Clean the Skeletons from the Closet Before You Sell Your Business: Are You Ready?



When a business owner decides that the time has come to consider selling, there are many aspects of the business that will need a closer look- hopefully before the business is listed on the market. An important area to consider during this process is the books.

If you are looking to sell your business, think for a moment about what needs to happen with your finances when a buyer makes an offer. When someone makes an offer on your business, due diligence begins, and during this period a prospective buyer gets a chance to go through all of your financial records. Are your books ready for this process?

If the answer to that is no (if your financial records consist of a QuickBooks account that you’ve never given much thought to, or if they’re nothing more than a bunch of boxes in the back stuffed with paper and receipts) then now is the time to act.

The best way to get your finances in good order is to hire professional help. Ask your business broker to recommend a CPA who has experience and knowledge with preparing a business for sale. The right CPA will be able to assist you with clearing out any “skeletons” and making your records easier to interpret by buyers.

Just like you would clean a house before you let prospective home buyers in, you need to clean up your books, find any issues that arise from a good look through them, and then address and correct these issues. If you deal with any financial issues in advance, then those problems won’t become negotiating points for the other side as you near the closing table.

Your records are the main way you prove that the price you are asking for is a fair one, so having them in a user-friendly form will greatly help during negotiations. Using a qualified CPA will insure that the books are easy to read and your numbers are easy to prove.

Planning ahead also means you can address problems and fix issues without the pressure of a buyer peering over your shoulder. By solving these issues in advance you will be able to present your business in the best light, instead of playing catch-up after the first impression has already been made.

Are you a business owner who has been thinking about selling, but your books are not in the best shape? Please feel free to leave us a comment or question here, and we will be happy to help you get your finances in ready-to-sell order.

 

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 Future Entrepreneurs Need to Know



When the title entrepreneur comes to mind, it often conjures thoughts of a person who came up with an inspired idea and built a successful and thriving business from the ground up. While this may be the path for a few very driven individuals, the path for most entrepreneurs begins quite differently, with the purchase of an existing business. This can be a fantastic entre into business ownership because it skips all the disadvantages a start-up will encounter, like establishing a customer base and building cash flow.

Skip the Build-Out and Buy Existing

Typically, buying a business is a safer bet than building one from scratch. You get to take over as owner of an already built-out location with trained employees and a proven set of operating procedures.

It is not, however, a fool-proof way to enter the world of business ownership. You need to choose a business that is profitable, or one that has easily-remedied issues that will make it profitable quickly (like customer service issues that could be handled by replacing some of the staff). You need to choose a business that has room for growth, and if it is a retail business, one with inventory that customers still want.

Were You Meant For Each Other?

When you have made the decision to buy a business your next step is choosing the type of business you will buy. Be very careful with this step because it is where many new entrepreneurs make a huge mistake.

The mistake is buying a business you know absolutely nothing about. If you are someone who has enjoyed the bar-scene for a long time, but you have never spent so much as a minute working in the restaurant industry, then buying a bar should be out of the question.

Look in industries where you have some knowledge or experience, as this familiarity will save you from complete disaster. Taking over a business for the first time is hard enough; you don’t want to add starting from scratch to the equation.

Who Will Save Me?

The smartest step any budding entrepreneur can make, or anyone looking to buy a business for that matter, is to hire an experienced business broker. A broker will be a great asset, as they can help you find businesses that are right for you, be a buffer during the negotiations between you and the seller, and they will be invaluable with assisting you with everything from licenses to red tape.

Once you have a broker and an idea of what type of business you are looking for, you will be well on your way to finding a great existing business!

Do you have a business type in mind, and are looking for help with finding the right business for you? Please feel free to leave us a comment or question here, and we will be happy to help you on your journey to business ownership.

 

Michael Monnot

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

http://www.infinitybusinessbrokers.com

 


Seller Financing and the Sale of Your Business: A Crucial Consideration



Even in a great economy, banks have never been big fans of lending money to individuals for the purchase of a small business, so what makes the business world work is seller financing.

Many business sellers shy away from financing a part of their business sale, instead hoping for the elusive all-cash buyer, but this can be a big mistake.

Why?

It can be incredibly hard to get third-party financing for buying a business, and all-cash buyers are extremely few and far between. If a business seller refuses to offer seller financing, they are slamming the door on a large number of potential business buyers. The key to success in the sale of your business is to offer to finance part of the transaction.

Two-Fold Benefits

Seller financing can be a great selling tool because it opens your business to many more potential buyers than you would have attracted otherwise. Listing your business as one that will offer seller financing will generate more activity and will put your business ahead of others who are not offering financing. Using this approach will open your business to a much bigger pool of buyers.

The other way that seller financing benefits your business listing is that it is an attractive deal term for buyers.  By offering financing, you are expressing your belief in your business and its success over the long term, something that buyers will like to see. It is a key component of closing a deal.

What would seller financing look like for me?

The terms you will offer will depend on considerations of rate, length of term, and the amount you are willing to finance. Terms typically range from one to five years, but it varies greatly. You and your business broker will consider what percentage of the total price you are comfortable with, and what realistic terms would be.

What if I really don’t want to offer financing?

Ultimately, this will be a big mistake. You will drive away buyers, and your business will not generate the activity it could on the market. Instead, try to be open-minded, and perhaps list your business as one where seller financing may be negotiable.

The success of any business sale depends on attracting the right buyer, so do your business and yourself a favor and be ready to offer seller financing.

Do you have questions or concerns about seller financing? Please feel free to leave a comment or question here, and we will get you the answers you need.

 

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? A Few Things to Consider



If you have decided that you don’t want to start a business from scratch, and that buying an existing business is for you, there are a few things to consider that may or may not occur to the first time business buyer:

 

Location-specific problems

Many small businesses end up on the market because of personal reasons related to the owner, like retirement or a family illness. If businesses you are considering are on the market for another reason make sure the reason is not an emerging threat in the area. A large competitor moving in or a change in traffic patterns that will be very disruptive to business are reasons to perhaps forgo this business and find another one.

 

Reputation

This issue is simple to address in the age of internet reviews and social media. Make sure you do your homework on any business you are considering. If you do find out the business has a bad reputation, it may not necessarily be a bad thing. For instance, a restaurant with a reputation for bad service can easily be rebranded and outfitted with a new and more customer-friendly staff. If you discover a bad reputation, try to determine if it is something that can be amended with rebranding or changes you are able to make.

 

Liabilities

As a new owner, you don’t want to be surprised your first week with unknown liabilities. When you buy a business, you inherit more than just the equipment and inventory. Any liabilities left by the old owner will now be your problem. Any debts, unpaid taxes, and impending lawsuits will end up on your plate if you don’t find out about them beforehand. This can easily be avoided if you are thorough during the due diligence phase. Ask your business broker for help with discovering any and all liabilities during due diligence.

 

The message here is simple. When entering into business ownership, you will need to make sure you have all of your bases covered. Use the due diligence phase and the expertise of your business broker to be completely and totally thorough in your examination of any business- long before you are handed the keys.

 

Are you looking for a business to buy, but have concerns with the businesses you have found so far? Please feel free to leave us a comment or question here, and we will be happy to help you on your journey to business ownership.

 

Michael Monnot

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

http://www.infinitybusinessbrokers.com

 


Making the Kids Work For Free: Why the Family Business Looking to Sell Needs to Think Ahead



Small businesses have always been a place where families get to work together. Many small businesses use family members as staff, and this mixing of family and business life can bring many benefits.

 

You know the people working for you better than a regular employee. You can trust employees who are related to you, and in most cases you will get a great deal of loyalty from family members within the business. It is also a fairly common practice to pay family-employees less than fair market wage, or even nothing at all.

 

What a business owner ends up with is loyal and trustworthy family-employees at a bargain, how could this possibly be a bad thing?

 

It’s a bad thing when it comes time to sell the business.

 

Why?

 

There are two main reasons, reasons a business owner needs to consider long before they want to put the business up for sale.

 

The first of these is value of the business. A client with a small restaurant had several children who worked as wait staff, and they were not paid hourly as the rest of the staff- they only took home what they earned in tips. The amount of work that these essentially unpaid workers did was very significant, as they helped in all aspects of running the restaurant. When buyers were evaluating the business, they had to add back in the fair wages these children never took, dropping the value of the restaurant substantially.

 

Another problem with the family-employee is loyalty at the time of the sale. If your kids are working for you because they feel like they have to instead of because they have a genuine interest in the business, there might not be much chance of them staying with the business once you’re gone. This can pose problems for a new owner, especially if those children are key employees within the business.

 

How can you avoid these pitfalls?

 

The most important thing you can do to protect the value of your family-run business is to be sure that all employees are paid at least fair market wage. Most business owners end up having to sell long before they thought they would be ready, so by having everyone “on the books” in this way, you are protecting the value of your business.

 

You can deal with issues of loyalty by having non-family employees who are trained to fill the positions of family members, even if they never do. By cross-training your staff in this way, you can ensure that a new owner will be left with a competent staff even if your family members decide to leave the business.

 

Do you own a family-run business and are concerned about the value of your business or employee retention after a sale? Leave us a comment or question here, and we will be happy to assist you with getting the most out of your business.

 

Michael Monnot

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

http://www.infinitybusinessbrokers.com

 


Buying a Franchise? Why You Need Your Own Business Broker



Are you interested in buying a franchise? Do you already have a franchise in mind that you would like to be a part of?

 

If you answered yes to either of these questions, you might think that your first step is to get a hold of the person in charge of new franchises or franchise sales. This should NOT be your first step. Your first step is to find a business broker familiar with franchise sales and hire them to help you.

 

Why? Don’t the franchises themselves have people who can help me?

 

They do, and they don’t. Some franchises do have a business intermediary or business broker of sorts, but what you need to question is where the loyalties of a broker employed by the franchise will be. They most certainly will not be with you.

 

Something else you should know. The commission paid to a business broker at the close of a business sale is paid by the seller of the business. Franchise companies without an in-house broker will essentially use the broker who is the lowest bidder. Is that the kind of person you want as your broker? Buying a business is a major personal investment; you will definitely want quality instead of someone else’s bargain.

 

When you are buying a franchise, you want someone on your side who can help you through the ins and out of the process. Using an affiliate of the franchise might not be the best fit for you, so do a bit of homework beforehand and get yourself a broker who is qualified, experienced and above all there to assist you with looking out for your best interests.

 

Are you interested in buying a franchise, but you have questions about how to begin? Please feel free to leave us a comment or question here, and we will be happy to assist you on the road to franchise ownership.

 

Michael Monnot

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

http://www.infinitybusinessbrokers.com

 


Beware the Part-Time Business Broker: Why Only a Full-Time Intermediary is Right for Your Business



It happens all the time.

 

We meet CPA’s, real estate agents, attorneys, and even doctors who, when they find out that we are business brokers, say “I do a little bit of business brokering on the side”.

 

As former business owners ourselves, this is a horrifying thought.

 

If you were in the middle of an IRS audit, you wouldn’t go to a dermatologist who dabbles in accounting; you would go to a qualified CPA. The same goes for your business.

 

You don’t want someone who is unable to dedicate their attention to your business transaction because their expertise and focus is in a completely different profession. You want an experienced and qualified business intermediary who does this and only this for a living.

 

Why? Can’t my real estate agent help me sell my business? The short answer is no. Selling a home is almost nothing like selling a business. If your real estate agent is a true professional, they will realize selling your business is beyond the scope of what they do and refer your business transaction to a business broker instead.

 

There a few things that a business broker brings to the table those other professionals can’t:

 

Confidentiality

When you sell your business, confidentiality is if the utmost importance. Without it, your business is sure to suffer. You don’t want your competition, your staff, or even your vendors to know that the business is on the market. When you sell, you have to get potential buyers into the business while maintaining the strictest confidentiality possible. An experienced business broker will know how to do this, will have the appropriate non-disclosure agreements ready to be signed, and will be able to market your business while keeping those who need to be in the dark in the dark at all times.

 

Marketing Power

A business broker has access to networks of buyers, networks of other brokers and their buyers, and access to business databases that other professionals will not. Business brokers put together marketing packages for businesses every day, and they have the experience and knowledge that allows them to put your business in the best light for prospective buyers.

 

Industry Know-How

A successful business broker is successful because they are great at what they do. They know the ins and outs of the buying and selling of businesses. They know how to properly price and market businesses. They know how to get you through the due diligence phase successfully. They know how to navigate all of the red tape a seller will need to go through. They have this knowledge because they are experts at buying and selling businesses.

 

When you are considering selling your business, be sure that the professional you hire to help you knows what they are doing. Make sure that they are truly a business intermediary or a business broker, not someone who dabbles just for fun. Ask the question, “Is this your full-time profession?” If the answer is no, find a dedicated full-time business broker instead.

 

Are you a business seller who has been approached by professionals other than brokers or intermediaries to sell your business? Do you have questions about why you should use a broker instead of someone else? Please leave a comment or question here, and we will be happy to address and questions or concerns you may have.

 

Michael Monnot

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

http://www.infinitybusinessbrokers.com

 


The Skeptical Business Buyer: Why Would Anyone Sell a Good Business?



If you are someone who is interested in buying a business, you are looking for a profitable business that has a good share of the market and a great location. You are not going to be willing to buy a business that is on the fast track to failure and bankruptcy, so as you begin searching for businesses you may have pondered the question…

 

Why would anyone sell a perfectly good business?

 

This question is a very important one to ask as you search for businesses, and it is a question that any business seller should be willing and able to answer. If you are unable to get an answer to this question from a business owner, this is a major red flag. Most reasons for selling a business have very little to do with the business itself. A large percentage of the time a business is on the market because of the personal life of the owner.

 

Let’s look at some reasons for selling that have more to do with the owner than with the business:

 

Retirement. This one goes without saying. An owner who is ready for another chapter in life is willing to sell a perfectly good business so they can move on.

 

Divorce. When husbands and wives are partners in a business, sometimes the business gets sold as part of the divorce.

 

Partnership disputes. Most partnerships start well, but not all end that way. If there is a breakdown in a partnership where both parties want out, it can mean putting the business on the market.

 

Medical reasons. If the owner or a member of their family has a medical condition that will take precedence over the business, or will keep the owner from being able to run the business, the business will likely end up on the market.

 

The kids decided not to follow in the family footsteps. Many small business owners have their children work with them in the business, but when the time comes for mom and/or dad to retire, sometimes the kids want to do something else.

 

There are many reasons that a perfectly good business ends up on the market, the key is to find out the real reason the owner is looking to sell. If the reason has little to nothing to do with the business itself, then you are looking at a potentially great business acquisition.

 

Are you looking for a business to buy, but have come across many that seem too good to be true? Do you have questions about how to find out the real reason a business is for sale? Leave us a comment or question here, and we look forward to working with you on your road to business ownership.

 

Michael Monnot

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

http://www.infinitybusinessbrokers.com

 


The Emotionless Negotiation: A Guide for Business Sellers Trying to Reach the Closing Table



When you are in the process of selling your business, one of the toughest periods is the negotiation table.

Why?

You might be selling a business, but when it comes time for the hard negotiations to begin, it is really just you and the buyer across the table. The miscommunication that is rampant at this crucial step in the business transaction process kills good deals all the time.

How do you avoid the pitfall of the negotiation table disaster? Try to think like the person across the table.

Your business is your baby. You have spent what seems like countless hours and all of your blood, sweat, and tears to get it to where it is today. Your business is literally a part of you, and no numerical value can ever really quantify what it means to you. To a buyer, your business is a set of financial records and a price tag.

Your staff is like a second family to you. They may not all be perfect employees, but you have kept them around for reasons that only being a part of the business’s history can explain. To a buyer, they are a list of names and titles, and they will either conform to the new owner’s paradigm or be let go.

The price you agreed to for the listing of your business is, at least in your head, the bottom dollar you are willing to take. Any offer that comes in below asking will be truly and deeply offensive to you. To a buyer, the listing price is a starting point for negotiations, and they are going to try and pay as little as possible for your business so they have capital left over to work with.

The way you run your business is how you like things done. You are the boss, so it has always been your way or the highway. Anyone who comes in asking questions about why you do things the way you do is clearly trying to insult your intelligence. To a buyer, it is as simple as needing to understand the reasoning behind the way your business is run, nothing more.

What is the same in all of these examples? The overt emotion on the part of the seller and the lack of emotion on the part of the buyer. Selling your business is an emotional process, but if you want your transaction to be successful, it is critically important that you leave your emotions at the door. This is, after all, a business transaction, one that can be easily derailed when emotions are allowed to have the upper hand.

The easiest way to avoid an emotional negotiation is to hire a professional to do it for you. Using a professional business broker will help to provide a much needed buffer at the closing table, one that will be able to keep things moving even if the emotional barrier gets crossed. The other way to avoid losing a deal is to try your best to stay an objective seller. Treat your transaction as what is is, a set of business decisions and nothing more.

Are you a business seller who has a hard time removing the emotional component of your business sale? Leave us a comment or question here, and we will be happy to help you become an objective seller.

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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