A Lesson From Shark Tank: You’d Better Know Your Numbers



If you’ve seen the show Shark Tank, then you know the typical drill. An entrepreneur knows their concept inside and out, but can’t get an investment from the Sharks because they can’t answer basic financial questions. Guess what? This happens in the small business market too.

 

If you take a step out of your business seller’s mindset and take a look at what buyers see in the market, you might be shocked.

 

Most listings for businesses for sale contain sketchy financial information at best, and if they contain any semblance of numbers at all they typically don’t make sense and don’t jive with the price the sellers are asking.

 

 

Where do these discrepancies come from?



While in a few cases the discrepancies come from good old fashioned dishonesty, for the most part the lack of consensus in numbers occurs because the seller simply doesn’t know. Small business owners are great at what they do, but in some cases they are not great at accounting or organizing their financial information.



We come across business owners more often than we should who can’t answer questions like “which product or service is the most profitable?” or “what is the cost to acquire a new client?”. If you are considering selling at any time in the near future, then you need to make the effort to get a handle on your financials long before you are being asked to justify a price.



What things should I be looking at?



Profitability of Products or Services



Many business owners who haven’t broken down the numbers may just assume that the most expensive item or service that they offer is the most profitable – but this is probably not the case. By tracking your products and services individually and then comparing them to the breakdown of what it costs you to provide that product or service, you may discover that your bread and butter comes from a low price item or service that you sell more than anything else. If not just for selling your business, this breakdown will also be immensely helpful when deciding where to put your marketing efforts.



Expenses



Small business owners are famous for paying for expenses out of pocket and never writing it down, or for jamming receipts for expenses in a box under the desk and never looking at them again. When selling your business, you may even think that disguising some of your expenses will make the business look more appealing and more profitable to buyers. This isn’t the case. First of all, there are a few expenses that will get added back before you set a listing price. Second, a business with very low expenses will look suspect to a discerning buyer. Really nailing down your expenses will not only help with selling your business, it will likely allow you to see where your money is going and give you an opportunity to streamline those expenses.





Don’t be a Shark Tank cautionary tale. If you are looking to sell, you need to get your financial ducks in a row, if not for buyers but for your own use to strengthen your numbers, focus your marketing efforts and streamline your expenses. Having a good handle on where your business is and where it needs to be will be instrumental in the negotiation process of your business sale. Strong and organized documentation of all of your financial information will also be very helpful in attracting buyers who are accustomed to the sketchy financials that are typical in the business scene.

 

Are you thinking about selling but are guilty of shoving receipts in a box? Do you have absolutely no clue what it costs you to aquire a new client and want help getting your ducks in a row before listing your business? Please feel free to leave questions or comments here!

 

 

 

Michael Monnot

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

 

 

 


Soul Searching And The Right Help – The Best Way To Find The Perfect Business For You



Ready to become an entrepreneur and work for yourself?

 

How do you start the process of buying a business and decide what business would be right for you?

 



First, let’s look at how you SHOULDN’T start.



The majority of would-be entrepreneurs start their business search by perusing various online business listing sites for that dream businesses they’ve always seen themselves owning. While it may seem counter-intuitive at first, this is absolutely the wrong way to start.



How SHOULD you start?



Do some soul searching and talk to the people who care about you first.  Trust us when we say that owning your own business is a life-encompassing affair. Those dream-state visions of running a business from the beach with a cold drink in your hand are extremely far-fetched. When you work for yourself, you work all the time. Nights, weekends, early mornings, few if any vacations – and you need to be ready to make that kind of commitment. If you think that type of life is the one for you because it allows you to fulfill your own destiny and make all of your blood, sweat and tears work for you instead of for someone else, that’s great. Now you need to clear this semi-extreme lifestyle with your spouse, your kids – anyone who you have a commitment with. If you are becoming a one-man shop and you used to work 9 to 5, it can be hard to balance your longer hours with your loved ones – especially if they are used to having you home for dinner and used to having you coach their little league team every spring.



Once you have the support of those you are closest to, you need to figure out what your goals for entrepreneurship are. Do you just want to make as much money as possible? Do you want to work in a specific industry that’s always been your dream and passion? Do you want a flexible schedule? Do you want to be home for dinner every night? Is it important to have weekends off? What financial goals do you have to meet in order to support yourself and your family? These questions will be pivotal in choosing what business will be right, both for your entrepreneurial goals and for your life.



Now that you have these basic questions answered, you need to get some professional help. Find and talk to a good business broker. A good broker will immediately ask you many of the same questions we just outlined above, and then they will use that information to help guide you to businesses that will meet those goals. Notice that we didn’t say a good broker will just ask you what type of business you are interested in and show you only that. As brokers who care about the success of our clients, it is in our best interest (and yours) if you succeed, as a healthy local small business market is our bread and butter. We will use the classic bar example. If a new buyer comes to us and says “I want to buy a bar“, we should be asking questions instead of just emailing every bar listing in the area. Has this new buyer ever worked in the restaurant industry? If not, then buying a bar will likely be a huge mistake. Starting off as a new business owner and trying to learn an entirely new industry at the same time is setting yourself up for an epic failure. Does this buyer have a family that wants or needs them home in the evenings? If so, then working every afternoon and into the night is going to cause more family upheaval then it’s worth.



Deciding on a small business is a very big decision, and will need to take into account a variety of factors. The best way to weed through the choices that are currently on the market is to first do some soul searching and then figure out what your business ownership goals are. You will also need to use the assistance of a business broker. A good broker will not only help you find businesses that would be right for you, they can help you narrow the field to those businesses that will help you fulfill your goals.


Have you always had a dream business in mind but aren’t sure it would fit your goals for business ownership? Would you like to know what businesses are available that would work with your family schedule? Ask us! 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

www.InfinityBusinessBrokers.com


Buying A Business? 3 Points About The Process You Should Know



Businesses are inherently complicated. You are dealing with staff, vendors, clientele, a location or locations, possibly vehicles, inventory, computer systems and software, operating procedures, leases, licensing requirements, permitting requirements, inspections, certifications – the list goes on.

 

If you are considering becoming a business owner and entering the world of entrepreneurship by buying an existing business, then the complicated nature of businesses not only includes the business itself but also the process to buy it.

 

If this is your first time in the business for sale market, then there are a few things about the process you must understand in order to be successful.

 

 

This Will Be Nothing Like Buying A House

This one is the biggest misconception. It will cause major problems between you as a buyer and the sellers and business brokers involved if you don’t immediately banish this thought from your mind. You don’t search “businesses for sale” on the internet, see pictures and collect addresses, then drive around with a business broker for tours. That is what you would do if you were buying a house. Businesses for sale keep that fact completely confidential, and as such you can’t call up a business broker and ask him to “show you some businesses”. In the business sale process, there are many more steps. You will first be required to sign non-disclosure agreements, then you will likely have conference calls and/or meetings with the sellers and brokers off-premises long before you get a “tour” of the business. The non-disclosure agreements also mean that you will not be able to tell anyone outside of the transaction what business you are considering buying until after you get to the closing table.

 

Most “Buyers” Don’t Buy Anything

If you are really serious about buying a business, then you will need to be prepared for the reality that those who are already in the business market – think sellers and brokers – are unlikely to give you the time of day. Sure, you are poised to write a very big check to someone for their business, but the fact is only about 10% of buyers who initially look at businesses actually end up buying one – so the other players in the game will initially have a hard time taking you seriously. What’s important here is not to be offended. If you worked in an industry where only one in ten people who vied for your attention actually followed through, you would be a bit picky about who you chose to spend your time on too. You can pull away from the tire-kicking pack by staying motivated, being honest and upfront about the finances you are intending to invest in a business (particularly with your own business broker) and by making good offers on the businesses you like.

 

Patience, Patience, Patience

We have all become very accustomed to instant communication and instant gratification in our technological world, but the complexity of businesses means you can’t get or do everything you want immediately. You can’t show up on a Thursday and expect your broker to be able to line up three or four businesses for you to “see” on Friday. When you request information from sellers, you need to be aware that in addition to dealing with you they are also trying to run a business, so it may take them a few days to get things back to you. You are (one would hope) not your broker’s only client, so if they don’t answer the phone or immediately return your call it doesn’t mean that they are blowing you off. When you send financial records off to a CPA or contracts off to an attorney to be reviewed, you will have to give it some time to get those documents back. If you are dealing with licensing and permitting issues, you need to be aware that government agencies are not known for their speed. Just be patient with the process and everything should fall into place.

 

If you really want to buy a business know that with a good dose of patience, good offers and the understanding from the start that this process can be pretty complex, you have a great chance of finding the right business for you.

 

Are you a buyer who’s had trouble getting anyone to take you seriously? Do you feel like the process couldn’t be any slower? Do you have more questions about confidentiality or any other part of the process? Ask us! Please feel free to leave your comments or questions 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


The End Of 2017 And 2018 Ahead – BizBuySell’s 4th Quarter 2017 Insight Report



BizBuySell’s 4th Quarter 2017 Insight Report shows record highs in the business marketplace, with small business transactions up 27% over the previously record-breaking 2016 numbers. The market has been steadily growing since the recovery for small businesses began in 2013, but 2017 marks a large jump in the number of businesses changing hands.

 

 

Why the big jump?

 

To put it simply, money. Small business revenues are up in most industries, with the economy at large continuing to grow. More businesses are coming on the market, with baby boomer owners choosing to retire and cash out of their businesses while the selling is good. More buyers are also taking the plunge into entrepreneurship with lending options that dried up in the wake of the 2008 recession slowly coming back to life. Added together, today’s market is a boon for business sellers, with many businesses selling for more than they would have two or three years ago – a whopping 14% more.

 

It’s also a good time for business buyers. They might be paying a premium for businesses, but the businesses they are getting are typically in very good financial shape. The same could not be said post-2008 as the glut of faltering businesses on the market meant you could get a good deal – but you had your work cut out for you.

 

Will the good times continue?

 

In the short term, probably. The last quarter of 2017 showed continued growth, with 23% more closed transactions and a 12% increase in median sales price over the same quarter of 2016. Levels that strong will likely continue well into 2018, but those who survived the meltdown of 2008 are beginning to fear another bubble.

 

The smart move?

 

If you own a business and were planning on selling in the foreseeable future, now is the time. The market may continue to climb or we may be quickly approaching the peak. There are buyers with money and your business is in the black, so the safest bet is to sell while the selling is good. This is also true if you were considering selling so you could buy a different business. The businesses on the market today are healthy, so a serial entrepreneur would be smart to take the large profit from a sale today and invest in a new opportunity now. The same is true for first time buyers – businesses are healthy and are a great buy.

 

Want to know what the market looks like for your industry in particular? Do you have questions about when you should sell? Are you thinking about buying a business and want to know what’s currently available? Contact us today.

 

 

 

Michael Monnot

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

www.InfinityBusinessBrokers.com


How Business Sellers Can Learn From Facebook’s Problems



Mark Zuckerberg has had a rough couple of weeks. The lack of trust in his business practices landed him in the hot seat before Congress, and that’s never a good place to be.

 

While the leader of a gargantuan company like Facebook might not have much in common with a small business owner who is looking to sell – there is a major lesson that can be learned from the recent Facebook debacle that can help a seller get to a closing table successfully.

 

 

The major lesson? Trust and honesty are key.

 

A business buyer is going to write you a very big check, and for that check they are expecting to get exactly what you told them they were buying.

 

All small businesses are complex, and as such those businesses have issues – big and small. There is never a perfect business, but it certainly would be easy to sell if it was – so many sellers make the mistake of trying to create an illusion that their business is perfect.

 

We get it, issues feel like failures and might decrease the amount of money a buyer is willing to give you. Hiding flaws, however, is a big mistake for a couple of reasons. First, if you had been honest and upfront with issues, buyers may have accepted those issues as part of the deal. If the issues come out later, then you’ve lost the trust of those buyers – and your chances of making it to closing will be slim to none.

 

Think you can hide those skeletons in the closet? Think again. A major part of any small business transaction is due diligence, where a buyer gets to go through every aspect of your business with a fine toothed comb. If there’s a problem, they’re going to find it, so it’s a far better strategy to be open and upfront. Maintaining trust in a business transaction is key simply because it’s a complicated process with a lot of money changing hands.

 

The same goes for things you might be slightly embarrassed about and so you gloss over them or don’t mention them in discussions and negotiations. You need to clearly communicate what your business is, how it makes it’s money, how it works day-to-day and what any problems might be. Omitting information or choosing to make light of things a buyer really needs to know is both unethical and a deal killer.

 

Transparency is crucial to your ability to sell. Trying to hide skeletons or not clearly communicating the aspects of your business a future owner needs to know will surely kill your deal – so play it smarter than Facebook and keep your buyer’s trust. 

 

Are you considering selling your business, but are worried about the skeletons in the closet? Would you like to know what types of issues buyers are usually willing to overlook? Please feel free to leave any questions or comments here.

 

 

 

Michael Monnot

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

www.InfinityBusinessBrokers.com

 


Off To A Good Start – 2 Ways Business Buyers Can Set Themselves Up For Success



 

Buying a business? Congratulations on your start in the world of entrepreneurship! It’s hard work, but the benefits of owning your own business can absolutely outweigh the challenges – as long as you’ve set yourself up for success.

 

How can you get yourself off to the best start as a business owner?

 

Experience Counts

 

One of the most common mistakes budding entrepreneurs make is they buy a business they know absolutely nothing about. For instance, if you’ve spent your whole career as a paper salesman – you definitely shouldn’t buy a bar. Why not? Although it might seem like slinging a few beers isn’t that hard – the restaurant industry can be impossibly tough. Do you know what your food and beverage costs should be to keep you in the black? Do you know enough about what it takes to be a good bartender so you can vet and hire the right staff? Would you be able to tell if your current vendors are giving you the right stock and the best price? Probably not, and these are some of the aspects of the restaurant industry that can mean the difference between success and bankruptcy. Choose a business in an industry where you already know the ropes. Adding a brand-new industry to the already precipitously steep learning curve of business ownership is almost always a mistake.

 

Customers Are Everything

 

Many budding entrepreneurs walk into their new business on day one and decide they want to focus on something physical, like changing the color of the upholstery, buying new furniture or repainting the walls so they can make the space feel like their own. This a huge mistake and a big waste of resources. Why? You bought an existing business. That business has an already existing set of customers. Your mission in the first few months is twofold. One, don’t drive away your existing customers. Two, get as many new customers as you can. One surefire way to keep from accomplishing those two goals is to focus on physical things like aesthetics. Maybe the reason your newly bought cafe is so popular is the regular clientele love the existing quaint atmosphere – redecorating to your sleek modern style might run them off. Instead, focus on building that customer base and take some time to learn why your current customers are there – before you make any changes.

 

Get yourself on the right path by buying a business you already know and by getting the doors open with your marketing plan in gear – and no immediate changes. 

 

Are you thinking about buying a business in an industry where you have no experience and want to know what other industries would fit with your specific skill set? Would you like to know more about how a new business owner can get new customers in the door? Ask us! 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

www.InfinityBusinessBrokers.com


Selling Your Business? Get With The Times And Get Online



Getting your business ready to sell? You’ve probably been busy assembling your financial records, fixing broken equipment and the like – but have you considered the virtual presence of your business?

 

 

Today’s consumers spend more and more time online, and business buyers are no different. They will want to see that your business is embracing the digital age and is primed for growth in the digital marketplace – so is it?

 

If you’ve got no online presence to speak of or all you’ve got is a poorly maintained business Facebook page – you need to act now.

 

Any business on the market should have a decent website, and a quick and simple website is fairly easy to do. Services like Squarespace and Wix let you pick an already well-designed template, buy a domain name, insert your own information – and poof, your business is part of the digital age.

 

It doesn’t need to be complex. The contact information for your business, the location and the hours. A blog where you add updates about the products or services you offer. Menus, lists of products or services offered and their prices. It really is that simple.

 

Is having a website really that important? Absolutely, yes it is.

 

When a business buyer looks at a business with no online presence they are going to wonder what else the current owner has let slide. If you haven’t even bothered to tap into the digital marketplace then you haven’t been utilizing every tool at your disposal to help your business grow.

 

Another digital marketing avenue you should consider is reviews. Anyone considering buying your business is likely going to look you up on review sites, so ask your customers to post reviews about you. Negative reviews should be taken as constructive criticism – no matter how crazy they seem – and you should respond to negative reviews in a calm, positive manner to ask the unhappy reviewer what you could do to fix their issue. This is a good idea on two fronts. One, it will show anyone reading the bad review that you care and tried to remedy the situation and two – you might be able to turn that negative review into a positive one.

 

If you are selling your business, embrace the digital age. It will show potential buyers that you care about the future and growth of your business and that you have taken the steps to market your business in both the physical and online world.

 

Are you thinking about selling your business and don’t currently have a website? Would you like to know how to improve your online reviews? 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



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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