The best way to set yourself up for success as a new entrepreneur is to get yourself into a business that you already know. You have a great deal of workplace knowledge and practical experience in the fields where you have already worked, and it will be important to tap into those personal resources of knowledge when you set out on your own.

If owning and operating a bar has long been a dream of yours, but you’ve never even worked in one, then it’s probably a bad idea to buy into this industry. You want to start your business on day one with at least a general idea of what to expect. Entering a completely new field often ends with disastrous results.

While staying within a field you know is the probably the most important consideration, there are some other aspects of business ownership that you should consider before deciding on a business to buy.

You need to have realistic expectations about business ownership. Make sure that you understand the time constraints and level of responsibility that will be necessary for any type of business that you are considering.

Also, pick an industry that plays to what you love. Someone who loves golf but is not a big fan of kids should go into a golf retail business instead of a children’s’ sporting goods store. The most successful entrepreneurs love what they do, so take some time early on in your decision deciding what will make you happy for the long run.

Set yourself up for success on your entrepreneurial journey by going with your strengths, keeping realistic expectations, and deciding on a business that you will love.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

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The less-than-serious buyer is an issue that plagues every sales market. They are known as tire-kickers, but more realistically they are time-wasters. If you are someone who is very serious about buying a business, it will be important for you to distinguish yourself from this group. By showing your sincerity, you will get the attention you deserve from business brokers and sellers in the marketplace. Here are some pointers that show you mean business:

–          You are ready, willing, and able to sign the necessary non-disclosure or confidentiality agreements.

–          You have realistic goals and expectations like knowing there is no such thing as the perfect business and that any business venture comes with a certain amount of risk.

–          You have already done your homework. You know what type of business you would like to buy and you have a general idea of what’s available on the market based on internet research.

–          You have your financial ducks in a row. You have a down payment ready, have equity in assets you are ready to borrow against, or have secured financing from an outside source. You need to be prepared to disclose your financial means to your business broker so that they can find you a business that you can afford. There are options like seller financing that you may be able to consider, especially if you have a down payment ready.

–          You are ready to submit an offer or letter of intent along with a deposit to show a seller that you are serious.

Sellers and business brokers will know if you are a serious buyer or someone who is just shopping around (and wasting their time). If you wish to be taken seriously, follow these pointers and you will be one step closer to business ownership.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

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Due diligence is an all too important part of buying a business. This phase of the business transaction allows the buyer access to all the records and contracts of the business, and is the time for the buyer to determine whether or not to proceed with the business purchase and how much they are ultimately ready to pay.

Some things you will want to consider during due diligence:

-Why is the seller selling the business? You don’t want to inherit a business that someone else is trying to run away from.

-Evaluate the last three years of financial records.

-Look into unresolved legal actions

-Examine relationships with clients and vendors

-Understand any intellectual property rights like copyrights and patents

During due diligence, be sure that you are speaking only with your business broker and the seller, as it is incredibly important to maintain the confidentiality of the sale. Once you have been over the necessary information and records, you can go ahead and make your decision on the purchase of the business. Due diligence is your best opportunity to examine the business, so be sure to use the time wisely.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

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If you are a budding entrepreneur who is looking to purchase an existing business, you will likely need to consider seller financing. The days of full third-party financing are long gone, as traditional financial institutions are much more careful and selective when financing small business deals. Any financing intuition will go over the business details thoroughly, as they need to be wary of mismanagement and fraud. It is highly unlikely that as a new business buyer you will get 100% financing, so it is best to have some kind of down payment together and look for business sellers willing to finance part of the purchase price.

On the seller’s side, visions of a full-price, all-cash buyer need to be brought back to reality. This type of deal rarely happens. It is much more common to find buyers with a down payment ready, and the desire to pay back the rest of the purchase price to the seller over time. As a business seller, you need to be flexible and patient when it comes to the terms of your deal.

In the interest of both sides in a business transaction, seller financing is an option that should be considered. It can overcome the financial difficulties that would otherwise stop a deal from happening. Ask your business broker about the seller financing option.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

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As a business buyer, the number that will be at the center of your attention throughout the business transaction is the purchase price. Just 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 evaluating the value of the business.  You have already evaluated the inventory, the equipment, and furnishings. You will now take these evaluations and combine them with the financial records to get the final evaluation of the business.

Part 3: Financial Records and Contracts

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. Both will be familiar with determining what the records really show in terms of how the business has been doing.

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.

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 (see Part 1: The Inventory) and other hard assets (see Part 2: Equipment and Furnishings), along with the financial records of the business before you head to the negotiation table.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

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As a business buyer, the number that will be at the center of your attention throughout the business transaction is the purchase price. Just 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 evaluating the value of the business.  You have already evaluated the inventory; now let’s take a look another hard asset, the equipment and furnishings.

Part 2: 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, and office equipment is 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 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.

Please see Part 1: The Inventory and Part 3: Financial Records and Contracts for a continuation of Evaluating the Value of a Business Before You Buy

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

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As a business buyer, the number that will be at the center of your attention throughout the business transaction is the purchase price. Just 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 evaluating the value of the business. The first part of your evaluation may be the inventory.

Part 1: The 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, or a trusted and qualified representative, 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 target market, or in poor condition, these are points to be brought up during negotiations

Please see Part 2: Equipment and Furnishings and Part 3: Financial Records and Contracts for a continuation of Evaluating the Value of a Business Before You Buy

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

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You are well on your way to becoming a business owner. You have found a business that suits you, and are on the verge of taking over. Did you remember everything? Is all the paperwork that is needed complete? If you are working with a business broker, they will assist you with any and all licensing, permitting, zoning, and EPA concerns that are required. If you are completing the business transaction on your own, you will need to address these items before the close of the sale.

1. Licensing and Permits. Almost all businesses will need specific licenses and permits in order to operate legally. The number and types of licenses and permits depends on the industry and location of the business. Use a business broker or your local government agency to determine what federal, state, and local licenses and permits your business will need.
2. Zoning. Depending on what type of business you are planning to operate, you may encounter zoning requirements that pertain to your location. To be sure that you are abiding by the zoning laws for your business location, you will need to visit your local zoning office.
3. The EPA. Does your business have property that you will be acquiring? If so, you will need to check the area’s environmental regulations. This can be done by contacting the EPA for information.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

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Getting in touch with a business broker is often a good way to find businesses for sale, but because most business brokers work on commission, some prospective buyers shy away from hiring a broker.  They decide to go it alone, but for a first time buyer, this can be a big mistake.  The assistance you get from a business broker can be invaluable, especially if you have never been through the process before. Here are a few ways that a business broker can help you when buying your first business:

Your broker can help you find the right business for YOU.

Your broker should start by finding out what experience you have, what your goals are, and then use that information to help you decide on not only the right industry but the right business for you.  By going through this part of the process with a broker, you may discover that a business you never would have considered is actually perfect for achieving your goals.

A business broker does the negotiating for you.

Negotiations are a key part of the business buying process, and you will need and want the experience of your broker in this stage to ensure that you are getting what you need out of the deal. Brokers are also important during negotiations because they can act as a buffer between the buyer and seller, ensuring that the deal does not fall apart over minor disagreements.

Brokers know all about the paperwork.

As a first time buyer, it is unlikely that you know all of the current laws and regulations regarding the business you are about to buy.  It is also unlikely that you know how and where to get all of the necessary permits, licenses, forms, and financing you’ll need to take over the business after closing.  Your business broker is there to help you streamline your way through the red tape and ensure that you don’t miss a crucial step along the way.

For these reasons and more, as a first time business buyer it is critical that you use the services of a business broker.  It will save you time, energy, and money in the long run to have an expert with you every step of the way to business ownership.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

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When reading the statistics concerning the lifespan of start-up businesses, a prospective entrepreneur may begin to feel discouraged.  There is a general understanding that only about 20% of brand new businesses will make it to a six year anniversary.

Most new businesses fail in their first few years for a variety of reasons.  Many new business owners invest too much initially in the start-up of the business, not leaving enough funds for the time before they begin to turn a profit. Some new owners try to expand their businesses long before they should, leaving a huge financial stress on the business.

Whatever the reasons for failure, the number of brand-new businesses that just don’t make it may intimidate a prospective entrepreneur.  There is an option, however. A prospective entrepreneur can buy an established business.

For a first-time business owner, an established business can be very attractive.  An established business has already been through the unstable early years and has proven itself in the local market.  It can be part of the purchase negotiations that the former owner stay on for training purposes until the new owner is ready to run the business on their own. The business will typically come with an inventory, and the location will already be equipped with the necessary furnishings and equipment. Many existing businesses come with a rental agreement with the property owner already in place.

The purchase of an existing business gives the new entrepreneur the chance to go into business for themselves without having to start from scratch.  This is not to say that purchasing an existing business is without risk.  Any business venture comes with some degree of risk, and it is the job of a prospective buyer to weigh those risks against the benefits of business ownership.  If this is your first step on the road to becoming your own boss, then perhaps the option of purchasing an established business will be the right choice for you.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

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