Sell or Grow? How a Business Seller Should Decide Which Path to Choose



It can be truly agonizing when you face the decision of whether or not to sell your business, but the agony of this question can be compounded if your decision to sell comes at the same time as a major growth decision.

 

What if your business is at a turning point where growth has to happen? Should you invest the capital in a business you are seriously considering selling, or should you pass the buck to the new owner? Here are a few things to consider when trying to make this choice:

 

Are you growing the business and investing the capital to service already existing customers with a model you have already used and proven?

 

An example here might help. Say you have a small dress shop, and some of the dresses you make in your in-house manufacturing facility are sold at local boutiques. One of the boutiques has recently expanded the amount of your dresses that they will carry due to high demand, and they would like to have you fill much larger orders for them on a regular basis. This increase in orders would mean that you have to expand the manufacturing part of your business substantially, likely by opening a second location.

 

In this situation, it is probably best to spend the capital and invest in the new manufacturing, then sell the business later. You are going to be serving an already existing customer (the boutique) using and already proven model (your dresses in high demand).

 

Are your ideas for growth dependent on new customer acquisition and retention using a new and unproven model?

 

Here’s another example to illustrate this point. This time you own a bakery, and since your sales have been a bit stagnant you have decided that you want to open a second small location in a newly revitalized part of the city.

 

In this situation, it would likely be best to sell the bakery as-is and let the new owner try out the second location. The new bakery location will require a new customer base and a new (and unproven) location.

 

Do the answers to these questions apply to every case? No, absolutely not. Businesses are very complex, and as such, every business is different in its needs for the future. Have a talk with an experienced and qualified business broker about whether or not the market will respond to your future investment in the business. It may be better to sell now if the market won’t give you back what you’ve invested.

 

Are you a seller stuck in the “to sell or not to sell” game? Do you have questions about whether or not your future plans will pay off in a sale? Please feel free to leave us a question or comment 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


Franchise or Not? How a Business Buyer Decides Between a Franchise or Going It Alone



If you are thinking of entering the world of business ownership by buying an existing business, then one of the decisions you will have to make will concern the type of ownership.

 

There are essentially two options, you can buy into a franchise or purchase an independent business. How do you decide between the two? Think about the differences between the two types of ownership by asking yourself these questions:

 

What type of owner do you want to be?

If you are someone who wants complete and total control of absolutely everything in your business, then franchise ownership is likely not for you. Independent business owners get the freedom to make every decision, and also have the freedom to change things along the way as they decide what works and what doesn’t. If, on the other hand, you are someone who is ok with having some general guidelines in exchange for the branding power and tested business model that comes with a franchise, then this option might be your best bet.

 

What do you want to spend your money on?

When you buy a franchise there are upfront franchise fees and then there are typically also royalties that will need to be paid on a continual basis. If you own an independent business, you will not have these costs, but you will also have to spend a lot more time, energy and money developing your concept and marketing it to acquire new customers.

 

How new are you to business ownership?

If you have never owned a business before, then a franchise might be a great choice. With many franchises, you get an already developed concept complete with operating procedures, corporate suppliers, training help, etc. Sure, veteran business owners also buy franchises, but if you are brand new in the industry you may have a bit of a learning curve if you try to go it completely alone for your first venture.

 

Do you really want to be associated with a big brand?

There are many advantages to buying into a franchise with big brand power. Customers come directly to you, without much marketing effort on your part. On the other side of this coin, however, is the realization that the actions of every franchisee reflect on the rest of the brand. A scandal halfway across the country could affect your bottom line if you share a franchise name with that owner.

 

Are franchises more successful than independent businesses?

You can find a lot of evidence for both sides of this argument, but what is important to remember if you are considering buying a business is that all business ventures come with an inherent amount of risk. There is no way to avoid this risk, and both franchises and independent businesses alike go under everyday.

 

The decision as to which type of business to buy is one that will depend entirely on your goals, how much you are looking to spend, and the business life you would like to have. Look carefully at all of your options, and discuss your questions and concerns with your business broker before making your decision.

 

Are you thinking about buying a franchise, but you have questions about the pros and cons of such a purchase? Ask us! Leave a comment or question here, and we would be happy to answer all of your franchising questions.

 

 

Michael Monnot

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

http://www.infinitybusinessbrokers.com


Keep Your Broker In The Middle: Why Trying To Communicate Without An Intermediary Is A Big Mistake When Buying or Selling a Business



Once you are in the middle of the process to buy or sell a business, it can be tempting to contact the other side without using your business broker.

 

Why?

 

Say you just have one simple question, and to get that question answered you would have to call your broker, your broker calls the other broker, they ask their clients, and then the answer gets passed back to you in reverse order.

 

This might seem incredibly inefficient, but the system is in place for a reason.

 

Let’s use the same example. You only have the one question, so you skip the intermediaries and call the other side. The conversation starts out innocently enough, but then your one question turns into five more, and as you continue asking the person on the other side becomes very offended by your questions, gets angry, hangs up and then decides not to move forward with the deal. Your one question just cost the whole transaction.

 

Business brokers, also known as business intermediaries are there for one reason, to protect the transaction. This is an incredibly important role, as without an intermediary most deals wouldn’t make it to closing.

 

Business transactions are inherently complicated, as someone’s hard work and someone else’s money are about to be exchanged. Like it or not, both buyers and sellers in business transactions have a lot to lose, and many seemingly innocent questions and statements can be misconstrued as offensive and can cause deals to fall apart and both sides to lose money.

 

Another major pitfall of going around the intermediaries? In almost all business transactions, there is a training period that occurs shortly after closing. Want to know what’s not fun and is seriously unproductive? When a buyer and seller hate each other and then have to work together.

 

Don’t make the mistake of trying to go around the intermediaries in the process. Your broker is there to act as a buffer and is there to help you, so keep them in the middle and you will have a far better chance at transaction success.

 

Are you a buyer or seller who has questions about the role of a business broker in your transaction? Ask us! Please leave a comment or question 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


What Are People Buying? A Look At The Trending Industries For Small Business Buyers And Sellers



If you are entering the business-for-sale market as a buyer or as a seller, it it sometimes helpful to know what types of businesses are hot and selling well. Here are the top three industries you will currently find trending in the market:

 

1. Restaurants

 

These types of businesses, whether they are a large fine dining establishment or a small one-man pizza shop, always seem to dominate the market in terms of what’s for sale and what’s selling.

 

If you own a restaurant, the recent upswing in the economy means there are new buyers in the market who are less nervous about the economic climate and therefore willing to take the entrepreneurial plunge. If you’ve ever considered selling, now is a great time.

 

If you are a buyer with a bit of restaurant experience, this is a great industry to enter and there are some high-quality restaurant establishments currently on the market.

 

2. Service

 

The service industry includes a wide variety of businesses. In this sector you can find anything from a large cleaning company with many residential and commercial accounts to a small mobile dog grooming business.

 

If you are a buyer without any restaurant experience, then this sector probably has a few businesses that would cater to your goals and expertise.

 

3. Insurance

 

This is usually one of the fastest selling industries, so if you are in the market to buy an insurance business- don’t hesitate or the listing will be gone before you get a chance to pull the trigger.

 

If you own an insurance business, this is great news for you. These types of businesses, if they are priced to sell, rarely stay on the market for very long.

 

Are you a business owner who would like to know what the business market looks like for your type of business? Are you a buyer who has questions about which industry would fit best with your experience and goals? Ask us! Please feel free to leave us a question or comment here, and we would 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


Buying a Business in the United States: The E-2 Visa



If you are living abroad and are looking for a way to come to the United States, then perhaps the E-2 Visa is for you.

 

What is an E-2 Visa?

 

This is a nonimmigrant investment Visa that allows a business buyer (and their spouse and children) to come to live and work in the U.S. so long as they invest in a business that has been approved as qualified for an E-2 Visa.

 

You can find out more about this type of Visa from the Department of Homeland Security, U.S. Citizenship and Immigration Services website here:

http://www.uscis.gov/working-united-states/temporary-workers/e-2-treaty-investors

 

and read more about the specific requirements here:

http://www.uscis.gov/eir/visa-guide/e-2-treaty-investor/understanding-e-2-requirements

 

How much will I need to purchase an E-2 qualified business?

 

The answer is, it depends. In most cases you will need somewhere around $80,000 to $120,000 to invest in a business to qualify for the Visa, but there are exceptions to this guideline.

 

How do I find a business that will help me qualify for the E-2 Visa?

 

Talk to a business broker who has experience with the immigration process and they should be able to answer any questions you have and help you to find a business that will qualify for the E-2 Visa. We have affiliations with local immigration attorneys and have helped many foreign nationals with the purchase of a business in the United States.

 

Is the E-2 Visa permanent?

 

No, but as long as you are meeting the requirements for the Visa you can be granted unlimited five year or two year extensions. An example of a situation where you would no longer be meeting those requirements would be if you sold the business you used to obtain your E-2 Visa without previously purchasing another business that would also qualify.

 

What if I am looking for permanent immigration status?

 

Those looking for permanent status would need to qualify for a different kind of investor Visa, the EB-5 Investor Green Card. You can read more about this type of Visa here:

 

Buying a Business in the United States: The EB-5 Visa

 

What if I have more questions?

 

Ask us! Please feel free to leave us a comment or question below, or you can read more about using a business investment to come to the United State on our website here:

http://www.infinitybusinessbrokers.com/visa/

 

Michael Monnot

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

http://www.infinitybusinessbrokers.com


Buying a Business in the United States: The EB-5 Visa



If you are living abroad and are looking for a way to permanently immigrate to the United States, then perhaps the EB-5 Visa is for you.

 

What is an EB-5 Visa?

 

An EB-5 Visa is for investors who have invested a substantial amount in a new business venture in the United States that allows for a certain number of U.S. jobs to be created. This is a Visa that allows for permanent immigration status for the investor, along with their spouse and unmarried children.

 

What qualifies as a substantial amount?

 

The answer is it depends on the circumstances. In some cases, the amount invested for this type of Visa could be as little as $500,000.

 

You can find out more about this type of Visa from the Department of Homeland Security, U.S. Citizenship and Immigration Services website here:

http://www.uscis.gov/working-united-states/permanent-workers/employment-based-immigration-fifth-preference-eb-5/eb-5-immigrant-investor

 

How do I start the EB-5 process?

 

Talk to a business broker who has experience with the investor immigration process, and they will be able to answer any questions you may have about the EB-5 Visa process, as well as referring you to a qualified immigration attorney. We have helped many foreign national investors come to the United States, and have relationships with local immigration attorneys.

 

What if I don’t have $500,000 to invest?

 

There is another type of Visa, the E-2 Visa, that allows foreign national investors to come to the United States for a typical investment of between $80,000 to $120,000. This Visa does not grant you permanent status, but you are allowed unlimited five year or two year extensions.

 

You can read more about the E-2 Visa here:

 

Buying a Business in the United States: The E-2 Visa

 

What if I have more questions?

 

Ask us! Please feel free to leave us a comment or question below, or you can read more about using a business investment to come to the United State on our website here:

http://www.infinitybusinessbrokers.com/visa/

 

Michael Monnot

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

http://www.infinitybusinessbrokers.com

 

 


No Yachts For You: Why A Business Seller Should Stay In the Game



When you own a business and are preparing to sell, a big part of your focus is probably on the endgame. What are you going to do with all of that capital? Buy a huge boat? Start a collection of sports cars? If you want to continue the entrepreneurial spirit, as we suspect many of you do, you can buy or invest in another business.

 

I just sold my business, why on earth would I buy another?

 

It may surprise you to hear this, but many former business owners jump right back into business ownership soon after they sell. Let’s face it, entrepreneurs are a special breed, and the fact that you work for yourself and decide your own fate everyday is what drives you. Re-entering the 9 to 5 or sitting idle in retirement probably doesn’t sound very appealing to you. Perhaps what you need is a change of business location, or perhaps a different industry all together.

 

If you are getting ready to sell, ask yourself If I had to buy another business, what kind of business would I buy?”. If you find your answer to that question very appealing, then perhaps another business is for you. Ask your business broker about what kinds of businesses are currently available in areas you find interesting.

 

I sold my business to retire, there is no way that I want to work those hours anymore!

 

If you don’t find the exercise of considering owning and running another business appealing – then instead you can make a very big impact on the entrepreneurial community in your area, stay active enough to quell your own entrepreneurial drive, and share the wealth of knowledge you’ve gained as a business owner over the years. How? You can become an investor.

 

Think back to your younger-new-business-owner self. You would have done anything to have today-you as a mentor and investor, right? Talk with your business broker about what kinds of investment opportunities are out there. You can be a silent partner, a part-time owner – the depth of your involvement is entirely up to you. The place you call home will benefit greatly from your continued contribution to the small business community.

 

Are you a seller who is curious about investing? Do you want to know what industries are available to buy in your area? Ask us! Please 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


Do Your Books Look Good? Why You Need Great-Looking Financials



If you are considering selling your business, whether now or in the near future, the part of your business that will be instrumental in the success of your sale will be your financial records.

 

Why?

 

Every buyer who considers your business will probably see your financial information long before they ever see the inside of your location. Your books will speak for your business, so they need to make that critical first impression. 

 

You will need to have the financial core of your business ready for buyers in a concise and ready to read format. Make sure everything is legible. A copy of your tax return that has been recopied so many times you can barely read it is not going to work.

 

Another major issue we come across is owners who have a huge box of unorganized and miscellaneous pieces of paper. These sellers want buyers to somehow divine the bottom line of their business from that collection of information. It’s not going to happen.

 

If you are someone who doesn’t have the know-how or time to turn that box into something usable, ask your business broker for help. They will know professionals who can make heads or tails of your numbers in a way that will really speak to potential buyers.

 

What information do I need to have ready?

 

You will need:

 

  • Your past three years of tax returns.
  • Profit and Loss statements (P&L’s) for the past few years
  • An up-to-date balance sheet
  • Any contracts, like client contracts or vendor contracts
  • A copy of your lease
  • Relevant documentation that shows revenue or costs
  • Employee contracts
  • Insurance information
  • Documentation that shows cash flow

 

Once you have this information assembled and put together in a way that will make sense to buyers, you will be well on your way to a successful sale.

 

Are you a business owner who has a giant box of financials you’d rather not deal with? Do you have questions about your current financials and whether or not they are buyer-friendly? Please feel free to leave us a comment or question here, and we will be happy to assist you with creating great-looking financials.

 

 

Michael Monnot

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

http://www.infinitybusinessbrokers.com


Dear Business Buyer: How To Navigate The Negotiations In A Small Business Sale



When you’ve entered the business-for-sale market, you will find that some businesses are priced no where near what you would be willing to pay. If you are still really interested in the business, you can put in an offer that makes sense to you.

 

If these two numbers are so different, how do buyers and sellers come to an agreement on the difference?

 

Negotiations.

 

Business brokers are also known as business intermediaries because they act as a buffer between the parties in a transaction so that the transaction happen.

 

In business transactions, the buyer and seller are the boss. A broker has to let a seller set the price of their business, and on the other side, whatever a buyer chooses to offer the broker must present to the seller.

 

This freedom allows for a buyer or seller to ensure they are getting what they want, but it has the pitfall of allowing one side to offend the other and kill a deal.

 

If you are a buyer preparing an offer, and your broker is telling you that the offer is only going to offend the seller – it would be wise to listen. You always have the ability to walk away from the deal, but you would be surprised how many buyers and sellers are able to reach a middle ground that works for everyone if both sides are able to stay amicable.

 

The moral of the story? Listen to the advice of your business broker!


Are you a buyer who wants to know how to make offers that will keep both you and a seller happy? Ask us! Leave a comment or question here, and we would 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


What Is An Earn-Out And Do I Want One? Questions For Buyers And Sellers



The price a seller puts on their business and the amount a buyer is willing to pay are rarely the same, but in some situations the difference between these numbers is too large to reconcile with simple negotiations. It can be difficult in certain cases to determine what the value of a business should be because the value is contingent upon something occurring in the near future.

 

Here’s an example: A manufacturing business is on the market, but the owner has just landed a large contract that is going to make the business a great deal of money over the next three years. This contract, if all goes according to plan, will increase the value of the business considerably. The seller of this business will want to be paid for this expected value, as this contract was a long time and a lot of work in the making – but a buyer is not going to want to pay for something that hasn’t happened yet. How do a buyer and seller reconcile these very different opinions on value? They use an earn-out.

 

What is an earn-out? In this type of arrangement the buyer will continue to pay the seller an agreed upon amount as certain milestones are reached, resulting in a higher value for the business overall. In our manufacturing example, the buyer pays the seller an initial amount. Then, as the manufacturing contract goes into full effect – the business will make more money. When the business hits the agreed-upon milestones, the buyer will then pay the seller for those milestones.

 

Is an earn-out for me? Probably not. These types of agreements are rare in the small business world, and as you can see from our example, some very unique circumstances need to be in place to make an earn-out work.

 

In most small business transactions, seller financing is used. This situation occurs when a buyer brings a large down payment and then pays the seller back the remainder over a set period of time (find out more about seller financing here: The Business Buyer’s Guide to Seller Financing).

 

In both the earn-out and seller financing deals, the buyer will have the advantage of knowing that the seller has real faith in the future of the business because the remainder of the money owed is contingent upon the future success of the business. The seller has the advantage of getting more for their business if the business does well, like in the earn-out situation.

 

How do I figure out if an earn-out is for me? Ask your business broker. Any experienced business broker has seen what works and what doesn’t in terms of earn-outs. Your broker will be able to advise you on the plusses and minuses of all of your options.

 

Are you a buyer or seller who is curious about whether an earn-out is right for your situation? Do you have more questions about how earn-outs work? Ask us! 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



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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