What’s The Game Plan? Why You Should Think About Your Exit When Buying A Business



When you’re thinking about buying a business, you’re probably focused on where potential businesses are, on the numbers they generate, on the industries you’re considering – but have you considered your eventual exit from your future business? You should.

 

 

Here’s why:

 

The end-game of your business ownership journey should greatly inform the attributes of the business you buy.

 

Here’s a few examples:

 

If you’re game plan is to be a serial entrepreneur – who buys businesses with lots of room for growth with the end-goal of selling those businesses to buy another – then you probably shouldn’t buy a well-established and successful business for a high premium. It doesn’t make sense to flip something when there’s probably not much room for profit. Smaller businesses, faltering businesses with poor management or businesses without any current marketing plan would be for you.

 

Perhaps you are someone looking for a long term investment, a business you might own for 15 or 20 years. The well-established and successful business mentioned in the last example might be the one for you. If staying around is the plan, a business that has already proven it’s staying power would be a good choice. Look for businesses that are community fixtures, have great numbers and a strong location.

 

If you’re buying a business with an eye on passing that business down to your kids when you retire – then you really should consider the strengths, weaknesses and passions of any successor before you try to force them to take over a business that you alone thought was a good idea. If you’re an accountant, and your adult daughter’s passion is to someday be a professional baker – then buying an accounting firm for her to take over is probably a colossal mistake. You should either buy a business you both could love, or buy your accounting firm with the exit strategy of selling that firm when the time is right so you can help your daughter buy her own bakery.

 

The message here is you really need to consider what the end game is if you want to have a successful business ownership experience. Talk to your business broker about what you are hoping to get out of business ownership so your exit strategy can inform your buying choices.

 

Are you thinking about buying a business and never considered the exit strategy? Does one of the buying scenarios above resonate with your long term goals? Talk to us today and get yourself on the road to successful business ownership.

 

 

 

Michael Monnot

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

www.InfinityBusinessBrokers.com


Own It Forever Or Sell Tomorrow – How Smart Business Owners Get Ahead



 

If you’ve considered selling your business sometime in the near future it can be tempting to get into a two-weeks-notice frame of mind. Remember when you worked for someone else and turned in your notice? You mentally checked out then and there, right?

 

Here’s the thing – if you want to get the best return on the investment of time, energy and capital you’ve put into your business over the years you need to act like you are going to own your business forever and like you are going to sell tomorrow.

 

I’m not going to own my business forever, that’s impossible.

 

Sure, but if you start every day as a business owner with the mindset that you will always be the owner you will probably make decisions about your business with an eye on long term goals and future growth. You’ll focus on marketing campaigns meant to bring in new customers. You’ll make improvements in your equipment that will improve customer experiences. You’ll make sure the people you hire are there for the long term and are both qualified and willing to learn to do things the way they need to be done. What does this eye on the long term lead to? An improved bottom line. An improved bottom line that will be very appealing to buyers when the time does come to sell and a bottom line that will directly benefit you as an owner while you remain in charge. A win-win.

 

I’m not ready to sell tomorrow, so why would I act like I am?

 

Putting yourself in the “I’m going to sell tomorrow” mentality will do a couple of things for you and your business. It will force you to make repairs and conduct regular maintenance and cleaning – things that keep your customer base happy. It will force you to keep your financial records in order – which will make your accounting easier as well as make your records easy to read for buyers down the road. It will also force you to keep an eye on potential for growth – both to improve your bottom line now for your own benefit as well as creating a selling point for potential buyers.

 

You want to get the best return on everything you’ve put into your business, so keep the two-week-brain on hold. Prepare your business like you’ll be there forever and like you’re selling tomorrow.

 

Are you considering selling your business because you’re totally burned out? Would you like to know more about how you can maximize the return on your business investment? Ask us! Leave 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

www.InfinityBusinessBrokers.com

 

 

 

 

 


Buying A Business With a Partner? 4 Things To Consider



 

Owning and operating a small business can be a much easier undertaking if you share the workload and responsibility with a business partner – but that lightening of the load can quickly devolve into a nightmare if you pick the wrong person.

 

How can you know if you’re making the right choice?

 

You’ve known the person long enough for the honeymoon period to have worn off.

If you’ve just met someone who you think would be absolutely perfect to own a business with – tap the brakes. A business partnership is just like any long term relationship – the first bit is all happiness and roses, then after a time real life marches in and true personalities (and flaws) surface. You wouldn’t marry someone after only a handful of meetings, so don’t jump into a business partnership with someone you barely know. If the two of you really think business partnership would be possible in the future, embark on a much smaller project together and let some time pass. If small projects are a success and you are still good to go after a year or so, then perhaps you’ve found the right business partner for you.

 

You both bring different things to the table.

Two disorganized creative people are not going to be able to run a successful retail store, but one disorganized creative person can bring life to a retail concept while their organized and number-crunching business partner keeps everything on track. Really think about what your strengths and weaknesses are, then find someone who complements those strengths and weaknesses.

 

You don’t disagree about massive life things.

Just like the marriage of a deeply religious person and an outspoken atheist probably won’t last – you and your business partner need to share some core values if you’re going to be able to coexist in the same space for years on end. This is another reason why you need to spend some decent time together before you sign on any dotted lines. You might find out you have irreconcilable differences of opinion that will hinder any chance of a good partnership.

 

You’re both willing to enter a strong operating agreement.

Much like a prenup in a marriage, an operating agreement from day one will eliminate any contentious arguments down the road about who is responsible for what, who owns what percentage, what the exit strategy will be, and what your rights are as a partner. If the person you are considering for business partnership either won’t sign an agreement or won’t agree to what you want – they probably won’t be a good partner down the road.

 

A great business partner can be a blessing, making your life easier by helping with the workload and by complementing what you bring to the table. The alternate possibility, however, is choosing someone who makes your life a living hell. Do some homework and let some time pass. Be just as diligent about choosing a business partner as you would be about choosing a business.

 

Are you considering buying a business with a partner? Would you like to know more about putting together a strong operating agreement? 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

www.InfinityBusinessBrokers.com


Selling Your Business? A Flexible Seller Is A Successful Seller



Selling your business is tough. It’s complicated, it’s stressful – and you have to deal with business buyers who want everything now and to pay you as little as possible. Sometimes it’s not fun.

 

One part of selling your business that you may not have considered? Flexibility.

 

What do we mean by that?

 

 

When you are the owner of a business, you are used to running the show and having control over the day-to-day. When you sell your business, you have to let other people – like buyers and brokers – into your realm. It can be frustrating, but by having a flexible mentality about the selling process you can get yourself to a closing table.

 

What do you need to be flexible about?

 

You are going to have to be flexible about conference call times, meetings and site visits. Site visits particular, because to maintain confidentiality you will need to show your business either before or after business hours when your staff isn’t around.

 

You are going to need to be flexible on your selling price and on the terms within the purchase contract. Neither side is going to get everything they want, so a flexible attitude in regards to the negotiation process will help you immensely. Your listing price shouldn’t be your rock bottom number, so you should expect initial offers to be lower – in many cases much lower. Just look at any offer, no matter how low, as a jumping off point for negotiations.

 

You need to be flexible with the due diligence process, which occurs after you accept an initial purchase offer. During due diligence the buyer will be requesting information, lots of information. You will need to produce your tax returns, financial documentation, bank statements, contracts, leases, payroll records – the list goes on. It can be difficult at times to deal with what feels like constant requests and endless lists of questions you feel like you’ve already answered. Patience is key in this part of the process. Try to see due diligence through a buyer’s eyes. They are trying to turn over every stone because they are making a very big purchase and don’t want to be surprised.

 

You need to be flexible about closing dates and training periods. Any buyer who plans on success will need the previous owner of the business to show them the ropes. Most training periods are two weeks, but it can vary from transaction to transaction and you may end up consulting with the buyer of your business for longer than you think is necessary. It can also be difficult during the training period because the business is no longer yours and decisions are no longer yours to make. Just remember that you are providing for the legacy of your business and that the training period is only temporary.

 

The key to the successful sale of your business isn’t really your numbers or the pictures your broker takes – it’s you. A flexible and patient attitude will get you to a closing table faster than anything else, so mentally prepare yourself for the journey ahead.

 

Are you thinking about selling your business and want to know more about the process? Would you like to know more about training periods for buyers? Ask us! Leave 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

www.InfinityBusinessBrokers.com


Buying A Business? Plan Ahead, Plan Ahead, Plan Ahead



 

You’ve made the decision – you’re going to bite the bullet, buy a business and move to Florida. You buy plane tickets and head down, ready to drive around and scope out the local small business scene. When you get to town, you try calling brokers to have someone drive you around to see what’s for sale – but you aren’t having any luck. No one is answering or returning your calls, and those that do tell you there’s no way you can see any businesses right now.

 

What gives? You’ve got money to spend – why won’t anyone help you?

 

Buying a business is a very complicated process that contains a multitude of moving parts, and as such the business buying process is nothing like buying anything else. When you buy a house or a car the process involves driving around and taking a look, but houses and cars are physical things. A business is different because a business has customers, has employees, has contracts, has leases, requires licenses and permits, has vendors. When you buy a business you aren’t buying a thing, you are buying cash flow. Since you aren’t buying a physical thing, the process is more complicated.

 

For starters, business sales are confidential. Confidentiality is important because there is a very powerful misconception that a business for sale is a business on the brink of failure. Think about it. The last time you saw a “For Sale” sign in the window of a business your immediate thought was that the business was in trouble, right? Why would anyone sell a perfectly good business?

 

Great businesses, profitable businesses are sold every day. Business owners sell for a myriad of reasons. Retirement, a desire to change industries, personal reasons, because a financial milestone has been reached. Sure, there are businesses for sale because the owner is in trouble and the business is faltering – but those businesses are fairly rare and can be a great opportunity for growth.

 

The fact that a business is for sale says nothing about the financial health of that business, but the misconception that exists can cause catastrophic damage to an existing business if the for-sale status is disclosed to the wrong people – like if the staff finds out the business is for sale and quits en masse.

 

The need for confidentiality means you will have to sign a non-disclosure form for each and every business you want to see, and you will most likely need to see the physical location before or after hours when the staff isn’t there. In addition to the required paperwork and the need to avoid a staff, physical visits to a business require aligning the schedules of the buyer, the seller, the buyer’s broker and the seller’s broker. This type of schedule wrangling takes time, so showing up in Florida and demanding to see businesses isn’t going to work.

 

What should you do instead? Plan ahead. Before you get on a plane, call and have a conversation with an experienced and qualified business broker. They can help you find businesses that fit with your goals and your financial means, then you can narrow your field to just a few choices. Your broker can set up conference calls, meetings and site visits long before you land so you can see the businesses you want in a way that works with everyone’s schedule.

 

Don’t hop on a plane cold – plan ahead and you will be set up for business buying success.

 

Are you thinking about buying a business and want to know more about why confidentiality is important? Would you like to know what businesses are currently available that might work for you? Please 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

www.InfinityBusinessBrokers.com


Finding The Right Business: 4 Questions To Ask



When you decide that the next step in your career is to buy a business and try your hand at entrepreneurship, there will be many decisions ahead of you. Possibly the most important decision will be what business would be right for you.

 

Yes, we know. Everyone who’s ever dreamed of owning their own business has a dream business in mind – but focusing on that business alone, without some careful thought, can lead to disaster down the road.

 

Why? Dreaming about owning a business and actually owning that business are two completely different animals.

 

Long before you look at listings, you need to ask yourself the following four questions so you can focus your energy on the right business – not a dream business.

 

 

1. What would you love to do?

Business ownership is a life-encompassing affair. You are going to work long hours, probably take less vacations and you will be on-call 24/7. The only way to mentally survive such a grueling schedule is to have a real passion for what you do. It has to get you out of bed every morning and push you through late nights. This is where the dream-business can be of some use. Why is it your dream business? If you’ve always dreamed of owning a cafe, but in those daydreams you aren’t making coffee – you’re sitting at a table going over numbers, this can tell you volumes about what kind of business you would actually enjoy (hint, it’s not a cafe).

 

2. What have you done before?

The learning curve of business ownership is a steep one, mostly because any mistakes can cause a severe change in your bottom line. Many budding entrepreneurs make the mistake of buying a business they know almost nothing about – and are then stuck both learning a brand new industry and learning how to be a business owner at the same time. You need to stick to your knowledge base and the skill set you already have if you want to be successful. Hate what you’ve done for work in the past? If escaping your current industry is the reason you are considering business ownership, then think more broadly about what your skill set includes. If you’ve spent the last decade working as a mechanic for an auto dealership, but you have a gaggle of old cars at home that you love to restore in your spare time – then perhaps an auto restoration business and not a standard garage would be for you.

 

3. How much money do you have?

Business prices can fall anywhere on the map, but there are some industries and some business sizes that will be off your list for financial reasons right out of the gate. You need to get your capital in line before you start seriously looking at businesses because the amount of money you have to spend will determine what you even get to look at. You also need to be honest with yourself at this stage and realize that a traditional loan is probably not going to happen, and even if seller financing is a possibility you will have to bring a substantial down payment to the table to get a deal done.

 

4. What would your local market support?

Although an extreme example, you wouldn’t start a water skiing business a hundred miles from the nearest body of water – but you get the idea. Some local markets just won’t support some types of businesses. You need to look at the local business market and do a bit of research on the industry you are considering. Is the industry growing? Have a large number of businesses in that industry gone out of business recently, or are they thriving? If your plan is to buy a business and change it to a different market, is that market already saturated or is there room to grow? Say your plan is to buy any small restaurant and convert it into a homemade donut place, but the town you are considering has ten Dunkin Donuts and five Krispy Kremes. Probably not the best market.

 

When you’ve asked yourself these questions and have a fair grasp on the answers, your next step would be to have a conversation about the right business for you with an experienced business broker. A good broker has been down this road many times, and can give you great advice on what the local market will support and ideas of businesses that would fit your skills and goals that you may not have considered. They can then show you the businesses currently for sale that would meet your criteria and you can find the business that is right for you.

 

Are you thinking about buying a business, but after reading this think that your “dream” business may not be right for you? Do you have questions about what industries your current skill set would apply to? Ask us! Feel free to leave us a comment or question here.

 

 

Michael Monnot

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

www.InfinityBusinessBrokers.com


3 Reasons Why Buying A Business Is Better Than Starting One



What’s the best path to entrepreneurship?

 

Most think of the startup in some suburban garage – but is that really the smart way to go? The short answer? Probably not. Buying an existing business, however, is typically the better route to business ownership. Here’s why:

 

1. Starting a business is a risky and expensive venture.

 

Startup businesses are tricky. You are testing new waters – with your concept, with your location, with your operating procedures, with a brand-new staff. In the unlikely event that all goes as planned and everything works in your favor, you will still need an enormous amount of capital to lease a new location, renovate that location to suit your needs, equip your location, buy inventory, pay for permitting and licensing – the list goes on. Then you will also need to have enough capital to sustain your business, your staff and yourself for the time frame it takes to start turning a profit, which can be several months or more.

 

If you buy an existing business, many of the risks and financial challenges of a startup have been removed. With an existing business, you are buying a proven concept, location, operating procedures, a trained staff – and in most cases a training period with the existing owner to get you on your feet. The amount of capital you need might seem substantial, but remember that it would be far more expensive in the long run to find, furnish, equip, stock and run a business with no history of success than to just buy one with that laundry list already complete.

 

2. There’s no such thing as a “startup business broker”.

 

One of the best parts of buying an existing business, especially if this is your first foray into business ownership, is you can have expert help along the way. By having an experienced and qualified business broker by your side you have expert advice to guide you through your business search and help you find a business that fits with both your goals and available capital.

 

Don’t see any businesses on the market that appeal to your entrepreneurial dream? Sometimes buyers have a specific type of business in mind, but the goals they have for business ownership would require that they end up in an entirely different industry. A conversation with a good broker will help you decide if the business you think you want to have is really the business you should have to get the kind of life you are looking for. If you are starting a business, you can seek advice from anywhere and everywhere, but there won’t be anyone to guide you in the same way a broker can if you buy.

 

3. A business you buy comes with everything you need.

 

Like we discussed before, starting a business means having to hire and train a brand-new staff, finding then leasing a new location, buying all the equipment and furniture, finding and purchasing inventory, and setting up licenses and permits – if you can even get them. An existing business comes with everything, including in most cases the former owner for a while (for a training period to help you learn the ropes). This will take an enormous amount of pressure off of you as a new business owner, allowing you to focus on learning your new business without all of the additional headaches that a brand new business would require.

 

If your goals for the future include business ownership, seriously consider buying an existing business instead of starting from scratch.

 

Have more questions about the differences between buying an existing business and starting one from scratch? Are you curious about what types of businesses could be right for you? Ask us! Please feel free to leave us a comment or question 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

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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