6 Business Buyer Blunders – And How To Avoid Them



If you are new to business ownership, or are considering buying a business for the first time, it is important that you understand the ins and outs of the business buying process; otherwise you might end up making a very costly mistake.  

 

 

Here are some typical blunders that inexperienced entrepreneurs make:

 

Using your own name for the business

You should not put any kind of legal contract or business agreement in your own name, nor should you make the business name the same as your legal name. When you purchase a business, you will need to set up a LLC or corporation to protect your personal assets from litigation related to the operation of your business.

 

Buying a business you know nothing about

First-time business ownership is hard enough without having to start at ground zero. If you have always wanted to buy a restaurant, but have never worked in one, it would be a big mistake to choose that industry. Choose a business in an area where you have experience because as the owner of a business, you need to know what the business needs.

 

Not doing your homework

Why is the business for sale? Is it just because the owner is retiring, or are they jumping off a sinking ship? You will have the due diligence phase to determine what, if any, the problems are, and then you will have the opportunity to amend your offer or walk away from the deal all together. This is a critically important step, as you don’t want to discover problems after the business is already yours.

 

Changing too much too soon

Unless you are buying a business with a horrible reputation, a new owner should tread carefully with regards to changing the business. You bought the business because it was an established company with a good reputation, and you don’t want to drive away customers familiar with the brand by immediately dismantling everything they know about the business. The established image may have more to do with the bottom line than you know, so make changes slowly.

 

Running out of money

It may take several months to get a business transitioning to a new owner profitable again, so leave yourself enough operating capital to keep the doors open. Many new owners walk into a functioning business and immediately spend far too much on unproven improvements, digging themselves a very deep financial hole in the process.

 

Not understanding the importance of marketing

You may have bought an already established business, but that doesn’t mean that you can forgo marketing and promoting the business. Many established businesses already have a customer base, but keeping those customers coming back and bringing new ones in is a responsibility that now falls to you. Advertising and marketing need to be a top priority as the new owner.

 

The most important thing you can do as someone who wants to become a business owner is find the right help. If this is a process you’ve never gone through before, find a good business broker to help you along the way. Having assistance through this process will save you from making many of the mistakes that first-time business buyers make, mistakes that can be very costly.

 

Are you thinking about buying a business for the first time, but want to avoid the blunders listed above? Do you have additional questions about the business buying process? Contact us or leave a question here and we will be happy to assist you on the road to business ownership.

 

 

 

Michael Monnot

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

http://www.InfinityBusinessBrokers.com


Big Price? Big Mistake – Selling Your Business



 

It can be really difficult to see a business that you have built from the ground up objectively, but there is a crucial decision that you will need to make as a business owner that will need to made without any emotion – pricing your business.

 

New businesses come on the market every day that are priced ridiculously high. They might be great businesses, but most of the time a business that has an over-inflated price will get no traction on the market and will stay listed forever.

 

When a business first hits the market it can create a lot of action from buyers, but those buyers can be permanently driven away if the price is completely insane.

 

So why do people list their businesses too high?

 

Usually one of two things has happened:

 

They got some bad advice. There are great professionals like business brokers and business transaction accountants that can help a business owner price their business correctly right out of the gate. There are, on the other hand, lots of people who know little to nothing about the buying and selling of businesses who give terrible pricing advice. Your brother-in-law who sold his bar in 1986, the CPA who does your taxes, your attorney neighbor who practices labor law – while well intentioned, none of these people know anything about the business market or about what a business like yours could actually sell for. Seek the advice of a qualified business broker who will know how to price your business the right way – to sell.

 

They wouldn’t listen. Even though you have put all of your blood, sweat and tears into your business, a buyer is only interested in numbers you can prove. Your business broker will help you use comparable businesses that have already sold, the numbers you have on the books and other pricing qualifiers to help you set your asking price realistically. Pricing only becomes an issue if you as the seller refuse to listen to the advice. A good broker will not let you demand any price you want, they will refuse the listing if you decide that it is your unrealistically high price or “the highway”. Be very wary of a broker who will let you list your business for whatever you demand – you will end up staying on the market indefinitely.

 

The message here? Seek proper advice and then listen to that advice. Successful business sellers go into the selling process with realistic expectations and with the right help.

 

Are you a business seller who made the mistake of pricing your business too high? Have you asked for advice on setting the price but got an answer you didn’t agree with? Please feel free to leave us a question or comment here, and we will be happy to help you with finding the right price for your business.

 

 

 

Michael Monnot

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

http://www.InfinityBusinessBrokers.com


Honesty About A Sinking Ship: Fix It Or Disclose It



No matter what you’re selling, it becomes exponentially more difficult to sell something that is broken than something in proper working order. It should also go without saying that it is very unethical to try and pretend a broken thing works when trying to sell it to another person.

 

These basic sales truths hold true in the small business market as well. If your business is a sinking ship that you are trying to escape from – you have only two options. Fix it, or disclose it.

 

What do we mean by this?

 

Let’s say your business owes an enormous amount of money to vendors or the IRS. You might think you have to hide ugly debt and pass the buck onto the next owner, but it won’t work. It will absolutely come out during the due diligence process. Your choices here are to pay the debt, or (if paying the debt is impossible) be upfront with prospective buyers about how much money the business owes. You might be surprised that for the right business opportunity buyers may be willing to deal with the debt in order to buy your business. If you try to go the other route and hide the issue, your deal will absolutely fall apart.

 

What if you have a ton of broken equipment? It might seem silly to spend a ton of money upgrading equipment you aren’t personally going to use, but if you were selling a house you’d probably paint and fix broken fixtures or doors. The same holds true for a business. Think of upgrades before selling as a way to strengthen the price of the business. A buyer isn’t going to pay top dollar for broken stuff, but they might if everything is working and/or new. Don’t take the chance and try to conceal broken equipment – you’d better believe buyers are going to figure it out and come after you.

 

These are just two examples, but there are many more skeletons that can lurk inside of small businesses. The message here is you absolutely, positively must be honest and upfront about why you are selling and what is wrong in your business. Problems aren’t necessarily the kiss of death for business deals, they are simply just points of negotiation. Hiding problems, on the other hand, will mean your business will never sell.

 

Are you thinking about selling but are worried about what buyers might find? Do you think the flaws in your business are deal-killers? Would you like to know more about how to turn flaws into negotiation points? 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


Small Business And Immigration: Why Business Owners And Foreign Investors Should Be Paying Attention



Immigration. Walls. Visas. Bans.

 

The news cycle in the last few months has been awash with immigration upheaval, so much so that many people have started to tune it out.

 

If you are a business owner, especially one that is considering selling sometime in the near future, you really need to be paying attention to what’s going on in the world of immigration. The negative perception recent immigration changes created may end up having a dramatic effect on your business and your ability to successfully sell.

 

If you are a foreign investor who is considering a move to the United States, you should also be paying attention because immigration issues and changes could potentially slow down those plans.

 

Take the two on-hold travel and refugee bans. These bans not only stopped people from the seven and then six Muslim-majority nations from entering the United States, it made a dramatic and symbolic declaration about where America as a whole stands on issues of religious acceptance – whether that was the intention or not. In the wake of the travel ban there was a wave of canceled trips to the United States that affected the tourism industry (and the small businesses that industry supports) in a big way. Many foreign tourists canceled their trips to the U.S. because the bans created a perception that they might be stopped at the border or might face intolerance while here.

 

The second big piece of news was the new guidelines that will affect the H-1B Visa. While this Visa isn’t typically used by small businesses, the ripple effect of changes to this Visa program are being felt across the small business world. Like the travel ban, scaling back the recruitment of specialized foreign labor, especially in the technology sector, has damaged the perception of the United States as a tolerant place to work.

 

Visas were also in the news because of the Kushner family and their pitch to Chinese investors about the EB-5 as a pathway to citizenship in the United States.

 

The EB-5 program is much smaller than it’s more well known H-1B counterpart, and is vastly different in both purpose and requirements – but the reporting on both have cast the entire Visa system in a very negative light. The EB-5 is an investor Visa, meaning those who qualify have the intention of investing a substantial amount (think upwards of $500,000) in a business within the United States that will create jobs for American citizens – and the investor is granted a Visa for themselves and their immediate family (spouses and children) in return. EB-5 Visas are good for the economy in general and have long been used to fund major building projects that would in turn help small businesses in the surrounding areas. Losing or major restriction of the EB-5 would likely cause big problems for new building projects that boost the local small business economy.

 

Another major Visa program that touches the small business world is the E2 Visa. Like the EB-5, the E2 is an investor Visa – although it requires less capital. The E2 is typically used when foreign entrepreneurs want to buy a small business and use that ownership as a means to immigrate to the United States.

 

Although the E2 hasn’t caught the attention of the media or the current presidential administration, it would be worth paying attention if your business would help a foreign investor qualify for the E2 (pre-qualifying your business opens your pool of potential buyers to international buyers – a smart move). Changes to the E2 could result in fewer foreign investors coming to the U.S., which would be bad for small business sellers and foreign investors alike.

 

What’s a business owner to do? If you are considering selling your business, you might want to keep an eye on immigration policy changes, especially if your business is one that would qualify for the E2. If you are a foreign investor, don’t panic. If you’ve been keeping tabs on our immigration news cycle then you know that every potential change to the immigration system has been met swiftly and intensely with legal maneuvering, push-back and protest. The United States is a country made up of immigrant entrepreneurs and the descendants of those immigrant entrepreneurs. Massive change has little chance of long term survival because those changes are proving to be highly unpopular.

 

Have more questions about the link between small businesses and immigration? Contact us or visit www.E2Visa.com for more.

 

 

 

Michael Monnot

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

http://www.InfinityBusinessBrokers.com


Business Buyers Beware: How Your Actions Can Keep You From The Closing Table



Small business sales fall apart for a multitude of reasons.

 

Any time you are contending with someone’s life’s work and large amounts of money changing hands, there are bound to be challenges. The problems arise when those challenges are more than the deal can take.

 

As a business buyer, you may find that some reasons for deals coming undone have little to nothing to do with you, like if a seller suddenly decides they’d rather not sell, but there are some issues that have everything to do with your end.

 

Sure, buying a business is a huge investment, both of time and money, but a ridiculously over-cautious, inflexible and inexperienced buyer can sink a business transaction as fast as an unwilling seller. The key is balance and understanding.

 

Before you get anywhere near a closing table, you may need to do a fair bit of introspective thinking. Do you really want to buy a business? Sure, owning your own small business is the American dream, but it is not always the easiest way to earn a living. Entrepreneurs can work long and intense hours, so you need to be sure that you are ready for that part of being your own boss. If you have done the requisite self-reflection, now it is time to go looking for the right business for you.

 

This may seem like a silly thing to point out, but you should choose a business that is going to suit you in terms of expertise and ability as well as one you actually like. Buyers might think they want to move to a completely different industry from where their experience lies, only to find that they are completely overwhelmed by the prospect of essentially starting from scratch in a business they don’t fully understand. An example would be an ill-prepared entrance into the restaurant industry where a former accountant suddenly decides to buy a bar without ever having worked in one. Avoiding this pitfall is easy, pick something that matches your expertise. This is a great time to employ the services of a business broker to help you figure out what businesses would be right for you in terms of how much you are looking to spend, what kind of hours you are willing to work and what would suit your knowledge base.

 

Once you have found the right business, make a serious offer. Buyers who lowball sellers just to see how steep of a discount they can get will only end up insulting the seller past the point of no return.

 

Do your due diligence once you have a business that you are serious about buying, but realize there will be limits as far as what will be available to you. For instance, sometimes buyers ask for the same information over and over again, or buyers demand to meet all of the key employees before it is appropriate to do so. All this does is upset the seller. Lean on the expertise of your business broker to ensure you are getting what you need without unnecessarily overstepping your bounds. .

 

The moral of the story is you will need to be cautious, and you should be when you are making such a big purchase – but also realize that any business is going to come with a fair bit of risk. Don’t let cold feet get in the way of a great business opportunity.

 

Are you thinking about buying a business but have questions about the process or what business might be right for you? Leave us a comment or question here and we will be happy to assist you.

 

 

 

Michael Monnot

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

http://www.InfinityBusinessBrokers.com

 


You Can’t Pass On Your Passion – Why You Should Sell Your Family Business



Successful entrepreneurs share one very important thing – passion.

 

They have the drive to get up every morning and push their business to success.

 

Business owners who intend to hand their family business on to the next generation should consider that passion for your business isn’t something you can pass on when you give someone the keys.

 

Your children may have worked in your business since they were very young, but ask yourself this: if they could have chosen to do anything, would they choose to do this?

 

 

What happens when a family business is handed down to someone who either lacks the drive to be a successful entrepreneur or doesn’t really want the business they are given? The business takes a nose dive and dies. We’ve seen it happen many, many times.

 

Want a better outcome and future for both your business and your kids? First and foremost, ask your children about their own passions. If running your business for the rest of their working life doesn’t make the list – sell your business instead.

 

Selling means you can get a return on the personal investment you’ve made in your business. You can use that money to enjoy your retirement or perhaps to invest in a business that your children actually want. This way you can continue the entrepreneurial tradition of your family while preserving your children’s potential for success by allowing them to do something they really want to do.

 

Don’t let an unwilling heir run your business into the ground. Sell instead!

 

Are you worried that your children don’t have the drive to run your business once you retire? Would you like to know more about how to sell and then reinvest in a business where they could be successful? Feel free to contact us today.

 

 

 

Michael Monnot

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

http://www.InfinityBusinessBrokers.com


Why Would Anyone Sell A Perfectly Good Business?



 

If you are someone who is interested in buying a business, you are looking for a profitable business that has a good share of the market and a great location. You are not going to be willing to buy a business that is on the fast track to failure and bankruptcy, so as you begin searching for businesses you may have pondered the question…

 

Why would anyone sell a perfectly good business?

 

This question is a very important one to ask as you search for businesses, and it is a question that any business seller should be willing and able to answer. If you are unable to get an answer from a business owner, this is a major red flag. Most reasons for selling a business have very little to do with the business itself. A large percentage of the time a business is on the market because of the personal life of the owner.

 

Let’s look at some reasons for selling that have more to do with the owner than with the business:

 

Retirement. This one goes without saying. An owner who is ready for another chapter in life is willing to sell a perfectly good business so they can move on.

 

Divorce. When husbands and wives are partners in a business, sometimes the business gets sold as part of the divorce.

 

Partnership disputes. Most partnerships start well, but not all end that way. If there is a breakdown in a partnership where both parties want out, it can mean putting the business on the market.

 

Medical reasons. If the owner or a member of their family has a medical condition that will take precedence over the business, or will keep the owner from being able to run the business, the business will likely end up on the market.

 

The kids decided not to follow in the family footsteps. Many small business owners have their children work with them in the business, but when the time comes for mom and/or dad to retire the kids may want to do something else.

 

There are many reasons that a perfectly good business ends up on the market, the key is to find out the real reason the owner is looking to sell. If the reason has little to nothing to do with the business itself, then you are looking at a potentially great business acquisition.

 

Are you looking for a business to buy, but have come across many that seem too good to be true? Do you have questions about how to find out the real reason a business is for sale? Leave us a comment or question here, and we look forward to working with you on your road to business ownership.

 

 

 

Michael Monnot

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

http://www.InfinityBusinessBrokers.com


A Tricky Balance: Confidentiality Versus Marketing Exposure



Business brokers get a lot of questions from business sellers, and one of the most common topics revolves around how to bring in buyers without letting the world know that the business is for sale.

 

Why is this an important point? Confidentiality during a business transaction is paramount.

 

As a seller, you don’t want the competition, your staff, or your vendors to know the business is for sale until the deal is done. A competitor can exploit your status, employees may jump ship, and vendors might tell their other clients about your impending business sale.

 

Discretion and confidentiality, therefore, are the name of the game when it comes to selling your business.

 

 

As a small business owner, however, you may find this counter-intuitive. The way you have brought success to your business is by getting the word out there. You have used networking strategies to make sure that as many people as possible know about your business and what you can do for them. You have put out marketing campaigns that may have included mailers, signs, posters, emails, and flyers. The more people you reach and the louder your message, the better.

 

So how do you balance the need to bring in buyers with the need to keep the whole thing under wraps? Don’t go it alone.

 

Confidentiality during a business transaction is one of the most important responsibilities that a business broker brings to the table. Trying to market your business yourself can lead to disastrous results, as it can be hard to know who to trust and who to disclose your sale status to.

 

Your business broker will be able to market your business in a variety of ways:

 

-A good broker has access to a number of business-for-sale databases that are available to other brokers and even to those who are searching online on their own. These listings give a prospective buyer a good idea of your business and the numbers without knowing which business it is. If they are interested in finding out more, they will be required to sign a non-disclosure agreement before they are allowed to know any business or location specific details. You can even specify a list of those (like competitors or employees) who you would like to be kept from finding out your business status.

 

-Most brokers also have lists and contacts with prospective buyers, so when your business gets listed, they will let those folks who’ve been looking for a business like yours know that it’s available.

 

-Business brokers also have contacts within the local business community, and are therefore able to let interested parties know about your business without giving any specific information that would let someone figure out which business is for sale.

 

-Depending on the type of business you have, certain types of marketing may work better than others. An experienced broker will know which methods will bring in the right buyers and which methods are a waste of time, and will implement a marketing plan for your specific business accordingly.

 

The message here is the confidentiality of your business sale is of the utmost importance, but so is getting you a buyer and getting your business sold. By employing the services of a qualified and experienced broker you can have the best of both worlds.

 

Are you a business seller who has had issues with confidentiality? Do you have questions about how we can market your business successfully while keeping the whole transaction under wraps? Leave us a comment or question here and we will be happy to address any concerns or questions you might have.

 

 

 

 

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, inventory to sell.

 

 

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

 

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 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 upfront 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 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

 


Weighing The Experts: Are You Really Getting Expert Advice Concerning Your Small Business?



 

As a business owner, you are your own Board of Directors, as all major business decisions are made by you alone. This can be a big job, especially because you may be an expert at running your own business, but you are not an expert at everything.

 

Who do you turn to when you need an expert’s advice?

 

For many small business owners, the answer is simple; you turn to your accountant or your attorney for help. Is this a good idea? It absolutely is in some circumstances, but there are important caveats for using this advice.

 

What about my attorney?

Your attorney is probably very specialized as almost all attorneys are. This specialization in the legal field is only going to help your business if you are using the appropriate attorney for the appropriate reason. You should have a business law attorney as your primary counsel, and then employ a more specific attorney if necessary, like a business litigation attorney if you are party to a lawsuit or an attorney who specializes in labor laws for a labor dispute.

 

What if you want to sell your business?

If you are looking to sell your business, then you will need an attorney who specializes in business transactions.

 

Why not just use your primary business attorney?

There are a few reasons. First, business transactions require specific knowledge just like any other area of the law, so a business transaction attorney is going to be the most knowledgeable.

 

Second, selling a business, like all other business related decisions, comes with a bit of risk. The job of your primary attorney is to protect you from any and all risk, so they are likely to advise you against your own business sale because of the inherent risk. Non-transaction attorneys kill business deals every day, deals that would have been fine had the appropriate counsel been sought.

 

Third, transaction attorneys are more efficient at negotiating and closing business deals than an attorney who has never closed a business deal before. It will mean less billable hours and more money in your pocket if you use a transaction attorney instead.

 

What about your accountant?

Accountants are different from attorneys because they are typically not as specialized, although you should really use as your primary accountant a CPA who has experience in your particular industry. Your primary accountant should be able to help you organize your financials and prepare your tax returns.

 

What your primary accountant should not do is give you a valuation for your business, or give you a valuation for any business you are looking to purchase.

 

Why? Business valuations are complex, and there are accepted methods for preparing a business valuation that an accountant who does not specialize in this field will not know. Typical valuations done by an unqualified accountant leave business owners with unrealistic expectations in the business market. Avoid this pitfall by hiring an accountant who specializes in business valuations.

 

The message here is you should absolutely listen to the advice of your attorney and accountant, but only if they are giving you advice within their realm of expertise. Hire a team of experienced professionals, and then only use each for what they specialize in. In the long run, it will save you from suffering the consequences of uninformed advice.

 

Are you a small business owner who has dealt with the consequences of uninformed advice? Leave us a comment or question here, and we will be happy to assist with getting you more informed answers.

 

 

 

 

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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