one? It could be considered fraud.

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

Reason two? It could mean your licenses get revoked.

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

Reason three? Fines, fines, fines.

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

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

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

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

Do you have questions about the licensing requirements for the types of businesses you are interested in? Would you like to know more about the services available to help you? Ask us! Please leave questions or comments here and we would be happy to help.

Michael Monnot

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

Stand Out! How Business Buyers Can Break From The Pack

Published February 11, 2019

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

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

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

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

Ask questions.

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

Be ready to answer questions.

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

Be patient.

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

Be flexible.

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

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

Do you have questions about the business transaction process? Are you wondering if the business you think you want to buy is actually the right business for you? Ask us! Please feel free to leave questions or comments here and we would be happy to help.

Michael Monnot

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

Buying A Business? 3 Financing Options

Published February 4, 2019

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

If I need financing, what options are available?

Traditional Loans

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

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

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

The Small Business Administration (SBA)

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

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

Seller Financing

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

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

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

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

Do you have questions about how to qualify for a loan from SBA? Would you like to know what currently available businesses are offering seller financing? Please feel free to leave comments and questions here and we would be happy to help.

Michael Monnot

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

A Fair Price Or Are They Dreaming? Small Business Listing Prices

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

Published January 28, 2019

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

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

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

Cash Flow and Contracts

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

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

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

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

Inventory

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

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

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

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

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

Equipment and Furnishings

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

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

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

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

Do you have more questions about how you as a buyer can determine if a price is fair? Would you like to know more about the importance of cash flow? Ask us! Please feel free to leave any questions or comments and we would be happy to help.

Michael Monnot

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

Market Confidence Drops While Prices Rise – What’s In The Tea Leaves?

Posted in Buyers Articles, Sellers Articles

Published January 21, 2019

Buyers and sellers aren’t sure what the future of the business market holds, so what does 2019 mean for those who are thinking about buying or selling a business?

While 2018 numbers have yet to be released, the results of the 2017 BizBuySell Buyer-Seller Confidence Index might give insight to those in the business marketplace.

The BizBuySell Buyer-Seller Confidence Index analyzes the survey responses of 2000 entrepreneurs. The Index is based on a score from 0 to 100, where 100 is the perfect market for buying or selling a business and 50 is a neutral response.

The 2017 Seller Index was down from 59 in 2016 to a score of 58 – meaning sellers are still confident that the market is in their favor, but that the positive vibes might not continue as many sellers are concerned that we are reaching a peak. Anyone who owned a business before the 2008 financial crisis remembers the boom before the bust – and with business prices inching higher and higher it’s hard to know when the market will top out.

Buyer confidence is down as well, from 49 to 46, but this drop is likely linked to rising business prices. Buyers have been lucky in recent years, with the 2008 recession driving business prices to bargain basement levels. In 2013 the small business market began to show signs of life, and prices steadily grew as the economy improved. Growing small business revenues have meant higher sales prices for buyers, leading to a drop in confidence that there are good deals for low capital investment. The drop may also be linked to high listing prices, as many prospective business buyers feel that many businesses are overpriced.

Although some sellers are definitely trying to take advantage of a market in their favor, most businesses are listing high because they are reporting very strong numbers. Buyers looking for a steal probably aren’t going to find one, but those buyers with the financial means to grab a business today will be getting a healthy business instead of a project on the brink.

What’s in the tea leaves for 2019 and beyond? Who knows. This booming market can only last so long, and with the slight drop in confidence on both transaction sides it may be coming sooner rather than later. The best advice is to sell now if you’re thinking about selling, and buy now if you want a business in the black.

Do you have more questions about the current state and possible future of the small business market? Contact us today 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

Miserable At Work? Mid-Life Crisis? Buy A New Life By Buying A Business

Published January 14, 2019

We all get burned out. Burned out at work. Burned out in relationships. Burned out on life in general.

You feel like you need something new, something exciting to turn your life back towards happiness – but what new adventure can make this happen?

A hot new car? A brand new boat? Sure, these toys can be fun – but will they really bring you life-altering satisfaction? Probably not in the long run.

The happiest people are typically people who have followed their passions. They wake up every morning with the drive to do what they do because they love it – not because they have to. If you are truly dissatisfied with your career because deep down you always wanted to pursue another passion – maybe now is the time to make that change. Maybe making the jump to entrepreneurship is for you.

Entrepreneurs are a unique breed. They are willing to take risks. They have drive and passion. Best of all, they get to do what they love and don’t have to answer to anyone but themselves. Sounds good, doesn’t it?

The good news is you don’t have to make the jump to entrepreneurship by starting from scratch. Start-ups are notoriously tough, expensive and risky. You are developing an unproven product in an unproven location using unproven operating methods.

You can make your life easier by buying an existing business instead. With an existing business you remove the unproven part of the equation. You get to walk into a business with a proven product, location and operating procedures. You also get a previous owner who will train you before you take over the reins.

There are many, many businesses for sale from multiple industry sectors – so if you’ve ever considered following a passion in the small business world, there is likely a business out there that will fit well with your goals. Try a cursory search by clicking here, and then have a conversation with us about your goals for business ownership, the types of businesses you think you’d like and the capital you have to invest. You and your broker can then narrow the search to just those businesses that will be right for you.

We aren’t saying that an existing business is without risk or that an existing business won’t be a challenge. Owning a business, whether you started it or not, takes dedication. The hours might be long and the work might be hard – but all of your time and energy are spent working for yourself instead of for someone else.

Is small business ownership for you? It could be, and it could be the key to a happier life. The only way to find out is to start looking. Skip the new car and invest your money in a business that could bring you not only financial returns, but a better quality of life.

Would you like to know what types of businesses would fit with your goals? Do you want to know what your dream business would cost? Ask us! Please leave any questions or comments here and we would be happy to help.

Michael Monnot

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

Why A “Used” Franchise Is Better Than Brand New

Published January 7, 2019

In our society, the word “used” typically carries with it a less than ideal connotation – it means that someone else got the best and the “used” buyer is left with what’s left.

In the business world, however, “used” gets a boost because a “used” business is an existing business. Existing businesses are good.

If you are thinking about getting into the franchise ownership game, you will have to initially decide if you want to start a new franchise location or try to find an existing franchise location to purchase.

If this is your first business or your first franchise – then buying existing is probably the best option.

Why?

An existing location is proven.

A franchise location that already exists and is currently running is far less of a gamble than putting a brand new franchise in an unproven location. An existing location also has an existing staff and it’s own established daily operations. There won’t be as much guess work for you as the franchise owner because there will be a seller there to train you as to what works and what doesn’t at that particular location and with that particular staff. An existing location is turn-key instead of starting from scratch.

An existing location has records.

Another major benefit only an existing location will have? Records. Deciding how much a business is worth to you as a buyer is far easier if there are records of the cash flow and finances of an already existing location. Buying new means a great deal of guesswork as to the future projections on your investment.

An existing location already has customers.

You might be considering a franchise because it comes with the added benefit of an already loyal customer base. The brand will definitely get people in the door, but and already established location will come ready-made with regular clientele.

An existing location offers flexibility during negotiations.

When you start a new franchise location, there are often strict rules and fee structures you must abide by – and very little (if any) room for negotiation. When you buy an existing franchise, there will likely be fees associated with an ownership transfer, but the price you pay and the terms of your deal will be largely in the hands of you and the seller. This may allow you some wiggle room in terms of price and contract terms, but this will depend on the franchise itself.

If a franchise is the business path for you, don’t get hung up on the “used” nature of an existing location – for most buyers it can be a far better bet. Ask your business broker about what franchises are currently available on the market and about the terms required to take over an existing franchise location.

Do you have more questions about how the process to buy a franchise differs from buying an independent small business? Do you want to know what the purchase of a franchise might cost? 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

Borrowing From Family To Buy A Business? A Few Considerations

Published December 31, 2018

We’ve all had those pie-in-the-sky conversations at the dinner table over the holidays, when the discussion turns to entrepreneurial ambition and your uncle/grandmother/father says something along the lines of “Sure, I can help you buy a business!”

When considering borrowing money from family members (or from anyone with whom you have a personal relationship), there are a few things you should consider.

Buying a small business is a very expensive venture, where you will need working capital in addition to the amount you offer because of necessities like licensing fees, lease deposits, payroll and initial inventory – just to name a few. What your relative initially considered loaning you/investing in you will probably not be enough, so they will likely need to write a much bigger check then they had imagined.

They will also need to provide financial records to business brokers, sellers, landlords and property managers – even licensing agencies in some cases. This can be uncomfortably intrusive if the business in question isn’t even yours.

If these considerations have you possibly rethinking borrowing from family, just remember that you absolutely can borrow from family successfully – there just needs to be good communication between both parties and a contract of some kind to ensure everyone is happy in the end.

You can also ask your business broker about other financing options that may be available.

You and the business you are interested in may qualify for financing through the Small Business Administration (SBA), for example. Want to read more about this financing option? Click here to read Business Buyers: A Guide to Financing and the SBA (U.S. Small Business Administration).

In most cases seller financing may also be an option, allowing you to purchase a business with help – but without the personal strings attached. Want to read more about this financing option? Click here to read The Business Buyer’s Guide to Seller Financing.

Were you considering family financial help, but now think a SBA loan or seller financing might be a better way to go? Do you have questions about what a family loan contract might look like? Ask us! Please feel free to leave any questions or 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

Business Buyer Advice: Don’t Take Your Seller For Granted

Posted in Become a Business Owner, Buyers Articles, Uncategorized

Published December 24, 2018

You’ve just left the closing table, and now you are the proud owner of your very own small business. Is it time to celebrate? Sure, but you also need to hit the ground running.

Why? I’ve bought an existing business, how hard can it be to just take over the seller’s responsibilities?

Really, really hard – especially if you make the mistake of taking your seller for granted during the previously negotiated training period.

Most training periods are only two weeks long, and learning every last aspect of your new business in that short amount of time can only happen if you buckle down and take full advantage of the plethora of information a seller has to give you.

You need to learn how to do things as simple as unlocking all of the doors and disarming the alarms to as difficult as how to put together the weekly payroll. You need to learn what licenses you will need to renew and when, how to set up and pay for utilities, how to order new inventory, how to run the website and social media accounts, what customers are regulars and what they expect, who the staff are and what they bring to the table, where all of the supplies are kept… you get the idea. It’s a lot.

The list is seemingly endless, but it is absolutely manageable in the typical two week training period – you as a buyer just have to make the most of every second of that two weeks.

Why can’t I just have a much longer training period?

First and foremost because if you apply yourself, two weeks is plenty of time. Secondly, it isn’t fair to keep a seller tied to a business they no longer own for longer than 99% of new business owners are able to learn the reins.

What about the 1% who didn’t learn the reins in two weeks? What happened there?

To be completely honest, buyers who weren’t able to get it together in a typical two weeks just didn’t try. They let the seller continue to run the business for that first two weeks like the seller was going to be there forever. They didn’t bother showing up, didn’t bother putting together a list of questions and didn’t work side by side with the seller to see everything they do and why. When the two weeks were up they were handed the keys to a business they knew almost nothing about – then blamed everyone but themselves for the mess they were now in.

The lesson here is that no one knows your new business better than the person you just bought it from – so use your training period to absorb every last drop of information you can from them, before it’s too late.

Are you considering buying a business and think two weeks isn’t enough time for training? Would you like to know more about the business buying process? Please ask us! Leave any questions or concerns 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