Borrowing From Family To Buy A Business? A Few Considerations

We’ve all had those pie-in-the-sky conversations at the dinner table over the holidays, when the discussion turns to entrepreneurial ambition and your uncle/grandmother/father says something along the lines of “Sure, I can help you buy a business!”


When considering borrowing money from family members (or from anyone with whom you have a personal relationship), there are a few things you should consider.


Buying a small business is a very expensive venture, where you will need working capital in addition to the amount you offer because of necessities like licensing fees, lease deposits, payroll and initial inventory – just to name a few. What your relative initially considered loaning you/investing in you will probably not be enough, so they will likely need to write a much bigger check then they had imagined.


They will also need to provide financial records to business brokers, sellers, landlords and property managers – even licensing agencies in some cases. This can be uncomfortably intrusive if the business in question isn’t even yours.


If these considerations have you possibly rethinking borrowing from family, just remember that you absolutely can borrow from family successfully – there just needs to be good communication between both parties and a contract of some kind to ensure everyone is happy in the end.


You can also ask your business broker about other financing options that may be available.


You and the business you are interested in may qualify for financing through the Small Business Administration (SBA), for example. Want to read more about this financing option? Click here to read Business Buyers: A Guide to Financing and the SBA (U.S. Small Business Administration).


In most cases seller financing may also be an option, allowing you to purchase a business with help – but without the personal strings attached. Want to read more about this financing option? Click here to read The Business Buyer’s Guide to Seller Financing.


Were you considering family financial help, but now think a SBA loan or seller financing might be a better way to go? Do you have questions about what a family loan contract might look like? Ask us! Please feel free to leave any questions or comments here, and we will be happy to help.




Michael Monnot

12995 South Cleveland Avenue, Suite 249
Fort Myers, FL 33907

Business Buyer Advice: Don’t Take Your Seller For Granted

You’ve just left the closing table, and now you are the proud owner of your very own small business. Is it time to celebrate? Sure, but you also need to hit the ground running.

Why? I’ve bought an existing business, how hard can it be to just take over the seller’s responsibilities?

Really, really hard – especially if you make the mistake of taking your seller for granted during the previously negotiated training period.

Most training periods are only two weeks long, and learning every last aspect of your new business in that short amount of time can only happen if you buckle down and take full advantage of the plethora of information a seller has to give you.

You need to learn how to do things as simple as unlocking all of the doors and disarming the alarms to as difficult as how to put together the weekly payroll. You need to learn what licenses you will need to renew and when, how to set up and pay for utilities, how to order new inventory, how to run the website and social media accounts, what customers are regulars and what they expect, who the staff are and what they bring to the table, where all of the supplies are kept… you get the idea. It’s a lot.

The list is seemingly endless, but it is absolutely manageable in the typical two week training period – you as a buyer just have to make the most of every second of that two weeks.

Why can’t I just have a much longer training period?

First and foremost because if you apply yourself, two weeks is plenty of time. Secondly, it isn’t fair to keep a seller tied to a business they no longer own for longer than 99% of new business owners are able to learn the reins.

What about the 1% who didn’t learn the reins in two weeks? What happened there?

To be completely honest, buyers who weren’t able to get it together in a typical two weeks just didn’t try. They let the seller continue to run the business for that first two weeks like the seller was going to be there forever. They didn’t bother showing up, didn’t bother putting together a list of questions and didn’t work side by side with the seller to see everything they do and why. When the two weeks were up they were handed the keys to a business they knew almost nothing about – then blamed everyone but themselves for the mess they were now in.

The lesson here is that no one knows your new business better than the person you just bought it from – so use your training period to absorb every last drop of information you can from them, before it’s too late.

Are you considering buying a business and think two weeks isn’t enough time for training? Would you like to know more about the business buying process? Please ask us! Leave any questions or concerns here and we would be happy to help.

Michael Monnot

12995 South Cleveland Avenue, Suite 249
Fort Myers, FL 33907

It’s New Year’s Resolution Time – No More Excuses, Buy A Business In 2019!

Anyone who’s ever had a job where they worked for someone else has considered life on the other side – as the owner of a business. The entrepreneurial dream is one where you control your own destiny and do something that gives you a reason to get up in the morning.

Many budding entrepreneurs hold back on their dream of business ownership because they think they could never afford it, owning a business is too risky or now isn’t a good time.

With the new year on the horizon, perhaps you should rethink these excuses that keep you from business ownership and start the new year on a path to your own dreams.

Excuse #1: I could never afford it.

Sure, there will always be businesses that are well outside of your price range, but think of it this way. If you had a small budget when you were looking for a place to live, you probably weren’t looking at mansions on the beach. You looked at your options within the framework of your budget. The same thing goes when you look for businesses. You might have to start small if you don’t have a lot of funds at your disposal, but small business ownership comes in many forms. If you work hard, you can make any business grow into what you need it to be. If you are shopping for businesses, you may also be able to find a seller who will take a significant down payment and seller finance the rest. You can also look into funding through the Small Business Administration (SBA). The SBA, as a government agency, will require a lot of paperwork but it could help you on your path to business ownership. Talk to a business broker about what funds you have available and what your goals for business ownership are. They will likely be able to find you a few options that would be feasible.

Excuse #2: Owning a business is too risky.

Yes, owning a business comes with it’s fair share of risk. You could end up bankrupt if you don’t put in the effort to make the business into a success. You could also walk into your “stable” job tomorrow and get laid off. In the working world nothing is ever a sure thing, so if you have always wanted to own your own business (and you have the passion and drive to get you there) – entrepreneurship is just as risky as anything else. Buying an established business is also typically less risky than trying to start your own company from scratch, as the concept and location have already been proven successful. Talk to your business broker about the risks you will be taking by buying an existing business.

Excuse #3: Now isn’t a good time.

The business market fluctuates from a seller’s market to a buyer’s market and back again on a regular basis. The good news if you are buyer is the market is about to be flooded with a wave of baby boomer owned businesses, and when this wave hits the market the tide will shift in the buyer’s favor. More and more businesses list every month, so now is as good a time as any to jump in and find the right business for you. Besides, you aren’t getting any younger- so why wait to fulfil your dreams?

If you have ever considered business ownership, now is a great time to take that dream and turn it into a reality. Make your new year’s resolution one where you buy yourself a business in 2016!

Do you have questions about the kind of business you can afford? Are you concerned about the risks or timing? Please contact us today or leave any questions/comments here and we would be happy to help.

Michael Monnot

12995 South Cleveland Avenue, Suite 249
Fort Myers, FL 33907

Tick, Tock – Why Business Buyers Need To Make The Most Of Due Diligence

If you are in the midst of your business search, then a major step in the process to buy a business is coming your way – due diligence.


This step in the business buying process occurs once an offer from a buyer is accepted by a seller. The business is pulled from the market and placed in a sort of limbo so the buyer has a chance to review all business related documentation and then make a final decision about whether or not they wish to buy the business and how much they would ultimately like to offer.


This limbo phase is great for buyers because it essentially stops the access of other potential buyers to the business they want and gives them a chance to peek behind the scenes.


Due diligence is not, however, an indefinite period that can drag on forever. A typical due diligence period is two weeks. That’s it, and honestly that’s all you really need. We regularly get requests for due diligence periods of multiple weeks or months – but that extended amount of time is unnecessary and unfair to the business itself.


Why is an extended due diligence period unnecessary? If you’ve made an offer on a business, you’ve already seen a good deal of the financial information and have a decent understanding of the inner workings of the business – like the contractual agreements the business has with major clients (for example). You don’t start the due diligence process with a blank slate, it is instead a more in-depth look at something you are already familiar with.


Since you aren’t starting from scratch, you should use your due diligence time efficiently. You should review the documentation as soon as you get it, thereby giving yourself a few days to think about your upcoming decisions. You should also have your broker or your business transaction accountant help you if you have questions – but you need to get them any questions and any documentation promptly as they may not be able to get to it right away. Don’t wait until two days before due diligence is over to rush the paperwork to an accountant and then try to request an extension. Procrastinating during due diligence could mean you are rushed into a decision without having reviewed the information thoroughly – leading to unnecessary surprises down the road.


Why is an extended due diligence period unfair to the business? An extended due diligence period pulls a business off the market and shifts a seller’s focus to just one buyer. The seller has to take time away from the day-to-day operations of the business to provide requested information and answer buyer questions. At the end of an extended due diligence a buyer can then decide they don’t want to move forward with the business sale, leaving the seller to start over with the process of finding buyers after an extended absence from the market. To shift focus for a period of two or three weeks isn’t unfair – but to ask a business owner to change their focus for weeks or months is.


If you are in the market to buy a business, it is in your best interest to use the due diligence period to your advantage by working quickly with the information you are given and giving yourself the time to think about the decisions you need to make. It will alleviate some of the stress of the business buying process and allow you discover any surprises before they become a problem down the road.


Are you looking at businesses and are concerned that a two week due diligence period won’t be enough? Do you have more questions about what happens during due diligence? Ask us! Please leave any comments or questions and we would be happy to help.




Michael Monnot

12995 South Cleveland Avenue, Suite 249
Fort Myers, FL 33907

Michael Monnot


5111-E Ocean Blvd
Siesta Key, FL 34242

Michael Monnot


9040 Town Center Parkway
Lakewood Ranch, FL 34202


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