What Am I Buying? How Business Buyers Should Look At Businesses



chairs near the summer cafe

 

When most first-time business buyers first call us, they have only one requestthey want to go see some businesses. They want to drive by, pop in and take a tour.

 

This is exactly the opposite of what a new buyer should ask for. You are buying a business, not a house – and the differences between the two are huge.

 

A house is four walls and the stuff inside. To make a judgement about whether or not a particular house is a good investment, you need to walk around and have a look at those four walls and the stuff inside.

 

An operating business is not four walls and the stuff inside. The four walls are usually leased from someone else and the equipment and furnishings are the assets of the business – not the business itself. Yes, when you buy a business you also buy the assets, but that isn’t all you are getting. You are getting cash flow.

 

You can’t drive by, pop in or take a tour of cash flow. You learn whether or not a business is a good investment by looking at the numbers, by talking to the seller, by going over inventory lists and by examining contracts.

 

The depreciated value of the equipment, the furnishings, the vehicles, even the color of the paint have very little to do with how a business is priced and should have very little to do with how you judge the price of a business. As such, tours are really not that important. Aesthetics can be easily changed once you take over – so focus on how the business makes money instead.

 

A better way to look at businesses starts with a conversation with an experienced and qualified business broker. In this initial conversation you and your broker will talk about what your goals are for business ownership and then search for businesses based on those goals. Once you have a few businesses in mind your broker can help you decide if the price is fair based on the numbers and also help you decide if you want to pursue more information.

 

Want to take a quick peek at what types of business are currently for sale? Use our Business Search Tool by clicking here.

 

Have more questions about buying a business? Check out these articles or get in touch by clicking here.

 

Don’t Get Kam Chancellor’d – Why Business Buyers Can’t “Just Go See” A Business

 

What To Do With Skeletons: How Business Buyers Should Deal With Due Diligence Issues

 

Why Business Buyers Can’t Ignore Red Tape

 

The NDA – Why Business Buyers Should Love This Document

 

Breaking The Mold – How A Business Buyer Can Stand Out

 

3 Steps to Buying a Business – A Guide For Business Buyers

 

3 Financing Options For Small Business Buyers

 

 

Michael Monnot

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

http://www.infinitybusinessbrokers.com


Reality and the Value of Your Business



We’ve owned businesses, so we completely understand how much of an investment small business ownership is. Whether you started from scratch or purchased the business from someone else, you had to put a huge amount of capital up to start your life as an owner. You’ve then spent the rest of your time at the helm constantly reinvesting in your business to help it thrive and grow. If you go back and add up all of that financial investment – it’s huge.

 

When the time comes to part ways with this business you’ve invested in there can be an initial urge to put out a price tag that would recoup all of that invested money. The reality is that number is probably well beyond the realm of possibility.

 

The harsh truth of the small business market is your business is only really worth what someone else is willing to pay for it. No buyer in their right mind would give you way more than your business is currently worth. Instead you need to price your business based on things like cash flow, your current financial statements, your inventory – you get the idea.

 

Blank tag tied with brown string. Price tag, gift tag, sale tag, address label, etc.

 

To be a successful seller, you need to be smart about your listing price. You want your listing price to generate interest, to be competitive with other businesses like yours that are currently for sale and to be in line with what businesses in your industry have actually sold for. The number you want and the number that makes sense might be very different, but you need to be willing to compromise if you ever hope of reaching a closing table.

 

A quick note here – be wary of a business broker who will let you demand to list the business for whatever you want. A great broker will help you decide on a number that makes sense based on your numbers and the current market. A terrible broker will take your crazy-priced business listing just to get the listing, knowing full well that the business will never sell at that price. The point of listing your business is to sell it, so price it to sell.

 

If your goal is selling, you also have to be prepared for the attitudes of buyers as they relate to the value of your business and the legitimacy of your listing price. Many new buyers don’t consider the vast investment you’ve made or the cash flow the business is currently generating – they incorrectly consider businesses as just four walls and the stuff inside, an asset sale. This misguided attitude means that many initial offers from buyers might seem shockingly low. The important thing to remember when you get a low offer is that it is merely a starting point for negotiations in much the same way your listing price isn’t the bottom number you would like to get out of your business. If your number is realistic and they are a serious buyer you can more than likely reach a middle ground that will make both camps happy.  

 

The message here is to go into the process of selling your business with an open mind – and success will follow.

 

Are you thinking about selling and want to know what businesses like yours are currently selling for? Do you have questions about how the process works? Ask us! Leave any questions or comments here and we would be happy to help.

 

 

Michael Monnot

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

http://www.infinitybusinessbrokers.com


Why No One Is Buying Your Business: The Price Hurdle



If you are considering listing your business, you may have thoughts about how you think the process is going to go.

 

The version of your business sale that exists in your mind, however, is likely to be more fantasy than fact. You probably imagine that shortly after listing for what you consider a more than reasonable price multiple offers from motivated sellers will come pouring in – and a fierce bidding war will ensue. Within a month of this imaginary listing scenario you are drinking margaritas on the beach with the proceeds of your highly successful business transaction in hand.

 

Reality, unfortunately, will be nothing like this fantasy business sale.

 

If you are considering selling your business, one of the most important things you can do to have a successful transaction is to manage your expectations. Going into the selling process with a realistic attitude will mean that you are able to deal with issues as they arise and will be better equipped to negotiate with buyers. In this first article of our “Why No One Is Buying Your Business” series we will look at the biggest expectation hurdle for sellers – price.

 

Jointed doll jumping over a 500-Euro-Banknote, on white background

 

Your business is your baby, and we get that. We’ve owned businesses too. You invest countless hours, what feels like endless streams of money and tons of energy into this enterprise – and then you have to put a number on all of that investment.

 

Most sellers who set their own price set it way too high. The reality of business sales is you aren’t going to get back every penny and every hour you’ve ever put in. Your business is going to sell for what a buyer is willing to pay for it – and that number will be related to the market, your current cash flow, the value of your inventory, etc.

 

If you are unfortunate enough to get an inexperienced broker or a broker who wants your listing with no intention of ever trying to sell it, you will likely be allowed to list your business for whatever you want. This is a huge mistake.

 

A business priced too high will languish on the market, and any buyer who takes a look will wonder about the credibility of a seller who would ask for such an unrealistic number.

 

Someone who is serious about selling their business will instead look for a broker who will help them put a realistic listing price in place – a price that can be backed up by the market and the numbers in the books. A fair listing price will bring the serious buyers in the door and give you a far better chance at reaching a closing table.

 

If you are serious about selling or are curious about what you might be able to get for your business, contact us and we can discuss a realistic listing price.

 

Join us for the second article in this series where we will discuss another big sales hurdle – purchase contract terms.

 

 

Michael Monnot

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

http://www.infinitybusinessbrokers.com


What Are Business Buyers Buying?



If you are considering selling your business, then you might be curious as to what buyers are currently buying. The May 2016 BizBuySell report, The Demographics Of U.S. Small Business Buyers And Sellers (read the full report by clicking here) holds some clues:

 

buyerspricerangesimage

From BizBuySell’s The Demographics Of U.S. Small Business Buyers And Sellers, May 2016 Report
(read the full report by clicking here)

 

Over half of the buyers looking for businesses are shooting for a business in the $100,000 – $499,999 range, great news if your business listing price falls within that range.

 

 

topbuyersectorsimage

From BizBuySell’s The Demographics Of U.S. Small Business Buyers And Sellers, May 2016 Report
(read the full report by clicking here)

 

Good news also if your business fits into one of the top five categories of restaurants, retail, internet businesses, manufacturing or bars.

 

Do you have a business (like a restaurant or retail business between the $100,000 – $499,999 range) that hits one of the marks currently popular with buyers? Would you like to know what businesses like yours have recently sold for? Leave any questions or comments here and we would be happy to help.

 

 

Michael Monnot

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

http://www.infinitybusinessbrokers.com


How Online Reviews Affect Your SEO & Attract New Customers



By Guest Contributor Krystal Burroughs – www.reviewdriver.com

 

localsearch

 

Unfortunately just relying on your website, social media and paid online advertising is not enough to always ensure you are attracting new customers. We have all spent too much time and money on our website to only find later that no one was visiting the site. Then we hear if we pay for SEO, blog and post to our social media sites daily that will bring the ideal customers our way.

 

While all the above are great plans for being found online there is still something else to consider. According to a recent study by Moz “Online reviews may make up 10% of the factors that search engines like Google use to rank pages”.

 

In addition to ranking what are your potential customers seeing about your business online?

 

How important are online reviews?
90% of consumers say they read online reviews before making a purchasing decision.
72% of consumers will take action only after reading a positive online review.
86% of people will hesitate to purchase from a business that has negative online reviews.

 

Not surprisingly many of the first calls I have with potential clients is them lamenting about bad reviews and how they are hurting their business. The questions to ask yourself when you find you are unhappy with your business ranking and online reviews:

 

Do you ask for customer feedback?
Do you implement changes based on the feedback you receive?
Do you monitor your online presence and reputation?

 

The answer to these questions is key to the future success of your business.

 

In the past it was cumbersome to get real feedback and even more so to ask customers to give you an online review. We have taken the pain out of this process. Give us a call today to not only improve your ranking and SEO but also improve your customer’s experience and loyalty.

 

 

linkedin reviewdriverFINAL
Krystal F. Burroughs
krystal@reviewdriver.com
Director of Client Happiness
Review Driver
(727) 218-9218

Stats Source Link: http://www.invespcro.com/blog/the-importance-of-online-customer-reviews-infographic/

 

 

Michael Monnot

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

http://www.infinitybusinessbrokers.com


What Do Business Buyers Look Like?



As a business seller, you may wonder what the field of buyers looks like. BizBuySell’s The Demographics Of U.S. Small Business Buyers And Sellers, May 2016 Report (read the full report by clicking here) gives a few hints:

 

buyeragebreakdownimage

From BizBuySell’s The Demographics Of U.S. Small Business Buyers And Sellers, May 2016 Report
(read the full report by clicking here)

 

While many sellers might expect the buyers coming in the door to be young millennial-age upstarts, the truth is most business buyers are essentially middle-aged (40-59 years old).

 

 

buyerincome

From BizBuySell’s The Demographics Of U.S. Small Business Buyers And Sellers, May 2016 Report
(read the full report by clicking here)

 

Business buyers may also surprise you as a seller because the largest group have what many would consider a modest household income of $50,000 – $99,999, not the ultra wealthy angel investor you may have visualized.

 

Have more questions about the motivations of buyers? Want to know what businesses like yours have recently sold for? Please leave any questions or comments here and we would be happy to help.

 

 

Michael Monnot

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

http://www.infinitybusinessbrokers.com


How Does A Business Seller Get Top Dollar? It’s All In The Books



Unless you own an accounting firm, it’s likely that the record keeping and accounting parts of your business aren’t necessarily your daily top priority. You have a business to operate, employees to manage and inventory to sell.

 

However, if you are thinking about selling your business in the futurethose record keeping and accounting skills will be paramount in getting you the biggest bang for your business investment.

 

Handwritten accounting on the open pages of some old ledgers

 

How? Think about this point from a buyer’s perspective.

 

You are looking at two nearly identical businesses. They are in the same industry, in similar markets and locations and they generate the same amount of cash flow. The first business has immaculate records that stretch all the way back to the day they opened the doors – tax returns, P&L statements, inventory records, payroll records, the list goes on. When you as a buyer request records for this first business, they are already complete and organized and are handed over almost immediately.

 

For the second business, a request during due diligence for records gets you a poorly copied set of two years of tax returns and a box of receipts.

 

Remembering that these businesses are essentially the same in terms of cash flow, which one are you going to be willing to buy and which one will you pay more money for? The first business, right?

 

Why? You know what you’re getting. The history of the business, the current numbers, the contracts and leases – everything is right there for you to look at. There’s no guessing or lack of transparency. It’s all there on paper in black and white.

 

If this scenario has you instantly picturing the dusty box of receipts shoved under your desk – all is not lost. Getting your books in order may be challenging, but the return on the investment of time will likely be substantial. You want buyers to be looking at how well your business is doing, not wondering how someone so disorganized keeps the doors open.

 

If you need help, help is available. Your business broker can guide you and refer you to a CPA who specializes in making records useful during a business transaction. All you need to do is ask and be up-front about the condition your records are actually in.

 

Are you panicking about the box of disaster under your desk? Would you like to know what types of records business buyers are going to want to see? Please contact us at Infinity Business Brokers today and we would be happy to help.

 

 

Michael Monnot

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

http://www.infinitybusinessbrokers.com


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Independence in the Workplace: Your Employees’ Top Grievances



By Guest Contributor Jessica Trippler – www.BrinkResults.com

 

As we celebrate our nation’s independence, many working professionals wish they could muster the courage of our forefathers to make their own Declaration of Independence. Poorly managed employees have a valid list of grievances. Could your management style be stifling your company’s productivity?

Consider these common workplace grievances and learn how to foster independence which will strengthen employee morale while boosting your bottom line.

 

Office lady being scared because of too much paperwork to do

 

1. “I don’t know what’s expected.” Lazy management is not independence. You might think you are giving your employees freedom, but an approach which is too “hands off” will make them feel anxious. Give clear direction. Employees can’t hit a moving target and will grow weary of poorly defined or frequently changing goals. Don’t leave your people guessing about whether they’re meeting expectations.

2. “I’m sick of being micromanaged.” Mentor, don’t hover. Just like “helicopter parents,” managers who hover too closely will stifle creativity. Make yourself available to answer questions and check in regularly, but don’t breathe down your employees’ necks. Give them space to brainstorm and experiment. Employees will grow more confident and competent when they are given the freedom to explore. Demonstrate trust and expect failures. It’s all part of the innovation process.

3. “I don’t feel appreciated.” People need to feel a sense of purpose. This may be lacking in a workplace atmosphere so “free” that progress is never measured or rewarded. A lack of manager awareness means poor work and productivity alike will go unnoticed. Your employees will begin to wonder if their accomplishments even matter. Be deliberate about recognizing achievements.

4. “My ideas aren’t valued.” Don’t override your team’s decisions without proper consideration. The reason you hired these professionals is because they bring a diverse and valuable collection of competencies. If decisions are routinely vetoed by management, employees will stop innovating. Listen to and carefully evaluate new ideas. If you must veto, offer solid reasoning. You lose your employees’ respect when you presumptively dismiss their proposals.

5. “I’m always the last to know.” The workplace is a fast-changing environment. If managers don’t prioritize communication, they will cultivate disgruntled workers. Share information as quickly and authentically as possible. Schedule regular meetings so communication isn’t shoved aside by deadlines. Nothing is more frustrating than feeling you’ve wasted time and energy pursuing a defunct goal. Managers who are candid and communicative will reap their employees’ respect.

6. “I’m treated like a number.” Get to know your employees as individuals. Call them by name. Find out what makes them tick. You never want to overstep personal boundaries, but a little interest goes a long way in building trust. Share your own relevant career experiences and listen to employees’ ideas on how to improve the workplace. By establishing a safe environment for personal expression, you will strengthen employee satisfaction.

 

Managing right is the key to fostering workplace independence. Brink Results can help through targeted training, workshops and behavioral assessments like ProScan® , which empowers management to capitalize on employees’ strengths and motivations. This creates an environment which reduces stress while increasing morale.

Your employees will thrive in a secure, communicative workplace where independence is supported through clear direction, regular feedback and recognition of achievements.

 

 

 

Photo Jessica TripplerBrink Logo PNG

Jessica Trippler

Director of Sales
Hire Right. Train Right. Manage Right.
Brink Results, LLC
10060 Amberwood Road
Fort Myers, FL 33913
Office: 239.334.1050 Ext. 204
Cell: 201.563.2243
Fax: 239.288.2493
www.BrinkResults.com

 

 

Michael Monnot

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

http://www.infinitybusinessbrokers.com


Selling Your Business? Why You Absolutely, Positively Must Have A Website



We all know the importance of an online presence in our digital world, but what many business owners may not consider is what the lack of an online presence can do to the possible future sale of their business.

 

Why would a lack of an online presence hurt a business sale? Consider the view from the other side.

 

You are looking for a business to buy, a good investment. You find two nearly identical businesses for sale – similar numbers, similar industries and similar locations. One business has a poorly maintained Facebook page that appears to have been nothing more than an afterthought. The second business has a visually appealing and highly informative website.  

 

As an investor, which business appears from it’s online presence to be more sound? Which one appears to have a more attentive and growth-driven owner? Which business looks like it would be favored by potential new customers?

 

The answers to these questions are easy. The business with the better website, right?

 

 

Web Design Online Technology Working Office Concept

 

You no longer have to be an IT expert to give your business a decent web presence. There are a multitude of web design services like Wix or Squarespace that allow you to use simple templates and drag-and-drop features to make your own website from scratch. There is also the option of hiring a website designer, although this will be more expensive than a do-it-yourself version. Either way, your business will have a web presence that speaks to a level of professionalism that a Facebook page (or no online presence at all) could never do.

 

Ok, I get that I need a website, but what should I include? A good business website has the name, address, phone number, email and other necessary contact information that is easy to find. You should also include information about the products or services your business offers, your hours of operation, menus or product lists and any other helpful information that you would want your customers to know. How are you different from the competition? How will your services or products help?

 

By having a visually appealing and highly informative website in place before you list your business for sale you will be giving buyers a great first impression. You will also be telling prospective buyers you are a business owner who is interested in the growth and future of the business you’ve built far better than the perception that you are a business owner who is behind the times.

 

Are you a business owner who is thinking about selling but don’t have a web presence to speak of? Would you like to know more about what buyers look for in a business? Please feel free to leave any questions or comments here and we would be happy to help.

 

 

 

Michael Monnot

941.518.7138
Mike@infinitybusinessbrokers.com
12995 South Cleveland Avenue, Suite 249
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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