Buyers Articles Archives - Page 39 of 40 - Infinity Business Brokers

Buying a Business? Five Questions to Ask.

Posted in Buyers Articles

Published August 2, 2012

Quite a few business experts are projecting an enormous wave of businesses will come on the market in the next twenty years as the baby-boom generation begins to retire. We recommend you ask five crucial questions when acquiring a new business.

Five Questions for Buyers:

1. Who really runs the business and does it function well if the owner takes a week or two off for vacation?

2. What do the numbers tell you? – Will this particular business give you a good return on your investment and time?

3. How does the company draw in sales opportunities? – Which marketing and advertising channel gives you the most/best leads?

4. Will the organization make it through the transition from old owner to new and will important personnel stay after the change?

5. Will the seller keep a stake in the game? – Are they prepared to stand behind the business’s initial year post-sale performance?

Michael Monnot

7 Points to Consider When Acquiring a Business or Franchise

Posted in Buyers Articles

Published July 24, 2012

Do you want to realize your hopes for the future by acquiring a company or franchise? Will this be a good match for the life style that you ultimately want? Getting an existing company or franchise is advantageous due to the fact each provide an established client base and continuing operations or an operations design. Financing from standard sources can also be easier. Here are some points to consider when looking for the right business or franchise opportunity.

1. Are you currently acquainted with the merchandise or services provided by the company?
What kind of business do you think would work best for you? Does it match your qualifications and practical experience? Having some understanding of the potential company will lessen the level of time you devote familiarizing yourself with the product, service, market and industry.

2. Does your family understand the commitment you’ll need to give a business?
Running your business will need a lot of your time and effort. You will find some responsibilities that you simply can’t delegate to your staff. Share your plans with your loved ones, so they fully grasp your responsibilities for the business.

3. Have you researched the industry and evaluated the competition?
Does the public prefer the product or services provided by this business more than the competition? Make certain there is continuous interest in the service or products. Does the business have a fantastic reputation? Find out what brings potential clients or consumers to the competitors. What are its weak points? How are you able to do better? Ahead of purchasing a franchise or company for sale, be sure to evaluate one against the other. Select that business that suits you better for location, the working hours, the work-family balance, etc.

4. Do you have adequate cash?
Franchises call for franchise costs and start-up fees. You will also be required to cover the advertising, insurance coverage, taxes and royalty fees even if your profits are low. Make sure not to forget the wages of personnel, lease payments, stocking inventory, along with other business expenses. Do you have enough income to buy the organization and run it? It may perhaps take some time before you make back your investment. Have reserve capital for any unforeseen expenditures.

5. Why is the seller trying to sell?
Figure out why the seller is looking to sell the business. Are there many liabilities associated with the business? Could it be losing its important shoppers? Is the seller going through lawsuits? Is a sizable competitor opening nearby? Are there demographic changes near the location that will have an effect on customer traffic within the coming several weeks or year? Will there be alterations in the tax code that adversely affect the organization?

6. Get in touch with franchisees or small business owners with equivalent companies.
Owners and franchisees could offer you a great deal of data that may benefit you. What is the franchisor’s reputation or background? Does the franchisor have a great track record for offering assistance to its franchisees? Does the franchisor supply its franchisees punctually? It truly is to your benefit to understand everything associated with the business. Learn the potential troubles, if any, before signing the purchase agreement.

7. Get assistance and advice from professional experts.
Specialists with knowledge in the buying and selling of businesses – business brokers, lawyers, financial advisors and franchise consultants – can be sure you pay the correct amount for the company. These professionals can ensure the business is free from liens and legal entanglements. They might explain the provisions, clauses and conditions of your purchase contract or franchise contract. They will see to it that you are acquiring a financially healthy enterprise. They can project the potential profits for the business. Franchise consultants or business brokers can explain the several franchise opportunities depending on your interest, investment stage and expert background.

Comply with the above guidelines and you will be on the right road to owning your business. Remember to check out and evaluate the enterprise for sale. Have confidence that your diligence will ensure the appropriate selection.

Michael Monnot

Is Having a Business a Part of Your Future?

Posted in Buyers Articles

Published July 24, 2012

At one particular point in time or another, nearly all employees hope for owning their own company. Maybe you are exhausted by all of your hard efforts winding up serving somebody else in reaching his or her business goals, or you may worry about losing your livelihood within a weakened economic climate. Whatever your motivation, the desire to own a business is powerful in a lot of us. Nevertheless the financial risk associated with turning that goal into reality has, all too often, served to derail even the best set plans.

Every possible small business owner is forced to wrestle with many diverse kinds of questions. Concerns about revenue surely lead the pack, but figuring out what kind of small business ideally suits you is much more crucial. The ideal place to start is by looking at the factors that have lead you to want to own a business. Here are some positive aspects to think about:

1. Benefit from all those years of work expertise, this time for your own personal benefit, not in the interests of other people.
2. A flexible schedule makes it possible for you to dedicate much more time to your friends and family.
3. Benefit from greater wealth and influence your own future.
4. Self-employed people today generally express greater happiness and fulfillment with life.

Compose a list of your talents, and do a lot of web-based background work to find out what kind of business enterprise is best enhanced by all those capabilities. If you happen to get pleasure from dealing directly with the general public, a retail or service sort of business could be a fantastic option. For those who have experience in bookkeeping, automotive service, publishing, or even selling exercise equipment, your ideal bet will be to find a small business within an industry you already know – and one where possible clients already know you. Your three primary selections consist of buying an existing business enterprise, building one from the ground up, or choosing a franchise. Every selection has its ups and downs – its positives and negatives – and its tradeoffs relating to cost and also the immediacy of financial success versus long-term income. Decide wisely, as the purchase of a small business is really a process you should only want to have happen once.

Practically no-one nowadays has a lot of cash lying around; consequently you might need to secure some kind of funding so that you can purchase a small business. Start by speaking to a person who works in your bank. The SBA (Small Business Administration) ensures certain loans for people who can’t qualify for typical loans from banks. If you’re considering the purchase of a current business, the seller may perhaps be prepared to finance some or all of the acquisition. Friends and relatives can also be a very good source for investment, depending upon just how nicely you get along. There’s always the alternative to take on a partner – either another person who is going to actively work beside you to grow the business, or else a “silent” partner who can invest personal cash in return for a portion of earnings in the future.

Owning a small business doesn’t have to be a dream, however the more you plan at the outset the better off you will be over the subsequent years. To begin with, fully grasp your capabilities. Next, do your background work and decide which sector suits you ideally, and then what sort of enterprise inside that sector. Third, find out how much you’ll need to have your small business up and operating. Fourth, obtain the funds you will need and ensure the small business revenue you realistically expect to create will cover all your expenses. Fifth, postpone your goal no more – get out there and develop into a business owner!

If you had launched your very own business enterprise five years back – or even two years ago – where might you be these days?

Michael Monnot

How to Properly Evaluate a Business For Sale

Posted in Buyers Articles

Published July 24, 2012

You would like to go into business for yourself by purchasing an already established business. Soon after weighing the pros and cons of the numerous businesses for sale out there, you’ve narrowed it down to just one. It truly is time to make an offer. How do you do a business evaluation? Just how much is the company for sale worth?
While in the process of buying a business, you calculate the economic worth for the business. Review the rewards you can get from it, particularly its future earnings prospective. Will the business give you a good return on your investment? Just how much are you able to count on producing will depend on its previous performance.
A business evaluation can highlight the strengths and weaknesses of a company for sale, and also you will need to have it any time you apply for any loan to purchase the business.

What you should think about when valuing a business:
1. Through a period of financial development, the value of a business goes up. In comparison, the value drops through occasions of recession. Collect business reports, reviews and information about the sector you are buying into. How will the efficiency of the business in current years in compare? Research related companies for sale and those which have lately sold.
2. Study the overall financial performance of the business by way of its balance sheets, earnings statements, expenses, loans, depreciation and amortization for the past three to five years. You’ll be able to predict the future of a business from the overall previous financial performance. Find out if there is a past pattern of growth. Is there a part of the year when the business generates far more sales? Does it have a wide client base or does the business rely on only a handful of consumers? Are the records complete and organized? If they are not, perhaps you should reconsider purchasing it.
3. Determine the price of replacing the assets of the same or comparable condition, or replacing those assets with new. Assets must produce revenue. If a business has a lot of assets but doesn’t make substantially money, negotiate to get a lower asset value.
4. Consider the intangible assets; for example, brand worth, consumer base, and goodwill. How might you decide the value of patents, licenses and contracts held by the business?
5. In terms of finances, what are the future requirements for the company? How much are the operating expenses? What about repaying debts?
6. Are you getting a “service” business? If the business is a private practice, one-man small business or consultancy enterprise, is the seller “the business”? In some situations, clients turn out to be repeat clients because of the personalized service offered by a particular person inside the company. If you lose this person, you could potentially lose clients too.
7. Work together with your business broker to ascertain the worth of the business plus the acceptable ROI. The annual earnings forecast and rate of return would have an impact on the amount that you are prepared to pay. Opt for business evaluation experts who specialize in the distinct market you will be preparing to buy into.
8. All business evaluations are subjective. See if you can determine how the seller decided on their asking price.
9. Include in your evaluation the how long the business has been around, the amount of personnel it has, the equipment used in business operations, supplies, stock and its present situation.
Your evaluation should evaluate what you would get out of the company. The aspects you think about in valuing a company vary based on the type of business. All businesses are different, as such, make sure you do not end up overpaying.
Keep in mind that the value as determined by the seller may not end up as the actual purchase price. The seller’s value can be very different from the buyer’s. For instance, how does one estimate the value of the businesses’ intangible assets?

Michael Monnot

Insurance for Your Business

Posted in Buyers Articles, Sellers Articles

Published March 11, 2012

Business insurance: broken down into a list of four types of insurance policies and briefly explained.

Property Insurance: Property insurance insures against loss or damage to the location of the business and its contents. It can also insure the property of others in your control when the loss occurs. Property insurance can be for a specific risk. For example, a fire insurance policy insures only against a fire loss to the location. A windstorm claim can be part for the property policy. A flood claim is a separate policy. The insured location can be owned, leased or rented. Premium rated per $100 of value. $300,000 build rate $.50 premium $1500.00

Liability Insurance: Liability insurance insures against liability legally imposed upon your business because of the negligence of the business or its employees. Put another way, it protects your business when the business is sued for negligence. Most landlords will want to be named as an Additional Insured on your liability. Premium rated per $1000 of exposure, this could be on payroll for construction or sales for non-construction. Restaurant with $650,000 in sales rated at $5.25/1000 premium $3412.50 per yr.

Workers Compensation: You will need to insure your employees against on-the-job injuries. In Florida you are required to carry Workers Compensation if you have 4 or more employees in a non-construction business. Any construction based business is required to carry Workers Compensation if there is one or more employees. Officers can be exempt from workers compensation but notification to be exempt must be completed. Rates are based on $100 gross payroll for full or part time employees. Restaurant class code 9082 rate $2.47 per $100 of
payroll. Annual payroll $150,000 premium $3705.00. One of the best programs for Workers Compensation is called pay as you go. Steve Chesnut has a Florida program for payroll and workers compensation where there is no money down and the payroll services is $1.50 per check. Call or email Steve for more info.

Commercial Auto: Your personal automobile policy does NOT cover vehicles used by your business. If your business uses vehicles or anything that is required to be titled by your state, then you need a commercial auto policy. Commercial auto coverage insures against property damage to vehicles and damage caused to others by those vehicles. Rated on year, make, model, and value of each vehicle. MVR of each drive will effect rate.

Steve Chesnut
239-841-7526
swc@comcast.net

Michael Monnot

Types Of Business Ownership – Florida

Published March 11, 2012

One of the most important decisions when forming your business is the corporate structure.

Here’s a look at some of your options in the state of Florida:

Sole Proprietorship

If the business is privately owned, in the USA it is a Sole Proprietorship. In the majority of cases this is a single person, who owns and leads the business. Simultaneously the Sole Proprietorship is the most common corporation structure. This type has some downsides. The owner is absolutely liable with his assets. He or she is liable for taxation and it is not easy to receive money for this type of business. He or she also has to apply for a business license.

General Partnership

The partners lead this business together and all of the partners are absolutely liable for accounts payable. The General Partnership has more administration effort and is more cost-intensive. Also for this type of business you have to apply for a business license.

Limited Partnership

The Limited Partnership consists at least of 2 people, a General and a Limited Partner. The Limited Partner has supervision, available and limited. He can’t be part of the management and acts as an investor. The Limited Partner leads and is liable for the business. A shareholder contract has to be prepared for the forming of the business. Furthermore you have to request a Certificate of Limited Partnership with the Secretary of State.

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 business assets. For the forming of the business the filing documents have to be registered with the Secretary of State. At least two shareholders are required for a Limited Liability Company. Our accountant can inform you about tax benefits for other types of companies.

Corporation

The most used type of business for forming a company in the USA is the corporation. By presenting the Articles of Corporation to the Secretary of State, you can carry out the forming of the corporation quickly. Forming the company in Florida, the registered office is also in Florida. The corporate structures are governed by the laws of the State of Florida. The Florida Corporation can carry out business in every state of the USA. 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 mail/documents.

Before you make a decision it is important to contact a tax consultant. We can connect you to our partners to make it easy for you to make the right decision.

This article doesn’t present any legal advice, but solely serves as general information.

Are you thinking about buying a business but have questions about the formation of your business entity? Would you like to know more about the pros and cons of the choices above? Ask us! Leave any questions or comments here and we would be happy to help.

Michael Monnot

10 Commandments For Buyers

Published March 6, 2012

Buying a business? Consider these commandments:

I. Thou Shall Not Be Greedy!

Sellers deserve a fair price for the years they have spent developing the business. Be prepared to pay for the goodwill of the business.

II. Thou Shall Have A Good Reason For Buying!

Buying a business is hard work! It takes commitment! Spend time deciding why you want the responsibility of owning a business.

III. Thou Shall Provide Background Information!

Be prepared with a resume and financial statement. Remember, the seller will most likely be your banker and will want to know that you can run the business successfully.

IV. Thou Shall Keep An Open Mind!

There are no perfect businesses.

V. Thou Shall Keep In Mind Tax Benefits!

Remember tax benefits are realized from intangible as well as tangible assets

VI. Thou Shall Offer A Reasonable Down Payment!

A low down payment indicates a lack of commitment. When sellers question commitment, serious negotiations are in jeopardy.

VII. Thou Shall Realize Businesses Are Priced on Profits!

A business making huge profits with few assets could save you money later in capital outlay for expansion.

VIII. Thou Shall Remember Time Is Of The Essence!

After all parties have agreed upon price and terms it is important to quickly proceed toward closing.

IX. Thou Shall Be Prepared To Meet The Landlord!

Landlords usually have little to gain by cooperation. Therefore, come to meetings armed with resume and financial statement.

X. Thou Shall Avoid Surprises!

Disclose pertinent information early and avoid surprises that might destroy your credibility.

Are you thinking about buying a business and are curious about some of the commandments listed above? Would you like to know what types of businesses you could afford with the capital you have available? Please leave questions or comments here and we will be happy to help.

Michael Monnot

Buying A Business – What You Should Know: What Happens When I Find A Business?

Published March 5, 2012

What Happens Once I Find A Business I Want To Buy?

When you become interested in buying a specific business, we will help in the preparation of an offer or proposal. This offer or proposal may have one or more contingencies. Usually, they concern financing and a detailed review of the seller’s financial records. They may also include a review of the seller’s lease arrangements, franchise agreement (if there is one), and other pertinent details of the business. Your proposal will be presented to the seller for their consideration. They may accept the terms of the offer or they may make a counter-proposal. You should understand, however, that if the seller does not accept your proposal, you may withdraw it at any time. We will submit all written offers to sellers for consideration. Verbal offers will not be presented.

When you and the seller are in agreement, we will work with both of you to satisfy and remove the contingencies in the offer. If you require financing, we can assist you with applications for traditional financing as well as helping to negotiate terms and conditions of seller financing when available. It is important you are prepared to work quickly and efficiently in this process. Infinity Business Brokers highly recommends you bring in outside advisers to help you review the information. When all the conditions have been met, final papers will be drawn and signed. Once the closing has been completed, you will take possession of the business.

As your business broker professional, we will work with you throughout the entire search and sales process.

Do you have more questions about the steps after an initial offer is accepted? Would you like to know how an offer is put together? Ask us! Please leave questions or comments and we would be happy to help.

Michael Monnot

Buying A Business – What You Should Know: What Paperwork Is Required To Buy A Business?

Published March 5, 2012

What Paperwork Is Required To Buy A Business?

To buy a business you will likely need to complete several documents. These documents include a buyer profile, a non-disclosure agreement, proof of financial viability and a summary of experience. Providing a buyer profile, proof of financial viability and a summary of experience to the broker prior to the start of a search can expedite the process and save you a lot of time. The broker has spent considerable time learning about the business for sale and documenting the key facts, it is only fair to the seller they document the key facts regarding prospective buyers.

A buyer profile is a one-page summary listing your name, contact information, industry and location preferences, owner benefit required, cash available for down payment, timing, key decision-makers, and other critical information about you, the buyer. A broker may ask you to complete the buyer profile, or they may complete it for you over the phone or in a face-to-face meeting.

A non-disclosure agreement (NDA) protects the seller and broker for a specified period of time. These protections include:

1. Assures you work through the broker and not directly with the seller. Respect the fact the seller hired the broker to communicate with, and qualify, all prospective buyers.

2. Informs the buyer all documents containing non-public information are considered confidential and the buyer is responsible for maintaining this confidentiality.

3. Advises the buyer to seek the advice of their own attorney and/or CPA when purchasing a business as the broker is communicating information on behalf of the seller and cannot guarantee the accuracy of this information.

4. Informs the buyer should they consummate a deal with the seller and/or landlord without the broker’s involvement within a two years of signing the NDA, they will be liable for damages including commissions due the broker.

5. Warrants the buyer is acting on their own behalf and not as an agent of a third-party, government agency or competitor.

A signed NDA allows you to receive a business summary, also refered to as a BLI, or Business Listing Information sheet. A signed NDA does not permit you to receive the name and/or address of the business.

Proof of financial viability is a critical step. Experience has shown less than 25% of all buyers have the necessary liquidity and/or available funding to purchase the business they are inquiring about. Sellers have little patience sharing time and confidential information with buyers who do not have the financial means to purchase and operate their business. Most sellers require their broker to have prospective buyers verify financial viability. This can be accomplished by one of three methods:

1. Complete and sign a personal financial statement.

2. Producing a letter from a CPA or other fiduciary stating you have a specified amount of liquid capital and/or access to a specified amount of funding or they have looked at the terms and conditions of the sale and assure you are qualified.

3. Statements from a bank, retirement or other savings account.

A summary of experience can be provided to a broker in written format, e.g., a resume, work history or other similar document, or verbally during a phone call or face-to-face meeting. Most sellers want to be reassured by the broker the buyer has the experience and skills to successfully operate the business. The more you share about your skills and experience, the better the broker can represent your interests to the seller.

Only after the broker has accumulated the necessary paperwork from the buyer and believes they are qualified to purchase and operate the business, will the broker and seller feel comfortable in releasing the name and address of the business.

Are you looking at businesses to buy and have more questions about the process and what will be required from you? Would you like to know more about the NDA? Feel free to leave us any comments or questions here.

Michael Monnot