The first question to ask is “Are you really ready to purchase a business?” The answer will depend on one main aspect- finances. Do you have the money you will need for at least a down payment already in place? If you are looking to expedite the business purchase process, it is typical that the larger the down payment you have, the faster you will be able to make a business acquisition. Fifty percent of the purchase price is ideal, although business transactions do close with smaller down payments. The reason for a large down payment is to give confidence to the seller. If you are not offering a full price payment, the seller will likely be giving you some kind of seller financing package. A seller wants to know that you will be able to make loan payments, and a reasonable down payment is the first step to creating this trust.

Once you have your down payment in place it generally takes about six months to acquire a profitable and solid business. Remember that six months is an average, and the timing will greatly depend on what specifics and locations you are looking for. You will need to give these desired details to your business broker in order to expedite the process as well.

A key to success in business ownership is practical experience. A common misconception is anyone can run any type of business, as long as they own it. Nothing could be farther from the truth. You must have relevant experience if you want to be able to compete in the market you are entering. Talk to your business broker about the areas where you have expertise so they can match you with an appropriate business.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

If you are a first-time entrepreneur, the lure of business ownership may have you thinking about starting your own business from scratch. Although it is possible to start a new business and succeed on your very first try, only 1 in 5 new businesses will make it past their five year anniversary.

Why is this the case? There are a number of reasons. The initial cost involved in a start-up is usually much more than anticipated, and this often leaves an owner cash-poor before the doors even open. Another common problem is overexpansion long before the business is ready, which can put a great deal of financial strain on the business. The most likely cause of start-up failure is the inexperience of the owner. If you have never run a business before, trying to put in place a location, equipment and furnishings, operating procedures, and an inventory can be really tough.

If you are intimidated by the chance of failure right out of the gate, there is another option for your road to entrepreneurship. You can buy an existing business. As a first-time business owner, this option means that your business comes ready-made. Businesses often come with an inventory, have a fully equipped and furnished location, and operating procedures that are successful. In many cases the current owner will agree to stay on for a time after the business is sold in order to give you training.

It is important to remember that any business venture comes with a certain amount of risk. As a prospective business start-up or potential business buyer, you will need to decide which road (and risks) you are willing to take on.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

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

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

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

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