Less than stellar economic news doesn’t mean that all businesses are in trouble.  As a future entrepreneur, you can stay ahead of the game by choosing a business that is essentially recession-proof, one that offers goods or services that people need regardless of the economic climate.

A few options?

1. The food service industry: Obviously a high-end restaurant is going to face tough times during an economic downturn, but a low-price restaurant can become a viable option for families who would still like to eat out but no longer have the discretionary income to spend a lot when they do.
2. The food retail industry: When looking to save money, many families will scale back on eating out and instead make the majority of their meals at home.  Therefore, retail groceries will tend to do better when families have less money to splurge on meals outside the home.
3. The maintenance sector:  In better times, you might just replace a household item that is worse for wear.  In a recession, there is a greater demand to fix what’s broken rather than to buy something new.  The same goes for structural aspects to homes, like roof repairs, where deciding to wait to solve a problem will cost the homeowner in the long run.
4. Legal service or debt collection industry: While a slightly darker business option, when times are bad for consumers, these two fields tend to be very lucrative.  The work needs to be done, and a new entrepreneur can step in to get what needs to be done, done.
5. The healthcare industry: People always need healthcare, and this wide and varied field can include walk-in clinics, eldercare, and selling medical supplies.

Choosing a business based on what people need instead of just what they want can be a very smart move during bad economic times.  Think about what goods and services are in demand regardless of the current housing or employment market, and you can have success as an entrepreneur in this uncertain economy.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

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How do you minimize your risk when purchasing a business?  You make an educated decision to purchase the future of a business by taking a good look at its past.  Follow this checklist to reduce your uncertainty and find the right business for you.

• Find a business that is in line with your practical knowledge and experience.  Is this a type of business you can be passionate about?
• Is the prospective business currently profitable?  Is there potential for growth?  How does this business stack up against the competition?
• What is the purchase price for the business?  Are you able to buy this business on your own, or will you have to acquire some kind of financing?  What financing options do you have at your disposal?
• Are you able to do a thorough investigation of the business? Have you looked into any and all potential issues like transfers of leases and existing contracts?
• Have you decided on a structure for your new business?  Are you going to go into business by yourself, or bring in partners?
• How much time are you willing and able to dedicate to running your new business?  Have you considered how this new responsibility will affect your family?

Go into any new business venture with a solid business plan, and be sure to follow that plan in order to achieve your goals.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

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The NDA (Non-Disclosure Agreement) is a legal document that is considered a standard in the business transaction world.  Its main function is to insure the confidentiality of a seller’s business information if a deal with a potential buyer falls through.  This contract gives both sides of a business transaction the freedom to be honest and therefore is essential for full disclosure of the business information during the process of a sale.

Within the NDA there are important rules for a potential buyer to follow.  Buyers may not discuss the business sale with anyone who is not a party to the NDA. They may not talk to employees or customers, nor can they “steal” staff or clients from the business. They cannot use the information they discover about the business for a commercial advantage.  This allows for the protection of the confidentiality of the business transaction until it is complete.

For a seller, the benefits of a NDA are twofold.  First, a NDA separates financially capable buyers from all potential buyers.  This keeps a seller from wasting their time with unqualified buyers.  Second, it protects the seller’s business, especially in the event that a potential sale falls through after the disclosure of sensitive business information to a prospective buyer.  This keeps the proprietary information of the business out of the hands of competitors, and also entitles the seller to claims and damages if the business is adversely affected by a breach of confidentiality.

As a buyer, the NDA also has benefits.  Within the shield of confidentiality that this agreement allows, a potential buyer will be able to really asses the business based on financial records, contracts, and business plans.  Without this accessibility, a buyer might purchase a business that seems fine by all outward appearances, but in reality has major issues that can only be discovered by a good look at the books.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

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The economic downturn adversely affected many in the workforce.  For those who lost their jobs, the loss of employment meant having to make new choices.  Do they try to find a job working for someone else, or do they take any money they had saved and start down the road to entrepreneurship?  If those seeking to restart their careers choose to become an entrepreneur, their entry into business ownership could come in a couple of forms.  One can start a business from scratch, buy an existing business, or buy a franchise.  What is the difference between becoming an entrepreneur and becoming a franchisee?  Are they one and the same?

An entrepreneur is someone who has assumed a financial risk in order to start a new business or in order to improve upon an existing business concept.  To truly embrace the entrepreneurial spirit one needs to think creatively, have a desire to innovate, and have the personal drive to build your business into a success.

A franchisee is also someone who has assumed a financial risk; however, this comes from buying into a franchise. When you enter into a franchise, you do so by entering into a license agreement with the franchisor.  This allows the franchisee to market the products and services of the parent company within the area of the certain location.  The franchisor, for their part, has grown a brand and a working business concept that they are then selling to franchisees.  The franchisee uses the name, trademarks, and logos of the parent company while following the guidelines established by the franchisor.  The franchisee maintains access to these rights by paying an ongoing royalty fee.

So how are these two types of business ownership the same?

• Whether you buy into a franchise or not, the research required before a purchase will be nearly the same.  You will be looking at financial records, deciding on locations, deciding on an industry, and looking into marketing.
• Any business owner needs to think like an entrepreneur.  Your creativity, innovative spirit, and drive are what will see you though.
• You will need to know your territory inside and out.  The only difference for a franchisee comes from sharing this responsibility with the franchisor.
• If you buy an existing business, a franchise, or start a new business from the ground up-in all ways you are acting on a business opportunity.
• When entering into any new business opportunity you will be taking on a financial risk.
• In any business you will be the manager, the supervisor of staff, and the one responsible for maintaining financial records.
• A franchisee might use a system of operation designed by the parent company, but all business owners are still ultimately responsible for the day to day operation of their business.
• As a business owner or franchisee, you are the one who retains financing, pays leases, orders inventory, and maintains relationships with vendors and suppliers.

Just like any entrepreneur, a franchisee functions as the owner of the business.  If you do choose to become a franchisee, realize that this doesn’t exclude you from the ranks of other entrepreneurs.  Your role as an owner in any business situation will be the same.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

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What are the advantages of becoming a franchisee?

• Your services and products will already be known to your potential customers because you are becoming a part of an already established brand.
• Your systems and methods of operation have already been proven by the success of the franchisor and previous franchisees.
• You will not only get training for yourself and your staff from the franchisor, you will also receive ongoing support from the parent company.
• You will have an exclusive territory of operation guaranteed by the franchisor.
• You have the advantage of buying into an already successful system.  There will be less risk of failure in the first six months of operation, like there might be in a start-up business, because the business and its products have already been proven.

What are some possible disadvantages to becoming a franchisee?

•  You will have to pay royalty fees for the duration of your franchise agreement.
• You will be asked to comply with the system that was created by the parent company.  While this is typically not a problem, it does mean a bit less freedom in terms of system design.
• You will not be able to have the creative license to generate your own logos and trademarks, as they already exist.

Entering into entrepreneurship by becoming a franchisee can be a great option for those who desire to be their own boss.  If this is an option for you, be sure to cover all of the bases with your research into the potential franchise.  Use your previous experience and practical knowledge when you decide what type of franchise would be right for you.  Always consider the advantages and disadvantages prior to making any business purchase decisions.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

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First, you need to remember one crucial fact.  Profits and sales are not the same thing.  A franchise with a higher ROI (Return On Investment) percentage might be better in the long haul than a franchise that initially costs you more but brings in a bit more net sales.  This second scenario, while having more sales, does not necessarily lead to a higher ROI.

Another way to use the numbers is to look at the rankings over the course of multiple years.  A franchise that is continually at the top of the charts year after year might be a better bet than one that consistently ranks lower.  When you look at the standings over multiple years, remember that a new upstart might knock a long-running franchise down the list a few pegs.  This may not be a sign of any trouble.  However, a franchise that is consistently sliding down the rankings may not be for you.

Lastly, use the expertise of your business broker when trying to decipher the profitability of any one franchise.  They are there to guide you during the process, and they have the knowledge to see through the numbers to the true value and profitability of the business.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

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If you decide to look into major industry journals during your research into which franchise will be right for you, there are two that publish their own rankings of the franchises at the top.  Entrepreneur and Inc. have a reputation for extensive details on the companies they analyze, as well as a reputation for honest analysis.  The critical points to remember when using publications to determine which franchise to purchase is twofold.

First, the best choice for you should really be based on your practical experience.  You should always try to enter into an industry you already know.

Second, just because a franchise is ranked the highest in a magazine, it may not necessarily be the most profitable for your situation.

Also, you should consider the criteria used for the rankings.  Entrepreneur uses overall corporate stability, startup costs, number of current franchises, rate of growth, financial strength, and number of years in business.  They rate 500 franchises each year using these criteria.

These rankings are divided in a few ways that can be beneficial for pre-purchase research.  There is a master list of rankings, comparing all franchise industries, and a listing of franchises within their respective categories.  These rankings may help you decide which industry to get into as well as which franchise within that industry would be the most profitable for you.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

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In any business transaction, it is a wise move to use the services of a business broker.  This can be even more important if you are considering purchasing a franchise.  A business broker will have access to the critical information you need when deciding on a business purchase, and will be able to get you financial information you would not be able to obtain otherwise.  If you try to call franchise owners and ask them what they make every year, you will likely end up listening to a dial tone on the other end.  Business owners are not going to breach their own confidentiality over your curiosity.  Instead, a business broker ensures the confidentiality of all parties, allowing for the disclosure of the important facts and figures without any breach of trust.  Business brokers also have experience and contacts within the field, so they will know what franchises are doing well in their area.  Use this expertise to guide you down a path to franchise ownership that will be both beneficial and profitable for you.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

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If you would like own your own business, it can be less difficult to purchase an existing business rather than starting your own business completely from scratch. An existing business will let you forego the startup stage completely, which is where 50% of all new businesses fall short. Should you purchase a business you’ll be able to concentrate your time and energy on helping to make the business bigger and much more successful.

Acquiring a business doesn’t necessarily need to be difficult. You would like to protect yourself from paying too much for the business or purchasing a business with a lot of underlying issues. The best method to steer clear of this is to abide by these three steps in purchasing your own business.

1.  Make sure you have arranged a down payment and/or financing from lenders.
2. Use the due diligence phase to determine if the business is right for you and how much you are willing to pay.
3. Make your offer, remembering that neither party is going to get everything they want.  Having realistic expectations is the key to getting into the business you have selected.

Owning your own business is without a doubt something which quite a few individuals dream of achieving. Purchasing an existing business can be one option to make this dream come true.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

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