I’m a 1st Time Business Buyer; What Kind of Business is Right for Me?



What kinds of things should you consider when deciding on the type of business you should buy?

First and foremost, you should really consider a field where you have some practical experience.  Jumping headfirst into business ownership and a new field is a recipe for disaster. Use the abilities you have developed throughout your employment history to bring success to your own business venture.

Also, be completely honest with yourself.  If you have never worked in a restaurant or bar, it is not a good idea to buy one. If you’re not a big fan of kids, don’t go into childcare. If you’re someone who hates sitting at a desk and staring at a computer all day, it is probably unwise to purchase an IT business. If you are prone to outdoor allergies, don’t buy a landscaping business.

Match your dreams, aspirations and knowledge to the business you will eventually buy.  By having the ability to bring what you already know into your new business venture, you will be setting yourself up for success as a new entrepreneur.

Michael Monnot

941.518.7138
Mike@infinitybusinessbrokers.com
1910 Park Meadows Drive, Suite 202
Fort Myers, FL 33907

http://www.infinitybusinessbrokers.com


I Can Sell My Own Business, Right? Not Really- Why You Need a Business Broker



You have put your blood, sweat and tears into your business to make it what it is today. When you sell your business, you want to get as much as possible for all of your hard work, and a business broker has the ability to do that for you.

Business owners are smart people, and they are great at what they do, but does that mean that they are qualified to sell their own business? Probably not.

A business owner has knowledge and expertise in their own industry, and the success of their business depends on their ability to focus on keeping the business going. A business broker has knowledge and expertise in the world of buying and selling businesses, and as a business owner you will need and appreciate this expertise in the selling process.

A business broker has the time to focus on selling your business, and had the know-how to keep the whole thing confidential.  This confidentiality is crucial if you don’t want to risk losing clients, vendors, and employees if the word gets out you’ve put the business up for sale.

Brokers also have the ability to reach far more potential buyers than you could on your own.  They belong to networks and have access to databases where they can market your business confidentially. Business brokers also know buyers who are on the lookout for specific kinds of businesses, so as soon as yours goes on the market, they will likely have people who may be interested.

A business broker has a great deal of business marketing experience, and knows how to put together a marketing package that will bring the right kinds of buyers to you.  They are then able to act as an intermediary between you and any potential buyers.

Most importantly a broker removes the pressure of the sale from you so you can focus on doing what you need to do in order to keep the business profitable.  You will get a far better price if the business is doing well than you would for one that is neglected.

 

Michael Monnot

941.518.7138
Mike@infinitybusinessbrokers.com
1910 Park Meadows Drive, Suite 202
Fort Myers, FL 33907

http://www.infinitybusinessbrokers.com


1st Time Buyers: The Leap to Entrepreneur



Going from employee to the owner of a small business will take a huge level of personal commitment and a good deal of effort, time and money.  This is not a decision or change that you should take lightly or a process you should do in haste.  There are elements you should consider and questions that you will need to ask while being mindful of potential pitfalls along the way.  Some of the questions you should begin to consider are as follows:

 

  • What kind of business would I ultimately like to have?

 

  • How am I going to pay for my new business venture?  Cash? Financing? A little of both?

 

  • Am I looking to be a franchisee?  Or do I want to buy an existing small business?

 

  • Have I really done my homework? Have I thought of and found an answer to all of my questions?

 

Your ultimate success, both financial and personal, will depend on your preparations at the beginning of your entrepreneurial journey.

 

Michael Monnot

941.518.7138
Mike@infinitybusinessbrokers.com
1910 Park Meadows Drive, Suite 202
Fort Myers, FL 33907

http://www.infinitybusinessbrokers.com

 


Franchise Sign Shop



Listing No: BBF-95312042

 

Category :  Signs SIC :  3993
Detail :  Sign Companies Price :  149,000
County :  Lee Down :  149,000
State/Prov :  Florida Adj Net :  43,381
Country :  USA Sales :  332,640

Make an offer. Health forces a quick sale. Top web rankings will put you in front of everyone looking to have a sign made whether it is a basic sign, vinyl lettering, box letters, printing or their high margin digital signs. This shop also does a significant amount of vehicle wraps. Seller manages business only so limited knowledge needed to purchase. Work is either subbed or done by staff & all quotes done by software. Plenty work in progress & a large database of 10 years worth of repeat clientele

Reason for Sale :  Contact Listing Agent
General Location :  Southwest Florida
Organization Type :  Limited Corporation     Hours Owner Works: 25
: Years Established: 10  Years Owned:  1  Emp FT:  3  Emp PT:  0  Mgrs:  0
Non Compete :  Miles:  10  Years:  3  Weeks Training:  2  Cost:  0
Operating dys/hrs :  Mon – Fri 8:30-5:30
Skills/Licenses :  None – Seller will Train
Business is :  Relocatable: N    Home Based: N    Franchise: Y    Lender P/Q: N



Data Source Annualized P/L Statement
Year (Cash Flow) 2012 (N) 2012 (N) (N)
Gross Revenue 332,640 221,760 0
Cost of Goods 64,278 42,852 0
Gross Profit 268,362 178,908 0
Expenses 259,747 173,165 0
Net 8,615 5,743 0
Owner Salary 34,500 23,000 0
Benefits 262 174 0
Interest Expense 4 2 0
Depreciation 0 0 0
Other 0 0 0
Owner Benefit 43,381 28,919 0

Accounts Rec 0 N* Real Estate 0 N*
Inventory 15,000 Y* ___________ 0 N*
F F & E 50,000 Y* Total Assets 75,000 Y*
Leasehold 10,000 Y* *Included?

Lease/Month: 1750 Square Footage: 3000 Building Type: Free Standing
Terms & Options: Expiration Date: 8/31/2013

 

Michael Monnot

941.518.7138
Mike@infinitybusinessbrokers.com
1910 Park Meadows Drive, Suite 202
Fort Myers, FL 33907

http://www.infinitybusinessbrokers.com


Deli and Market Business for Sale



 

Listing No: BBF-95312043

 

Category :  Restaurants SIC :  5812
Detail :  Deli Restaurant Price :  90,000
County :  Lee Down :  90,000
State/Prov :  Florida Adj Net :  44,729
Country :  USA Sales :  281,725

Serving breakfast, lunch & dinner & has convenience market items, catering, lottery & to-go items. Serves basic breakfast fare, salads, sandwiches, burgers & has a 2COP. Sellers are absentee & COG’s & payroll have gotten out of control. The gross is there just needs a working owner & this could be turned around immediately. Gross numbers are from tax returns. Numbers have increased from 2011-2012

Reason for Sale :  Contact Listing Agent
General Location :  Southwest Florida
Organization Type :  Limited Corporation     Hours Owner Works: 0
: Years Established: 4  Years Owned:  2  Emp FT:  6  Emp PT:  1  Mgrs:  0
Non Compete :  Miles:  10  Years:  10  Weeks Training:  1  Cost:  0
Operating dys/hrs :  Mon-Sat 8am-8pm Sun 9am-6pm
Skills/Licenses :  Restaurant Experience Helpful
Business is :  Relocatable: N    Home Based: N    Franchise: N    Lender P/Q: N



Data Source Proforma
Year (Cash Flow) 2011 (N) (N) (N)
Gross Revenue 281,725 0 0
Cost of Goods 84,517 0 0
Gross Profit 197,208 0 0
Expenses 182,453 0 0
Net 14,755 0 0
Owner Salary 0 0 0
Benefits 183 0 0
Interest Expense 0 0 0
Depreciation 29,791 0 0
Other 0 0 0
Owner Benefit 44,729 0 0

Accounts Rec 0 N* Real Estate 0 N*
Inventory 2,000 Y* ___________ 0 N*
F F & E 30,000 Y* Total Assets 42,000 Y*
Leasehold 10,000 Y* *Included?

Lease/Month: 3700 Square Footage: 1300 Building Type: Plaza
Terms & Options: Rent Includes Everything Expiration Date: 8/31/2014

 

Michael Monnot

941.518.7138
Mike@infinitybusinessbrokers.com
1910 Park Meadows Drive, Suite 202
Fort Myers, FL 33907

http://www.infinitybusinessbrokers.com

 


Buying a Business: Why You Should Make an Offer



Instead of starting a new business, you have come to the decision to buy one that is already established.  Your research has shown that this sector of the market has the potential for growth, and the business belongs to an industry in which you already have practical experience and familiarity. After searching for businesses and discussing the options available for sale with your business broker, you have settled on one choice that really interests you.  You would like to make an offer, but you are still not completely sure if this is the perfect business for you. You already have the basic financials from your business broker, but you would really like a more in-depth look at the books.  What should you do?

 

You would need to ask a seller to show you all of their proprietary financial information, but they are not going to release this information to just anyone.  Put yourself in the seller’s shoes.  Someone who is inquiring about you business may not be a true potential buyer.  They may not be financially qualified to pay for your business.  They may just be people who like to look at businesses for sale, but never “pull the trigger”.  They might be someone your competitors have sent to find out how you are doing.  These risks are too great for a seller to be careless with their books.  How does a seller determine who is serious about buying their business?

 

The answer to both the buyer and seller questions is simple.  The potential buyer should make an offer.  By submitting an offer to the seller, you are letting them know you are serious about purchasing their business and they will then be willing to open the records and books for you. In a sense, by making an offer, you set the wheels of the deal in motion.

 

There are two types of offers that you can make, and you should consult with your business broker to determine which would work better in your unique situation.  One is a Letter Of Intent (LOI) and the other is a Purchase Contract (sometimes just called an Offer).  With both, you will be able to back out of the deal during the following Due Diligence phase if you find that the numbers from the business are not adding up, if your business loan falls through, or if you come across another reason you wouldn’t want to go through with the deal.

 

If you don’t discover anything during Due Diligence that causes you to back out, the next step will be to purchase the business.  If you make an offer today, you will be on the road to business ownership in the near future.

 

Michael Monnot

941.518.7138
Mike@infinitybusinessbrokers.com
1910 Park Meadows Drive, Suite 202
Fort Myers, FL 33907

http://www.infinitybusinessbrokers.com

 


Buying a Business: The Offer or Purchase Contract



A purchase contract (or “offer to purchase” as it is sometimes called) is a detailed document that a buyer submits to a seller in order to purchase the seller’s business.  In this document the conditions, warranties, non-compete conditions, financing, terms, inventory, training and other transition details, and other aspects of the purchase are laid out.

Your business broker will help you draft this document, and may even have a standardized version you may use to craft your own.

This contract will allow you to have access to the records and finances of the business you would like to buy during a due diligence phase that follows the initial offer.  After due diligence, you will have the chance to amend your offer or back out of the deal if you choose.

Again, your business broker will be an invaluable asset during this process, as they will be able to help you decide how you should proceed.

Michael Monnot

941.518.7138
Mike@infinitybusinessbrokers.com
1910 Park Meadows Drive, Suite 202
Fort Myers, FL 33907

http://www.infinitybusinessbrokers.com


Buying a Business: What is a Letter Of Intent (LOI)?



To put it simply, a Letter Of Intent (LOI) is a letter that a buyer sends to a seller to let the seller know that they are a serious buyer who is looking to make a serious offer on the business.

LOI’s are typically used for larger business transactions, though that is not always the case.  Consult with your business broker to determine if the LOI is the right way for you to proceed in a potential business deal.

In the LOI will be an initial summary of the terms; like timing of the steps taken in the future, price and other terms. This document is non-binding, but is considered a serious commitment by you to the business transaction, and lets a seller know that you have the initiative to see the deal go through.

This will allow you to get into the due diligence phase, where you will have access to the financials and other records of the business.  After this phase you will be permitted to either back out of the deal or make an offer to purchase, depending on what you find out during due diligence.

Michael Monnot

941.518.7138
Mike@infinitybusinessbrokers.com
1910 Park Meadows Drive, Suite 202
Fort Myers, FL 33907

http://www.infinitybusinessbrokers.com

 


An Inventory Evaluation Checklist



The following are a list of suggestions on how to value a business’s inventory:

–          You and the seller will first need to agree on which method to use for the evaluation of the inventory. There are typically two types of evaluation methods.  The first is to use the vendor’s invoice or some other documentation to determine the original purchase price.  A warning when using this method, the original price may not reflect the current value of the inventory. To avoid this pitfall, use the second method where the current value is used.

–          When should you do the evaluation and final inventory count? This step should be completed at the close of the business sale, as the inventory will likely fluctuate during the process of getting to the sale closing.

–          When negotiations begin between a prospective buyer and the seller, there should be an estimated inventory value that will just need to be adjusted at closing.  This is a crucial aspect of the purchase process if you wish to avoid major disagreements, and as a buyer you want to be sure you will have the necessary inventory to take over operations of the business.

–          What counts as inventory? Ask your business broker for specifics, but typically something counts as inventory if it can be used or sold as a material or product for a customer. This does not include furnishings or equipment.

–          A word to the wise, do not trust inventory software programs, get in there and do an actual physical count. This will lessen the risk of discrepancies within the actual inventory.

–          While completing the inventory, you can simultaneously do a condition and quality check of the inventory. This can be useful for determining which items you will be able to sell and which, if they are no longer in demand or not compatible with your business plan, you may be able to negotiate for a lower value.

–          If no issues have developed between the buyer and seller, then it may be a good idea to do all (or at least part) of the inventory together as it offers a unique opportunity to “pick the brain” of the owner for additional inside information about the business.

–          Another option is to bring in an outside service to conduct the inventory for you. This is a good idea if you and the seller are not getting along well, as it limits the amount of time you have to spend together. This is also a great option if you do not have the time to conduct the inventory yourself.

The evaluation of the inventory is a very important part of the business buying process. The only way to make sure you get fair value for the inventory is by conducting the inventory yourself, or at least by having a qualified and trustworthy person do it for you.

Michael Monnot

941.518.7138
Mike@infinitybusinessbrokers.com
1910 Park Meadows Drive, Suite 202
Fort Myers, FL 33907

http://www.infinitybusinessbrokers.com


Buying a Business: Inventory Evaluation



The purchase of a business is always complex, and one area that can cause issues for a potential buyer and the business seller is the evaluation of the business.  This critical part of the business transaction can mean the difference between paying too much or buying a business that is in trouble without realizing it.

For instance, a good deal of the evaluation of the business might be held in inventory.  In some sectors, the value placed on the inventory is above the purchase price of the business.

As a potential business buyer, you should understand what is included in the inventory and also what method you will use to do a evaluation.  Do the inventory evaluation at the close of the sale, and this value should remain very close to the estimated inventory you and the buyer agreed upon at the start.

Also, be sure to do a physical count instead of depending solely on the value reported by the inventory software the business currently uses.

Michael Monnot

941.518.7138
Mike@infinitybusinessbrokers.com
1910 Park Meadows Drive, Suite 202
Fort Myers, FL 33907

http://www.infinitybusinessbrokers.com



Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

12995 South Cleveland Avenue, Suite 249
Fort Myers, FL 33907

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

12995 South Cleveland Avenue, Suite 249
Fort Myers, FL 33907




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