Realistic Expectations and Your Business Broker – 3 Pieces of Advice for Business Buyers



Reality Check written on desert road

 

Buying a business is a daunting task, and just like you probably wouldn’t go to court without a lawyer or buy a house without a real estate agent – a smart business buyer needs a good business broker to help them navigate the business buying process.

 

What makes a good broker a good broker? There are a few major things.

 

A good broker won’t just send you NDAs to sign.

When you first contact a broker or first inquire about a particular business, you shouldn’t immediately get a seemingly automatic reply with the NDA (non-disclosure agreement) to sign. If you are able to gain access to confidential business information about a business that is for sale without a broker asking you anything about yourself – that broker is not going their job. One of the most important functions that a business broker serves is to keep the confidentiality of businesses that are for sale. A breech in confidentiality can be disastrous for a business, and a big part of maintaining confidentiality is determining if the buyers who are inquiring about this business are even buyers at all. You might be a competitor trying to find out if you can steal the best sales staff by telling them their employer is selling and they will soon be out of a job. You might be someone who can’t possibly afford to buy this business and therefore have no reason to gain access to confidential information. You might be an employee who is trying to find out what your owner is up to so you can warn your fellow employees about the for-sale status of the place you work.

The point here is that it can be a bit frustrating as a buyer when you aren’t able to get the information you need immediately. It can seem intrusive that a broker wants to have a conversation with you about your finances and your work experience – but these practices are what you want to see. This diligence where confidentiality is concerned is what separates a good broker from the bad.

 

A good broker isn’t always available.

A good broker is busy. They are meeting with sellers, they are assembling comprehensive marketing packages for buyers, they are taking pictures and shooting videos, they are having conversations with other buyers, they are working out commercial leases with landlords and property managers – the list goes on and on. Many new buyers get frustrated when a call (or three calls in five minutes) goes unanswered. Understand that if your broker is good at their job they won’t always be available. You aren’t their only client – and you shouldn’t be.

A good broker will find the time to address your concerns, answer your questions and negotiate with the other parties on your behalf. Just realize that it might not always be an immediate response and that any delay means that your broker is doing their job – it doesn’t mean they are ignoring you.

 

Your business broker is only one part of the process.

Buying a business is a long and often very frustrating process. Why? There are many personalities and the inherently complicated nature of a small business to contend with. In a transaction there can be buyers, one or more sellers, the buyer’s broker, the seller’s broker, the buyer’s attorney, the seller’s attorney, the transaction attorney, one or more business accountants, the property owner, the property manager and maybe even a few key employees. If you’ve ever tried to get four people to agree on where they should go for dinner, you can guess that trying to get all of the parties involved in a business transaction to agree on a complicated purchase agreement can be a monumental task. Within that task your broker acts as a negotiator and as a buffer between all those involved. This means that when you ask for something from the other side, your broker’s hands are tied if the other side is dragging their feet or refusing to cooperate.

The point here is the most successful business buyers are also the most patient, and they also understand how complex their transaction can be.

 

Managing expectations is an important part of the successful purchase of a business – so find a broker who wants to have in depth conversations about your goals for business ownership, your experience and the capital you have available to invest. Look for someone who answers your calls and emails in a timely (although not immediate) fashion. Once you have a good broker understand that there are a great many things about a business transaction that they can’t control. Be patient and realistic, it’s the best way to set yourself up for the purchase of the right business for you.

 

Do you have more questions about the business buying process? Would you like to know what information we would ask from you before we send you the NDA and why we require that information? 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


Investment Opportunity: An Environment-Smart and Health-Smart Pest Control Business



If you are looking for an investment opportunity, but have concerns about the risks of a new business venture – this might be for you.

Join a successful, green pest control business as a 50/50 partner. This business has fantastic potential for growth and you get a partner who has the environment-smart and health-smart processes already in place. This is truly a unique investment opportunity!

Watch the video below and then contact us with any questions.

 


A Steep Learning Curve And The Myth Of Perfection – Why Business Buyers Need To Think Ahead



Illustration of a Silhouette of a Guy Looking over a Cliff

 

You’ve made the plunge, you’re buying a business – welcome to the fantastically tough but fantastically rewarding world of entrepreneurship. You may just be starting your search, or the closing table is next week – but wherever you are in the process of buying a business there is a very big change in your life that is approaching at light speed. Life as a small business owner.

 

Many new buyers (and sometimes veteran buyers too) have a roads-paved-with-gold attitude when it comes to what happens after the closing table. They have visions of happiness in their newfound investment, visions of getting the keys and starting in a brand-new and wonderful life.

 

Life as a business owner can be very wonderful, but it’s also very hard – especially in the first few weeks. A buyer who wants the smoothest transition possible into entrepreneurship needs to remember two all-important things.

 

There will be an extremely steep learning curve.

 

Regardless of your experience in the industry, any new business is going to come with a very steep learning curve. Why? Unlike an employee at a new job who only really needs to learn their own responsibilities when they get hired, a new owner has to learn EVERYTHING. Not only do you have to learn the day-to-day logistics and operational procedures, you need to learn how to do payroll, how to pay taxes, how to make a schedule that won’t cause a mutiny, how to order new inventory, how to get licenses and permits, how to acquire new customers, how to keep your customer base happy through the transition of ownership, how to pay the rent and deal with your new landlord – the list goes on and on.

 

This steep learning curve should in no way freak you out or dissuade you from small business ownership, instead it should help you mentally prepare for a tough few weeks ahead. Once you get the hang of things it will obviously get a lot easier. Just don’t set yourself up for failure by thinking it will be a walk in the park.

 

Your new business isn’t perfect.

 

You may come out of the due diligence phase thinking your new business is perfect every way. Reality, however, will rear her ugly head in the first few weeks or months of ownership and turn your perfect little business into what it really is – a business. There is no such thing as a perfect business. They all have flaws. They all have skeletons in the closet. The only thing you can know for sure as a new small business owner is you are going to find something (or many things) that make you unhappy. There are two ways to react to imperfections. One is to completely freak out and try to sue everyone who was a part of the business sale, then lock the doors and walk away. That is not the productive solution.

 

The other, and far better way to react is to take a deep breath and figure out a way to solve your problem. Owning a small business means having to constantly be ready to deal with issues – so treat the unearthing of skeletons as the first real test of your entrepreneurial grit.

 

Entrepreneurship is hard, but it is also a great way to earn a living. Think of the transitional time ahead of you as a challenge to be conquered and not a mythical field of roses.

 

Have more questions about the path to business ownership? Are you curious about what businesses would meet your goals for life as an entrepreneur? Ask us! Please leave 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


Access And The NDA – Why Buyers Should Relax About Non-Disclosure Agreements



Be silent

 

If you are new to the business buying process, there are several steps that can seem very uncomfortable – like having to give potential sellers, business brokers and your possible new landlord access to proof of your finances (so those involved in the transaction can see proof that you can, in fact, afford the business you are about to buy). While initially unpleasant these steps are critically important for a successful business purchase.

 

One of the most unpleasant steps for new buyers is the signing of non-disclosure agreements, or NDAs – but it is also one of the most important.

 

What is the NDA and why do you need to sign it?

 

The NDA is an agreement that says you will not disclose any of the information you are about to be given on a particular business – including the fact that it is this particular business that is for sale. Each business you request access to will require it’s own NDA, so the longer you shop for a business to buy, the more NDAs you will have to sign.

 

Confidentiality in business sales is of the utmost importance, so for the protection of the business and the protection of the seller the NDA is a must before any information is given to any potential buyer. It provides the seller of the business with legal protections – meaning legal consequences for a careless buyer who discloses anything about the business to someone they shouldn’t, even telling someone inappropriate that the business is for sale. Without this confidentiality people like the staff, the customers and the vendors might think the business is for sale because it is on the brink of failure (almost never true) and will leave the business for better prospects somewhere else.

 

The importance of non-disclosure means if you as a buyer are uncomfortable with signing the NDA, you aren’t going to be able to buy a business. The NDA can’t be changed to suit your tastes, it can’t be amended to take the legal risks for you away – it is what it is. Sign it or don’t, but no seller in their right mind will allow a buyer anywhere near their business or their books without this all-important legal protection.

 

If it is the legal repercussions you are concerned about – you shouldn’t be. All you have to do is keep the information you are given to yourself. That’s it. If you tell your neighbor’s wife in a casual conversation at the mailbox that the business is for sale or you talk to your barber about the last three years of tax returns you’ve been shown – those potentially devastating disclosures will land you in hot water. If you talk to your broker, your attorney or your CPA about this business you are thinking about buying – there will never be a need to enforce the legal repercussions of the NDA.

 

NDAs are good for you as a buyer because they keep all potential businesses on the market safe from the disasters a discourse can cause. You don’t want you brand new business adventure to have been damaged by another careless buyer. You also want access to all of the proprietary and financial documentation possible before you buy so you can sure about your purchase before you write a big check. The NDA provides for both.

 

Don’t be nervous about signing the NDA, as long as you do what’s asked of you by keeping the information to yourself – it will get you one step closer to owning your own business.

 

Do you have questions about the legal repercussions of the NDA? Would you like to know more about the process of buying a business? Ask us! Please feel free to leave any comments or questions here and we will 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 Long Does It Take To Buy A Business? Well, It’s Complicated



For most businesses, the time on the market between listing and selling is in the neighborhood of 9 to 12 months. The typical time between an accepted purchase contract and the closing table is somewhere around 30 to 90 days. These industry stats might be helpful for a business seller, but if you are a buyer – what does the process of buying a business mean in terms of time frame? How long will it take a buyer to buy a business?

 

Closeup businessman looks at his watch

 

The answer is it depends. And it’s really complicated. Yes, that’s a terrible answer, but it’s the truth. Here’s why:

 

It depends on the industry.

Like any market there are waves of popularity for specific types of businesses – and if the type of business you are looking for is a hot commodity, it might take you a while to get your hands on one. Great businesses in popular categories land under contract very quickly, so you might miss out on a few before you get lucky. What that means for time frame is a lot of waiting around for another shot.

 

It depends on what’s for sale.

You might have a specific type of business in mind, but within that category the current choices on the market may not hit enough of your criteria to warrant a purchase. Like the popular industry problem we just talked about, waiting for a business to come up for sale that fits what you want could take a while.

 

It depends on the complexities of the purchase contract.

Even if you luck out and get a business that suits your goals under contract, the length of time to get from accepted contract to closing varies from deal to deal. Some close quickly, in a month or so. Some contracts need to be negotiated for over a year. It depends on many, many factors and varies considerably from deal to deal. You may have many aspects of the purchase contract to negotiate or it may be very straightforward. The only way to know will be to get to this phase of the transaction and then to have some patience with the process. 

 

It depends on the existence of financing.

If you aren’t paying all-cash for your new business (most people don’t), then the time frame can be prolonged because of financing issues. If you are working out a deal where seller financing is in the mix, that can add another layer to the negotiation process. If you are getting your funding through a more traditional lending institution or through the Small Business Administration (S.B.A.), then the time table of that lender will also play into the mix.

 

It depends on the motivation of the buyer.

It can be really difficult to make a huge decision like the decision to buy a business, especially because there is no such thing as the perfect business to buy. Many, many buyers (90%) enter the market and never buy anything, so looking at the average time it takes the full population of buyers to buy a business probably won’t be very helpful because for the vast majority of those buyers the time frame is forever. You can also be extremely motivated and the business you want just isn’t out there at the moment.

 

The point here is the length of time it takes you to find the right business and then reach a closing table isn’t as important as focusing on making sure the business you end up with fits your goals. It also isn’t as important as staying motivated and patient with the process. If owning a business really is in your future, you will be able to meet your goal.

 

Have more questions about the process to buy a business? Are you curious about what types of businesses are currently on the market? Use our Business Search tool by clicking here! Otherwise, feel free to leave any questions or comments 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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