As business brokers, we get these folks once in a while. They have been scouring the internet for years, looking for the perfect business opportunity and never taking the search past emailing the broker on the listing.

If you feel like you are a serious business buyer, but that description sounds like you – you may not be as serious as you think.

First and foremost, there is no such thing as the perfect business. It is often said that you only find what you are looking for, so if you look for reasons not to buy a business by demanding perfection, then you will never own a business. Instead, you need to adopt the mindset of a serious business buyer – that there is a great business out there if you are motivated to find it and realistic about what you are looking for.

How do you get serious about buying a business? If you are realistic and motivated, you can find any number of businesses that could work for you.

First, you need to know that a listing is just the tip of the iceberg, and as such you can’t really make major determinations about a business from this scant bit of information alone. Business listings are meant to help in the search process, so whenever you find a listing that interests you, call your business broker or (if you don’t have your own broker – which you will need, see “Business Broker 101: A Business Buyer’s Guide to Working With a Broker, Part 1: Why Do I Need a Business Broker?“) get in touch with the broker who has the listing. We don’t mean that you should just send an email, get someone on the phone and have a discussion about the business that is listed and see whether or not it may be a good fit for you.

At this point if you would like more information about the business you will have to sign a non-disclosure agreement. This agreement protects the seller of the business from those who would use the confidential material released to them in an improper way. If you are a prospective buyer, you need to be prepared to sign these types of agreements. These agreements are in no way binding you to the business, they are just a way for you to see more.

If you like what you see after this point, make an offer. By making an offer, you let the seller know that you are a serious buyer who is motivated to buy a business. Once you have an accepted offer, the transaction will then move to the due diligence process. Making an offer in no way forces you to buy the business, it just allows you to take a look at the financial records more closely. At the end of due diligence you will be able to make a decision of whether or not to go through with the purchase of the business.

The moral of the story is to change your approach if you are buyer who really wants to own a business but has never made it past a listing search. By having a realistic outlook and staying motivated throughout the process, you will be well on your way to business ownership.

Are you a business buyer who has spent countless hours searching the internet for a business, but haven’t found one you like? Do you have questions about how you could change your approach to have more success in the business market? Ask us! Leave us a comment or question here, and we will be happy to help you get started in business ownership.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

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This is one of the many reasons why a buyer really needs to have their own business broker.

Let’s say you buy a restaurant on your own, sign the closing agreement, and arrive at your new restaurant only to discover that there isn’t a single chair or table in the whole place. A call to the seller reveals that the purchase agreement didn’t include the furnishings, so the seller packed them up and took them. Now you are stuck trying to refurnish a restaurant that you had assumed came as-is.

How do you avoid this scenario? Use a business broker.

Purchase agreements can be very complex, and if everything you’re expecting to get in the sale isn’t in the agreement, you could end up chair-less. Have your business broker go over your purchase agreement with you and ask lots of questions. You can never be too thorough when it comes to a legal document like a purchase agreement.

What about my attorney? Can’t I just have him look over a purchase agreement for me?

The short answer to this is no.

Only an attorney experienced with business transactions can really be of any help with a purchase agreement. We have seen countless deals fall apart at the last minute when an attorney with an entirely different specialty (like family law or labor law) looks over an agreement and tells their client not to sign off.

Business dealings of any kind always come with at least a bit of risk. Remember that the attorney that helped you with a lawsuit, for example, gets paid to keep you protected from any and all risk. A business broker is there to see that the deal goes through and that all parties have agreed to what is on the table.

This fundamental difference in responsibilities is what prevents your attorney from being of any real help during this process. You should employ the services of a business transaction attorney and a business broker instead, as they are more familiar with the process.

Have your business transaction attorney and your business broker go over with you what parts of the business will transfer to you and what parts will stay with the seller. Typically inventory, equipment and furnishings come with the business, but not always. You should also be clear about what contracts, client lists, etc. you will be inheriting.

Are you a business buyer who has questions about what assets and inventory come with a business when you buy it? Do you need help finding an experienced business transaction attorney and/or business broker? Please leave us a comment or question here, and we will be happy to help.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

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When you are considering buying a business, many business buyers waste an inordinate amount of time beating around the bush. They spend countless hours searching business listings, calling multiple brokers, signing dozens and dozens of non-disclosure agreements only to never get to their ultimate goal of actually buying a business.

Business sellers and business brokers see these kinds of buyers all the time. While deep down this type of buyer might be serious about owning a business, they will not be taken seriously by those in the market or those in the industry because no one wants to waste valuable time on a buyer who is only “kicking tires”. As a buyer you have to show how serious you are about purchasing a business as soon as you have found the right business for you.

What if I am “kicking tires” because I’m not sure this is the business for me?

You will have to realize something about the business market right away – there is no perfect business. All businesses come with their fair share of issues, you will just have to decide what you will (and won’t) be able to deal with.

How do I find out if the business has issues I can deal with?

Make an offer. This is the best way to pull back the curtains and really decide if this is the business for you. In many cases, the seller will refuse to release any confidential financial information until an offer is made.

What happens after you’ve made an offer that is accepted by the seller is a period called due diligence. During due diligence, the business is temporarily pulled from the market to allow you as the buyer to have a good look at the financial records, the inventory, the equipment, etc.

If, during this due diligence period, you find out that the business has issues you can’t handle, has problems that you didn’t see from the outset, or you simply decide that the business is not for you – you can back out of the deal and move on.

As a buyer, you can’t be afraid to get the ball rolling. Make offers on businesses you are interested in. If a full-fledged offer makes you too nervous, you can even go in with a Letter of Intent (LOI). The point is the only way to be taken seriously by a seller is to put an offer in writing.

Are you a buyer in the market, but are having trouble getting sellers and brokers to take you seriously? Do you have questions about how to put in an offer on a business? Please leave us a comment or question here, and we will be happy to help.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

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It is absolutely shocking how many businesses end up on the market with a ridiculously high valuation and an outrageous asking price.

Why does this happen? When a seller is allowed to decide on an asking price, the value they place on their own business usually has little to do with what the business is actually worth to a buyer and more to do with how much money they feel they have invested, how much they think they’ll need for retirement, etc.

Many business brokers allow their clients to set the listing price simply because they want the listing, not because it is what is in the best interest of the seller. Some sellers and brokers alike also set an asking price high because they want to use it as the high end of a negotiation scheme. What this does in reality is drive away buyers and stick the business in listing purgatory.

As a buyer you are likely going to deal with listing prices that are way too high, but the solution is not to send in a low-ball offer and hope it sticks. That is the last thing you should do because it will almost always severely offend a seller to the point that they will refuse to work with you. On the other hand, you are not willing to overpay for a business, so what should you do?

The answer is initially ignore the asking price, as long as it is generally in the ballpark of what you are looking to spend. For instance, if you are only willing to invest $50,000 in the purchase of a business, you should probably not consider businesses listed for $300,000. If you initially ignore the listing price, you will give yourself a chance to determine what the business is worth to you.

How do you determine what you should offer? First and foremost, use your business broker for help. They know what comparable businesses have sold for, what the local competition means in terms of price and what the industry trends are. You will also need to look at the business and its numbers to see if fits with what you are looking for. Whatever you offer will need to be backed up with why you think that price is appropriate, so consider all aspects before deciding on an offer.

Also, the better the relationship you have with a seller, the better your transaction will be, so be sure to give a respectful offer with some real reasoning behind it. Trying to start negotiations by sending in a very low offer is as ridiculous as the seller setting an outrageously high price as a starting point for negotiations. The two sides will be too far apart for any meaningful negotiations to begin.

The moral of the story is that everything in a business transaction is negotiable, so just because a business is listed at a specific price it doesn’t mean that is what it will sell for.

Are you a buyer who can’t seem to find a business with a reasonable listing price? Do you have questions about how to determine what you should offer for a business? Please feel free to leave us a comment or question here, and we will be happy to help you.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

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Business deals fall apart everyday, and if you are really serious about buying a business, you will have to do your part to keep your deal in motion all the way to the closing table. How does a buyer keep the momentum going?

Here are a few ways:

First and foremost, go into the business buying process with the realistic attitude that a perfect business does not exist. All businesses are going to come with issues, you will just need to decide on a case by case basis what types and sizes of issues you are willing to overlook or deal with.

Another very common issue that arises with buyers? Don’t over-analyze the business. While it is incredibly important to use your due diligence phase to discover any problems with the business (before they become your problems after closing), there is a point where cautiousness turns to an unnecessary analysis of risk. All business dealings come with a certain amount of risk, there will never be a circumstance where you can avoid it all. Be cautious but not crazy.

Another way a buyer can do their part is not to ask for enormous lengths of time to look at the books. A few weeks should be sufficient. It is unreasonable to ask a seller to pull their business off the market for inordinate amounts of time, especially if you then decide not to buy.

Don’t forget about things like leases and licensing. These parts of the business transaction sometimes involve a lot of back and forth with red tape, so make sure you get started on them right away. You don’t want to be without the proper licenses the day you take over the business.

It is not always an issue with the buyer’s side of the deal that can hold up a sale, so don’t be afraid to push the deal forward if you feel that the other side is taking too long to get you information you need. Due diligence is your chance to run through the financials, but you will need to be aware that the seller is trying to run a business while all of this is going on, so keep your time demands realistic.

The buyer side of the deal can slow a sale down just as easily as the seller side can. If you are serious about buying a business, do your part to get to the closing table and you will have a much better chance for a successful transaction.

Are you a buyer who has been a part of deals that have fallen apart? Do you have questions about the best way to get to the closing table? Please feel free to leave us a comment or question here, and we will be happy to help you with the business buying process.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

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When you think about famous entrepreneurs, it often conjures thoughts of a person who came up with an inspired idea and built a successful and thriving business from the ground up. While this may be the path for a few very driven individuals, the path for most entrepreneurs begins quite differently, with the purchase of an existing business.

I have a lot of questions, who should I ask?

The smartest step any budding entrepreneur can make, or anyone looking to buy a business for that matter, is to hire an experienced business broker. A broker will be a great asset, as they can help you find businesses that are right for you, be a buffer during the negotiations between you and the seller, and they will be invaluable with assisting you with everything from licenses to leases.

Should you start your own business or buy an already existing business?

Typically, buying a business is a safer bet than building one from scratch. You get to take over as owner of an already built-out location with trained employees and a proven set of operating procedures. This can be a fantastic entre into business ownership because it skips all the disadvantages a start-up will encounter, like establishing a customer base and building cash flow.

It is not, however, a fool-proof way to enter the world of business ownership. You need to choose a business that is profitable, or one that has easily-remedied issues that will make it profitable quickly. You also need to choose a business that has room for growth.

What kind of business is right for me?

When you have made the decision to buy a business instead of starting one from scratch your next step is choosing the type of business you will buy. Be very careful with this step because it is where many new entrepreneurs make a huge mistake.

Don’t buy a business you know nothing about. This problem arises most frequently in the restaurant industry where folks who have always wanted to buy a restaurant, but have never worked in one, get in over their head in a new business they know absolutely nothing about.

Look in industries where you have some knowledge or experience, as this familiarity will help you a great deal while you are trying to get your bearings as a new business owner. Taking over a business for the first time is hard enough; you don’t want to add starting from scratch to the equation.

Do you have a business type in mind, and are looking for help with finding the right business for you? Please feel free to leave us a comment or question here, and we will be happy to help you on your journey to business ownership.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

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