Interested in Selling Your Business? Don’t Make These Big Mistakes. Mistake #4: Letting Unqualified Buyers in the Door



If you are interested in selling your business, there are some basic mistakes business sellers make that can absolutely be avoided if you know what they are. Business transactions are inherently complex, so knowing what the most common pitfalls are can help to streamline the process by avoiding them.

 

Big Mistake #4: You are letting buyers get to due diligence without knowing if they are qualified to actually buy the business.

 

If you are trying to sell your business on your own, this is a situation that you should cause you some concern.

 

Why? By going it alone, you will be exposed to buyers who may not be able to pay, buyers who are just kicking tires and buyers who assume they will be able to get third-party financing when they can’t. Every seller is going to come across buyers like this, but if you don’t find out ahead of time you could get stuck with your business off the market in due diligence for no reason.

 

What is due diligence? Due diligence happens when a seller gets a serious offer from a buyer and accepts that offer. What happens next is the business gets temporarily taken off the market so the buyer can conduct a thorough investigation of the business. If, after the due diligence period, the buyer wants to proceed with the sale, the business transaction moves to closing. What can happen in these situations when a buyer has not been qualified is the business gets pulled from the market for several weeks for due diligence only to have closing not happen for lack of funds.

 

How can you avoid this situation? Use a professional business broker. They are able to determine if a buyer is a truly serious buyer with access to the adequate funds to purchase your business. They will weed out buyers who don’t have the funds or are hopeful for a third party loan from a bank that probably won’t happen in this economic climate.

 

Do you have questions about how to find buyers with enough capital? Are you wondering if you need a business broker or if you will be able to go it alone? Please leave a question or comment here and we will be happy to help you with your business sale.

Want to read Mistake #1: The Cold-Feet Seller? Click here.

Want to read Mistake #2: The Box-O-Paper Financials? Click here.

Want to read Mistake #3: All-Cash Greed? Click here.

 

Michael Monnot

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

http://www.infinitybusinessbrokers.com


Interested in Selling Your Business? Don’t Make These Big Mistakes. Mistake #3: All-Cash Greed



If you are interested in selling your business, there are some basic mistakes business sellers make that can absolutely be avoided if you know what they are. Business transactions are inherently complex, so knowing what the most common pitfalls are can help to streamline the process by avoiding them.

 

Big Mistake #3: You refuse to accept an offer that is not all cash.

 

Your business means a lot to you, and the value you place on it may not be objective because you add to the value all of the time, energy and money you have put into it over the years. Even if you are able to be objective and take the advice of your business broker when pricing your business, you may run into problems when you decide what type of payment you are willing to accept.

 

What would be ideal? An all cash, full price offer is always ideal, but in the reality of the business market this rarely happens. There are many sellers who enter the market demanding all cash, but this is a huge mistake.

 

Why? Great buyers are few and far between, and there are hardly any buyers in the market who can come up with the capital to make all cash offers. Buying a business is an expensive proposition, and most small business owners and prospective small business owners don’t have that kind of cash available.

 

What can happen if a seller demands all cash? The short answer is your business won’t sell. Sure, there have been cases where a seller wanted all cash and all cash is what they got, but this is an incredibly rare scenario. The reality is your business will remain listed indefinitely and you will miss many great potential buyers.

 

How can a buyer who can’t raise the capital to make an all cash offer be a great buyer? A great buyer should not be defined by capital alone, they are defined by their ability to pay.

 

What do we mean by that? The most common situation in today’s business market is for a seller to offer seller financing. This is means a buyer brings a substantial down payment, and then an agreement is made for the buyer to pay for the remainder of the business over time directly to the seller. Offering seller financing can be a great option to offer when you sell your business.

 

Why? Seller financing opens your business to a much larger pool of buyers and it shows that you have faith in the future of the business, so it is an option that is good on two levels. You will have  a much better chance of selling if more buyers are able to make offers, that goes without saying. Also, buyers are always a bit suspicious of anyone who is willing to sell a perfectly good business. By offering seller financing you are letting buyers know that you have faith in the future of the business because if the business fails, you don’t get your money.

 

The moral of the story is be flexible. You may get an all cash offer after all, but chances are by offering seller financing you will find a great buyer and still get the price you want from your business.

 

Do you have questions about what types of options you should offer to buyers? Are you still determined to accept only an all cash offer? Please leave us a comment or question here, and we will be happy to assist you with questions about your business sale.

Want to read Mistake #1: The Cold-Feet Seller? Click here.

Want to read Mistake #2: The Box-O-Paper Financials? Click here.

Want to read Mistake #4: Letting Unqualified Buyers in the Door? Click here.

 

Michael Monnot

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

http://www.infinitybusinessbrokers.com


Interested in Selling Your Business? Don’t Make These Big Mistakes. Mistake #2: The Box-O-Paper Financials



If you are interested in selling your business, there are some basic mistakes business sellers make that can absolutely be avoided if you know what they are. Business transactions are inherently complex, so knowing what the most common pitfalls are can help to streamline the process by avoiding them.

 

Big Mistake #2: Your books and financial records are an absolute mess.

 

Small business owners sometimes love being their own boss because it means no oversight from management where paperwork is concerned. This might be nice for your stress level, and your system of shoving any business-related material into an ever-growing stack of file boxes in the back room might work for you, but it will become an absolute nightmare when the time comes to sell your business.

 

Why? No buyer is going to give you a penny for your business if you can’t prove that the business is worth what you are asking. There are a number of ways to determine or evaluate the value of a business, but the most straightforward way is to use current and past financial statements. Any prospective buyer is going to want to see at least the last three years of tax returns and your current P&L’s.

 

What you will need to do before you list your business is get your financial ducks in a row. You need to find and make legible all of your financial records, make copies of your tax returns, and (if your records really are just a stack of miscellaneous boxes) maybe even hire a business transaction CPA to get the books in order. This may seem like a monumental task, but it will pay off in the end as there will be no ambiguity about what your numbers really are, they will be right there for buyers to see in black and white. It also removes the risk of creating mistrust between you and a serious buyer if what you said the numbers would be and what they figured out the numbers are after slogging through your financials themselves don’t add up.

 

This mistake is easily avoided by being prepared ahead of time. Ask your broker for help, for a list of what you’ll need, and for the name of a good business transaction CPA if you’ll need one. A note here, you probably should not use your usual CPA that does your tax returns for this project. Only a CPA familiar with the buying and selling of businesses will be able to properly assemble and evaluate your financials for prospective buyers.

 

Are you a business seller with less than legible financials who wants to know how to get your books organized? Do you have questions about what kinds of documentation you’ll need to have ready? Please leave us a comment or question here, and we will be happy to help you get your business ready to sell.

 

Want to read Mistake #1: The Cold-Feet Seller? Click here.

Want to read Mistake #3: All-Cash Greed? Click here.

Want to read Mistake #4: Letting Unqualified Buyers in the Door? Click here.

Michael Monnot

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

http://www.infinitybusinessbrokers.com


Interested in Selling Your Business? Don’t Make These Big Mistakes. Mistake #1: The Cold-Feet Seller



If you are interested in selling your business, there are some basic mistakes business sellers make that can absolutely be avoided if you know what they are. Business transactions are inherently complex, so knowing what the most common pitfalls are can help to streamline the process by avoiding them.

 

Big Mistake #1: You aren’t 100% sure that you actually want to sell.

 

This one may seem a bit bizarre at first glance, but it is by far the most frequently encountered problem when it comes to deals coming apart on the seller’s side.

 

It can be frightening as a seller to look towards a closing table and see yourself as basically unemployed at the end. Your business is and has been your baby, and if you are the typical entrepreneur it has been basically your entire life. You really need to be ready before you decide to sell. Some serious introspection is necessary long before your business is listed.

 

Turning away buyers at the last minute because you have changed your mind can cause major problems with your credibility in the business market, as well as driving away good buyers you may not be able to get back if you change your mind once again and want to sell in the near future. Those good buyers you had a crack at will have bought something else and be long-gone. Ask anyone in the small business market, a good buyer is a precious commodity, not one you want to waste because of cold feet. In the same light, businesses that have come on and gone off the market repeatedly will cause suspicion in the buyer pool because anyone who looks at the business will wonder why you keep pulling it from the market.

 

Another huge no-no? Don’t test the waters to see what you could get for your business if you really want to sell quite a few years down the road. This causes the same problems we already have discussed, causing mistrust in the buyer pool from doubts about the stability of the business.

 

The key here? Decide if you really want to sell. Ask yourself (and answer) some hard questions before your business hits the market. Are you ready to do something else with your life? Do you have the financial means to be without a source of income for the period between closing and your next business venture? Are you going to be able to relinquish control of your business to someone who might completely and totally change everything you have built?

 

Are you considering selling, but have not yet made up your mind? Do you have questions about when the best time to sell would be? Please leave us a comment or question here, and we will be happy to assist you.

Want to read Mistake #2: The Box-O-Paper Financials? Click here.

Want to read Mistake #3: All-Cash Greed? Click here.

Want to read Mistake #4: Letting Unqualified Buyers in the Door? Click here.

Michael Monnot

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

http://www.infinitybusinessbrokers.com


Why a Business Buyer Needs Their Own Broker



If you go into a deal where both sides of the transaction are represented by the same broker, is this a good thing or a bad thing? The answer is it depends on the deal.

 

This situation works best when a broker has a listing with a seller and also knows of buyers that they have worked with previously or they have been working with for awhile. If the two sides are aiming for the same goal then it could be a good match, and since both parties are familiar with the broker it will work well to have just one intermediary involved. It is also beneficial during negotiations to have fewer intermediaries in the deal, as it can streamline the process significantly. There are other situations where having a sole broker to represent both sides of the deal is useful, but the situation will depend on those involved and the transaction at hand.

 

On the other hand, if you are a buyer who is trying to go it alone, what may end up happening is your transaction will be represented by a single broker. That broker, who at this point has only been working with the sellers with whom they have the listing, may not be the best representative for your side of the deal.  You enter this relationship as a bit of an outsider, never a good proposition.

 

By having your own representative in the transaction – someone who you have had a chance to talk with, someone who understands what your goals are for business ownership, and someone whose opinion you can trust – you can eliminate the worry that the broker is not on your side and is only interested in what the sellers want.

 

Another really good reason to have your own broker is that if you become unsure about buying the business, like after discovering problems during due diligence, the seller’s broker still has to work with that seller for the duration of the listing agreement. It is in the best interest of the broker to maintain a good and positive working relationship with their client so as to keep things amicable for the next deal. The broker is not going to make their client unhappy for the sake of a buyer who might ultimately walk away.

 

The moral of the story is a business buyer needs help navigating the complex world of business transactions, and that person needs to be someone that you know and can trust. Find yourself a good business broker to assist with your journey to business ownership.

 

Are you thinking about buying a business and want to know what a business broker can bring to your side of the deal? Please leave a question or comment here and we will be happy to assist you.

 

Michael Monnot

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

http://www.infinitybusinessbrokers.com


Business Broker Vs. Real Estate Agent, What’s the Difference When I’m Trying To Sell My Business?



Many people assume that business brokers and real estate agents are essentially the same thing, one just sells property and the other just sells businesses. Nothing could be farther from the truth.

 

If you are looking to sell your business, not understanding this difference could mean trouble for your business sale. These troubles arise because some who may call themselves business brokers are in fact just real estate agents giving themselves another title to diversify their work.

 

To put it simply, the only thing that business brokers and real estate agents have in common is they both work for commissions. That’s it. Essentially everything else is different.

 

For a real estate agent, selling a home or a piece of property means the more exposure, the better. They work hard to put their listings in front of as many prospective buyers as possible. Marketing techniques include listing the property on the MLS, which is basically available for anyone to search. They put a sign in the front yard, put photos in local print and online publications – basically telling the world where and for how much their property is for sale.

 

For a business broker, the marketing techniques must be very different. Businesses need one very important thing while they are trying to sell. They need confidentiality. Marketing a business the same way you would market a house could be disastrous for the business. They could lose employees, vendor contracts, and even clients as people tend to pull away from a business if they know it is going to change hands. Your customers, vendors and staff having a fear of the unknown will cause problems for your bottom line.

 

Only a business broker will be able to put together the best marketing package, ensure that confidentiality is maintained, help you with everything from licensing to leases, and act as a buffer between you and the buyer during any negotiations.

 

Make sure you hire the right help when the time comes to sell your business. Use a qualified and professional business broker.

Are you ready to sell your business, but have questions about which professional to use? Please leave us a comment or question here and we will be happy to answer any questions you may have about what a business broker can do for you.

 

Michael Monnot

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

http://www.infinitybusinessbrokers.com


Ready to Sell Your Business? Who Should I List My Business With?



I want to list my business, but I’m not sure who I should list with. Should I choose my real estate agent or maybe a commercial agent since businesses are considered a commercial space?

The answer is neither. The professional you should employ when you want to sell your business is a business broker.

Why a business broker and not the other two? A business broker specializes in the buying and selling of businesses. They have the right tools and know-how to get your business from listing to closing. Sure, real estate and commercial agents are also professionals that help with sales, but they specialize in homes and property – not existing businesses. It would be like going to a plastic surgeon when you have the flu. Sure, the plastic surgeon is a doctor, but you are asking them to serve you outside of their area of expertise.

Here are some specific reasons why a business broker will serve you better as you try to sell your business:

A business broker has the right tools.

Real estate agents have the MLS and commercial agents have a system called Loopnet where they list and find properties for sale. Good business brokers have their own sites, networks of cooperating business brokers, direct marketing campaign systems they create for each business they list, databases of buyers and investors, and relationships with professionals like CPA’s and immigration attorneys who can bring in interested clients as buyers.

A business broker can market your business without breaching confidentiality.

Confidentiality is what protects your business from losses while it is for sale. It means that the only people who know your business is for sale are the people who need to. Prospective buyers must sign non-disclosure agreements before your business is disclosed, and a broker works hard to keep employees, vendors, and customers from finding out as well. Only a broker knows how to properly market your business without improper disclosures. Realtors and commercial agents do not appreciate the importance of confidentiality, and we have seen images of businesses end up on the MLS and employees find out because an agent brought in buyers at an inappropriate time. Use a broker instead to protect your business.

A business broker creates a unique marketing plan for your specific business which includes a professional marketing package.

Pictures, a paragraph and a P&L will not sell a business anymore. Real estate agents and commercial agents will not have the know-how to put together the best marketing package for your business. A great broker will put together  a marketing package that will include a complete financial recast along with a SWOT analysis, a complete business profile to give a buyer an idea of what is needed to run the business, owner and employee duties, history, projections, video, pictures, asset lists and so much more. A marketing package should typically start at a minimum of 10 pages for a very small business and can go to 20, 30, 40 and more pages.

If you have an agent or a broker who you think may not meet these criteria- ask for an existing listing to review, ask for proof of completed transactions, marketing methods, confidentiality forms, processes…if you get any hesitation you should find a better business broker to list you business with.

Are you looking to list your business and have questions about how we can meet the needs of your business with the right tools and the best marketing? Please leave us a comment or question here, and we will be happy to help you get your business SOLD.

 

Michael Monnot

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

http://www.InfinityBusinessBrokers.com

 


Ready to Sell Your Business? Who Should I List My Business With?



I want to list my business, but I’m not sure who I should list with. Should I choose my real estate agent or maybe a commercial agent since businesses are considered a commercial space?

The answer is neither. The professional you should employ when you want to sell your business is a business broker.

Why a business broker and not the other two? A business broker specializes in the buying and selling of businesses. They have the right tools and know-how to get your business from listing to closing. Sure, real estate and commercial agents are also professionals that help with sales, but they specialize in homes and property – not existing businesses. It would be like going to a plastic surgeon when you have the flu. Sure, the plastic surgeon is a doctor, but you are asking them to serve you outside of their area of expertise.

Here are some specific reasons why a business broker will serve you better as you try to sell your business:

A business broker has the right tools.

Real estate agents have the MLS and commercial agents have a system called Loopnet where they list and find properties for sale. Good business brokers have their own sites, networks of cooperating business brokers, direct marketing campaign systems they create for each business they list, databases of buyers and investors, and relationships with professionals like CPA’s and immigration attorneys who can bring in interested clients as buyers.

A business broker can market your business without breaching confidentiality.

Confidentiality is what protects your business from losses while it is for sale. It means that the only people who know your business is for sale are the people who need to. Prospective buyers must sign non-disclosure agreements before your business is disclosed, and a broker works hard to keep employees, vendors, and customers from finding out as well. Only a broker knows how to properly market your business without improper disclosures. Realtors and commercial agents do not appreciate the importance of confidentiality, and we have seen images of businesses end up on the MLS and employees find out because an agent brought in buyers at an inappropriate time. Use a broker instead to protect your business.

A business broker creates a unique marketing plan for your specific business which includes a professional marketing package.

Pictures, a paragraph and a P&L will not sell a business anymore. Real estate agents and commercial agents will not have the know-how to put together the best marketing package for your business. A great broker will put together  a marketing package that will include a complete financial recast along with a SWOT analysis, a complete business profile to give a buyer an idea of what is needed to run the business, owner and employee duties, history, projections, video, pictures, asset lists and so much more. A marketing package should typically start at a minimum of 10 pages for a very small business and can go to 20, 30, 40 and more pages.

If you have an agent or a broker who you think may not meet these criteria- ask for an existing listing to review, ask for proof of completed transactions, marketing methods, confidentiality forms, processes…if you get any hesitation you should find a better business broker to list you business with.

Are you looking to list your business and have questions about how we can meet the needs of your business with the right tools and the best marketing? Please leave us a comment or question here, and we will be happy to help you get your business SOLD.

 

Michael Monnot

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

http://www.infinitybusinessbrokers.com

 


Are You a First-Time Business Buyer?



When you think about famous entrepreneurs, 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.

I have a lot of questions, who should I ask?

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 leases.

Should you start your own business or buy an already existing business?

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. 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.

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. You also need to choose a business that has room for growth.

What kind of business is right for me?

When you have made the decision to buy a business instead of starting one from scratch 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.

Don’t buy a business you know nothing about. This problem arises most frequently in the restaurant industry where folks who have always wanted to buy a restaurant, but have never worked in one, get in over their head in a new business they know absolutely nothing about.

Look in industries where you have some knowledge or experience, as this familiarity will help you a great deal while you are trying to get your bearings as a new business owner. Taking over a business for the first time is hard enough; you don’t want to add starting from scratch to the equation.

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


Are You a First-Time Business Buyer?



When you think about famous entrepreneurs, 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.

I have a lot of questions, who should I ask?

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 leases.

Should you start your own business or buy an already existing business?

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. 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.

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. You also need to choose a business that has room for growth.

What kind of business is right for me?

When you have made the decision to buy a business instead of starting one from scratch 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.

Don’t buy a business you know nothing about. This problem arises most frequently in the restaurant industry where folks who have always wanted to buy a restaurant, but have never worked in one, get in over their head in a new business they know absolutely nothing about.

Look in industries where you have some knowledge or experience, as this familiarity will help you a great deal while you are trying to get your bearings as a new business owner. Taking over a business for the first time is hard enough; you don’t want to add starting from scratch to the equation.

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



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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