Falling Out Of Love With Your Business: How Business Sellers Can Find A Way To Let Go



One of the greatest aspects of being a small business owner is your business is your own. You’ve made it into what it is today, and for the most part small business owners love what they do. Difficulties can arise, however, when you’ve made the decision to sell your business.

 

For many it can feel like your business is your whole life, and as such it can be difficult to sever that tie at a closing table. From time to time deals fall apart because a business seller looks at what comes after the closing table and begins to get panic-driven cold feet. The sense of loss of control, coupled with the fact that a seller basically becomes unemployed the day they sell their business, can absolutely get in the way of reaching the closing table.

 

What can you as a seller do to keep from derailing your own sale?

 

Take some time to prepare yourself for post-sale life.

 

The first thing to do is think about the way you describe your business. We sometimes feel like a business is so much a part of our lives that we use the same terminology we would for the people in our lives.

 

Do you love your business? You may think that you do, but what you actually love is what your business does for your life. If you break it down for yourself you probably love the fact that you are your own boss and the freedom that brings. Think about the time after the sale in the same way. You will still be in control of your day to day life and you will have much more freedom than you do today.

 

Another common feeling may be the satisfaction you get every day from getting to wake up and do what you love. If the sense of purpose you get from your business is what you will miss the most, find something else to do post-sale that will give you the same level of satisfaction. If you had your own construction business, you could volunteer your time to build homes for veterans, for example.

 

The key here is to not let your emotional connection to your business keep you from selling. Think about how you can keep the parts of your business life that you love after the sale and you will be better prepared to let go.

Are you a seller who is nervous about selling? Do you have questions about how to better prepare yourself for life post-sale? Ask us! Please feel free to leave us a comment or question here and we will be happy to help.

 

Michael Monnot

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

http://www.infinitybusinessbrokers.com


Eyeing The Seller: How To Tell A Lot About A Business By Watching The Owner



When you are in the market to buy a business, you will likely see quite a few before you find the one you ultimately purchase. These first visits are important for a number of reasons. You will want to see the physical state of the business, what equipment and furnishings you will be inheriting, and perhaps even how the business functions during normal operations.

 

One often overlooked indicator of the health of a business is the actions of the ownership.

 

Whether you are in for a surreptitious visit where no one is aware you are a buyer, or if you are in a meeting with the seller for the first time – watch their actions. The phrase “actions speak louder than words” plays heavily in the small business world.

 

Here’s an example: A restaurant owner who spends an entire dinner service at the bar drinking while the food quality lags will be able to tell you a lot about how the rest of the business probably functions.

 

An owner who is checked-out like this will likely not own a business that is as profitable as it could be. The financial state of the restaurant may not be up to par, but this kind of information is not always bad news for a buyer.

 

Simple fixes that an engaged new owner can implement, like holding staff accountable or changing food suppliers and/or the menu can get you a business for less than you might have thought with a fairly quick opportunity for growth.

 

You can find all of this out just from observing the owner.

 

On the other end of the spectrum, an owner who is punctual to all meetings with a buyer, who is meticulously organized, and whose staff snaps to attention as they enter a room likely runs a tight ship.

 

What you will inherit is a well-oiled machine that is likely in great financial shape, but you will likely have to pay a bit more than for the business in our first example.

 

Again, you will have a general idea of the state of affairs just by carefully noticing the actions of ownership.

 

In the initial stages of the business buying process – pay attention to the actions of the seller and you will learn much more than you ever could from just reading the financials.

 

Are you a buyer who would like to know more about what to watch for when visiting a business? Do you have questions about the kinds of questions you should be asking a seller in the first meeting? Ask us! Please feel free to leave a comment or question here and we will be happy to help.

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 Seller’s Best Exit Strategy Is No Exit Strategy



Any business owner who has forward vision for their company should have a well defined exit strategy. It’s just good business practice to know when and how you would get out of your business if the time or circumstance presents itself.

 

When that time does come and you are ready to put your business on the market, you need to act like you have no exit strategy at all.

 

Why? Here’s an example.

 

A seller with a small transportation company really wants out, and against the advice of his business broker, he tells every prospective buyer who comes in the door just that. He offers up the bottom line number that he would accept, and tells buyers he is completely burned out and totally ready to sell. He thinks that by seeming eager to sell, buyers will be eager to buy. The exact opposite is true.

 

His attitude and actions give the impression that the business is a disaster he is trying to run away from – fast. He never gets any offers because buyers don’t want to take a chance on a business that the current owner doesn’t even want. He never sells the business, opting instead to close the doors.

 

This situation could have ended very differently and in a positive way. The business was in good shape and had room for growth.

 

When you put your business on the market and begin to get offers from potential buyers, it is critically important to keep your exit strategy under wraps. You need to behave as if you don’t need to sell. A seller doesn’t want buyers to think they have to sell, that they are in any way desperate or that they are trying to get off a sinking ship before the business folds. Sellers that seem too eager to accept any offer will get just that – any offer (or no offer at all).

 

In the business market it is a seller’s job to put their business in the best light so they can get top dollar. The buyer’s job is to drive the price down as much as possible. A seller who seems too ready to get out of their business will attract buyers who are looking for a cheap steal, not the motivated buyers who will be willing to negotiate.

 

Instead of making buyers aware of your exit strategy, you should have in place and ready to implement a three year plan. This plan should include ideas for growth, new marketing strategies and plans for any necessary improvements.

 

Even though these are ideas that you have not yet implemented, they will be ideas that a prospective buyer can use to visualize the future of the business under their leadership. These plans will also be a powerful negotiating tool as they will allow you the power to walk away from any deal where a buyer refuses to negotiate for a fair price. Better still, if you are not able to sell your business these plans will help you grow your business for a sale at another time.

 

When you are ready to sell your business, you need to keep your focus on the growth of your business if you want to instil faith in potential buyers that the business has a successful future. If the seller in our example had done just that, he would have sold his business and not had to close the doors. Keep your exit strategy to yourself, and you will have a better chance at a successful sale.

 

Are you a seller who wants out, but would like help showing buyers that your business has room for growth?  Do you have questions about how to make a three year plan? Please leave us a comment or question here, and we will be happy to help.

Michael Monnot

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

http://www.infinitybusinessbrokers.com

 


Want To Own A Business? Self-Searching Is A Must



Most people dream of being their own boss, but what most fail to realize that an entrepreneur still has a boss – that boss is their business. Instead of answering to management, they answer to their bottom line, their customers, their employees, their vendors. Owning a business is a life-encompassing venture, so unless you are prepared for the responsibility and workload, then you might want to reconsider.

 

There are a few questions you should ask yourself in the beginning stages of the entrepreneurial plunge to assure you are prepared for the challenge:

 

What kind of personality do you have?

Someone who goes to engineering school because both of their parents are engineers may end up miserable because all they really want to do is paint. Your personality will drive what ultimately makes you happy in your occupation. The same is true for business owners. Some people have the natural tendency to be organized leaders (an entrepreneurial must), some people just want to own their own bar because they enjoy being a patron. The former will have great success, the latter will have a tough time finding the drive to make their establishment profitable.

 

What do you want to be when you grow up?

This sounds like a silly question you were asked as a child, but it will fundamentally determine what kind of business will be right for you. An owner’s job can seem at times like a 24/7 affair, so if you are passionate about what you do, you will be willing to do the extra work.

 

Where do I have knowledge and/or practical experience?

Back to the bar example, if you have never worked in any sector of the restaurant industry, then a food and beverage business is probably not for you. New ownership is hard enough, you don’t want to have to start from scratch the day you take over your business. Having some experience behind you will be instrumental to your success.

 

Do I have the blessing of my family?

If you are transitioning from a traditional 9 to 5, Monday through Friday gig to owning your own business, you must have the support of your loved ones if you have any hope of business success and keeping your family together at the same time. As entrepreneurs ourselves, we frequently have to work long hours and weekends. Vacations may only be a two or three-day long affair and then only if wi-fi is available at the hotel and cell phone reception is possible. Your entire family will likely have to sacrifice, so you will need to get them together and decide if this is the life for all of you before you proceed.

 

Business ownership is extremely rewarding, but it is also challenging. Do some soul searching before you decide if ownership is for you, and you will be better equipped for your new venture.

 

Are you considering buying a business, but are not sure what kind of business would be right for you? Do you have questions about what types of businesses would fit the amount of hours you would want to work? Please feel free to leave us a comment or question here, and we will be happy to help you on your journey to entrepreneurship.

 

Michael Monnot

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

http://www.infinitybusinessbrokers.com


Business Buyers: A Guide to Financing and the SBA (U.S. Small Business Administration)



If you are considering taking the entrepreneurial plunge, then one of your major considerations may need to be the financing to purchase a business. One option available to those interested in purchasing a small business is what’s known as SBA (U.S. Small Business Administration) financing.

 

How does SBA financing work? A business buyer finds a lender who cooperates with the SBA, and up to 80% of the loan will be guaranteed to the lender by the SBA if the buyer ends up in default. This helps budding entrepreneurs tremendously because traditional lending institutions have become very gun-shy about financing in the aftermath of the economic collapse.

 

Sounds great, right? Ok, here’s the downside. Since the SBA is essentially a government program, it comes with a fair amount of red tape. It can sometimes be difficult to fund your business purchase this way, but it is rarely impossible. The key is to start early and talk to your business broker from the start about whether this type of financing is for you.

 

Have more questions? Click through the links below to find more information about SBA loans:

 

http://www.sba.gov/content/sba-loans

This is the official website of the U.S. Small Business Administration. Here you will find information on SBA options and the forms you will need to begin the application process.

 

http://www.foxbusiness.com/personal-finance/2013/05/06/how-to-improve-your-chances-getting-sba-loan/

Here’s an answer to the question “How do I increase my chances of getting a SBA loan?”. While this article focuses mainly on those who already own a business and are looking for capital, it is good information for buyers also.

 

http://www.entrepreneur.com/article/52730

An article about how to get started with a loan from the SBA.

 

http://www.inc.com/jeremy-quittner/sba-pulls-more-levers-for-smallest-loans.html

An article highlighting the newest move from the SBA – eliminating fees for the smallest loans, which is good news for small business buyers.

 

Still have more questions? Contact us here or leave us a comment or question below and we will be happy to help you find out if SBA financing will work for you.

 

 

 

Michael Monnot

941.518.7138
Mike@infinitybusinessbrokers.com
12995 South Cleveland Avenue, Suite 249
Fort Myers, FL 33907

http://www.infinitybusinessbrokers.com


How Apathetic Business Sellers Can Kill Their Own Deals: Why You Need To Show Buyers Your “A” Game



One would think that a business seller would do everything possible to get their business to the closing table, but in the business market deals fall apart because of the carelessness of sellers more often than they should.

 

Here’s an example. A buyer is interested in purchasing a large pizza restaurant, and although the buyer has some experience in the restaurant industry – they are not comfortable with taking over such a large establishment right out of the gate.

 

During discussions with the seller, an agreement is made so that the seller will stay on as an acting manager for the first six months after the sale to train the new owner and provide stability with the employees and vendors.

 

After this agreement is reached and three weeks from the closing table, the seller begins to show up late or not at all to scheduled meetings with the buyer. This happens enough times that the buyer loses confidence in the seller to point of deciding not to go through with the deal.

 

The issue here is the seller, who mentally checked out long before they should have. It can be difficult to stay focused on a business you are no longer going to be responsible for, especially when your thoughts are on the future and what you will be doing with your life after the sale.

 

However, this is the most important period for you to be on your “A” game. Your actions will speak volumes about how you feel about the seller, the transaction and the future of your business.

 

Stay motivated and don’t check out. If the seller in our example had followed through on the promise made to the buyer, then they would have sold the restaurant and shortly been well on their way to a new chapter in life.

Are you a business seller who is ready for your your business to be sold? Do you have questions about what you can do to instil confidence in buyers? Please feel free to leave us a comment or question here and we will be happy to help.

 

Michael Monnot

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

http://www.infinitybusinessbrokers.com


Selling Your Business? How To Think Like An Investor, Not An Owner



When you own a business, your head must be in the game in terms of the day-to-day operations, otherwise you wouldn’t be successful. One of the most difficult parts of trying to sell your business will be to take that mindset you’ve been using to make your business what it is today and change it around so you can see what any potential buyer will.

 

Every business that is headed to the market can benefit from this change in view, as it will allow you to see what changes are needed to get your business to a point where a buyer will be willing to invest their time and money.

 

To start this process, ask yourself a very simple question. If you walked into your business today, exactly as it is, would you buy it or not?

 

If the answer is yes, are you truly looking at the business with an objective eye? If you feel that you are, think of reasons why you would buy your business all over again. These aspects of your business are the ones you will need to highlight for a prospective buyer so they can see the business in the same “good investment light” you do.

 

If the answer to the question of whether you would buy your business again is no, what reasons do you have for feeling that way? Does the business need major aesthetic renovation? Are there more things that need repair than you have the time or money to handle? Are the systems of operation inefficient? Are there changes you would love to make, but for one reason or another you never have?

 

The answers to these kinds of questions are the issues you will need to address long before you list your business on the market. If you are truly unhappy with parts of your business, any buyer that comes through the door will likely see these parts in the same way. Fixes now will keep you from losing buyers down the road.

 

Make repairs, thoroughly clean, add a fresh coat of paint, streamline operations, get the financial records in order, etc. Even minor changes can help your prospective buyers to see the business in the best light possible.

Are you thinking of selling your business, but you are unsure of what buyers are looking for? Do you need help seeing your business as an investor instead of as the owner? Please feel free to leave us a comment or question here, and we would be happy to help you get your business ready for the market.

 

Michael Monnot

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

http://www.infinitybusinessbrokers.com


Why Recast Your Financials



Requesting marketing packages from other brokers on their listings this week has again made me think how sorry I am for some of the sellers getting stuck with a bad broker.

Here are the two last marketing packages I received.

#1 – “Thanks for the NDA . Company is XYZ. website is www.XYZ.com. Please email or call if your prospect would like to see the business. Could be a great add on for him.”

This broker will rely on the seller to explain the business, so why does he really even need a broker?

#2 – I received 30 pages of a couple years of tax returns so this broker is going to let the buyer decipher the financials. Look at the bottom line of your tax returns; is that how much money you really make? But that is what the buyer will see!

What is a Recast

Tax returns are really prepared to minimize your tax liability so the objective of recasting your financials is to show the true income/benefit of the business by adjusting any one time expenses, owner compensation, fringe benefits, depreciation, amortization, interest and other items.

Owner Salary

This is typically the most common as we will add back the salary of the owner. Compensation of family members is also common and would be added back if they are not actively working in the business.

Fringe Benefits

There are a plethora of fringe benefits that I have seen and are a true benefit. Some of the common fringe benefits are the business is paying for personal cell phones, personal gas and vehicles, health insurance, travel and entertainment. Some of the more grand fringe benefits I have seen are airplane fuel, a muscle car collection, groceries, travel and more.
Unless specifically asked and pointed out how would a buyer find these items and see the true income of the business.

Depreciation

Typically depreciation, or at least a portion is added back in to the income as a non cash expense for small businesses which we use the seller discretionary earnings (SDE) to show income and benefits.

Interest

A business is typically sold free of any liabilities meaning the interest expense is added back since it will not be a continued expense.

Non-Recurring Expenses

We will typically add back one time or extraordinary expenses if it is non recurring or not related to the business. In other situations we may add back certain purchases such as a vehicle and properly amortize it rather than taking a large one time hit. Other typical add backs may be legal fees, moving expenses, expanding operations, purchase of assets or many other items.

As a seller a larger income will usually mean a larger selling price. The add backs should be valid and provable as to legitimize the value of the business.

List your business with me and you will not have to worry about what your broker is or is not doing but rather focus on your business while I focus on selling it for the true value.

Michael Monnot

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

http://www.infinitybusinessbrokers.com


The Over-Confident Buyer: Why You Should Take Baby Steps With Your New Business



When you are looking at businesses to buy, it can be very tempting to assume that the reason the business isn’t making record profits is an apathetic seller. What many budding entrepreneurs fail to realize is while it can be the case that a business could do much better with a fresh and motivated owner, running any business on a day-to-day basis is very hard work. Most businesses that are currently in business are that way because of the system that the current owner has in place and in many cases changes that could bring more profits are not made simply because there is not money or time to do them.

 

What can happen when a buyer is too over-confident in their ability to revamp a business? They walk into a new business that is currently functioning and profitable, and without trying to understand how the business works and what is keeping the doors open, they gut the current system and try to implement one of their own. This is an enormous mistake.

 

As a buyer, you need to take the time to learn the business as it currently exists and give yourself the time to figure out what is currently working and what is not long before you try to implement any changes.

 

Another typical mistake is to completely renovate a space before you have a clear picture of what really needs to be changed aesthetically and what can remain as-is. By undergoing a major renovation, many new business owners blow through all of their working capital and end up in the hole financially before they even know how to make the business turn a profit.

 

The message here is don’t be one of these over confident buyers. Don’t’ fix what isn’t broken! Instead, learn your new system and slowly integrate changes only after your are absolutely sure that they are necessary and only when you have more than enough capital to cover them.

 

Are you a business buyer who wants a business that needs a lot of changes so you can make it all your own? Do you have questions about what kinds of changes are necessary and which ones can wait? Ask us! Please leave us a comment or question here, and we will happy to help you.

Michael Monnot

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

http://www.infinitybusinessbrokers.com


Want to Buy a Business? How Serious Are You?



As business brokers, we get these folks once in a while. They have been scouring the internet for years, looking for the perfect business opportunity and never taking the search past emailing the broker on the listing.

 

If you feel like you are a serious business buyer, but that description sounds like you – you may not be as serious as you think.

 

First and foremost, there is no such thing as the perfect business. It is often said that you only find what you are looking for, so if you look for reasons not to buy a business by demanding perfection, then you will never own a business. Instead, you need to adopt the mindset of a serious business buyer – that there is a great business out there if you are motivated to find it and realistic about what you are looking for.

 

How do you get serious about buying a business? If you are realistic and motivated, you can find any number of businesses that could work for you.

 

First, you need to know that a listing is just the tip of the iceberg, and as such you can’t really make major determinations about a business from this scant bit of information alone. Business listings are meant to help in the search process, so whenever you find a listing that interests you, call your business broker or (if you don’t have your own broker – which you will need, see “Business Broker 101: A Business Buyer’s Guide to Working With a Broker, Part 1: Why Do I Need a Business Broker?“) get in touch with the broker who has the listing. We don’t mean that you should just send an email, get someone on the phone and have a discussion about the business that is listed and see whether or not it may be a good fit for you.

 

At this point if you would like more information about the business you will have to sign a non-disclosure agreement. This agreement protects the seller of the business from those who would use the confidential material released to them in an improper way. If you are a prospective buyer, you need to be prepared to sign these types of agreements. These agreements are in no way binding you to the business, they are just a way for you to see more.

 

If you like what you see after this point, make an offer. By making an offer, you let the seller know that you are a serious buyer who is motivated to buy a business. Once you have an accepted offer, the transaction will then move to the due diligence process. Making an offer in no way forces you to buy the business, it just allows you to take a look at the financial records more closely. At the end of due diligence you will be able to make a decision of whether or not to go through with the purchase of the business.

 

The moral of the story is to change your approach if you are buyer who really wants to own a business but has never made it past a listing search. By having a realistic outlook and staying motivated throughout the process, you will be well on your way to business ownership.

Are you a business buyer who has spent countless hours searching the internet for a business, but haven’t found one you like? Do you have questions about how you could change your approach to have more success in the business market? Ask us! Leave us a comment or question here, and we will be happy to help you get started in 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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