Follow The Rules: How To Keep From Killing Your Deal



Buying a business can be (and often is) an intensely frustrating process. When you have questions, when negotiations are in full swing – even getting initial information usually means you spend a lot of time waiting. Waiting for the seller’s broker to contact the seller. Waiting for the seller to get together the documentation you’ve requested. Waiting for an attorney to look over a contract. Waiting for approval by your new commercial landlord. Waiting for licensing and permitting requirements to go through. It takes an enormous amount of personal patience to see it through.

 

This huge patience requirement can make you feel a little crazy – maybe even crazy enough to try and push the process along by yourself.

 

What do we mean by that?

 

The process of buying and selling businesses comes with a rather rigid set of rules. The majority of those rules seek to protect the deal on two fronts. They protect the confidentiality of the transaction itself and they protect the buyer and seller from each other.

 

Why does a transaction need confidentiality and why shouldn’t you push to break it? Breaching confidentiality might not only kill your deal, it could potentially cause a fatal blow to the business you are hoping to buy. Business sales happen under a strict veil of confidentiality for a few very important reasons.

 

The most important of these reasons is the incorrect but pervasive assumption that a business for sale is a business on the brink of failure. This notion can destroy a business if the news gets out that it’s on the market. Employees can panic and leave. Clients can cancel big contracts. It can be devastating. As a buyer you have to keep the for-sale status of prospective businesses under wraps. You will not only be required to sign non-disclosure agreements – you will be forbidden from talking to staff on your own, from emailing the owner directly (in many businesses the owner’s email is accessible to their staff), from calling the place of business and asking for the owner, from visiting the premises without permission, etc.

 

While it might be tempting to email or call the seller because you’re tired of waiting for the brokers and attorneys involved to get you the information you’ve been asking for – don’t. One seemingly insignificant point of contact can cause a disastrous cascade. The rules exist for a reason. You have to follow them.

 

This leads us to the second set of rules that protect the buyer and seller from each other. Even if you are following the rules that protect confidentiality to the letter, it might be tempting to bypass the intermediaries and talk one-on-one with the seller (if you somehow have their home phone number, for example). Don’t do this either.

 

Why?

 

The better question is why do the intermediaries, the business brokers, exist? They exist because the complex tangle of a business transaction requires experience and it also requires a buffer. A seller is selling their blood, sweat and tears – something that may be their life’s work. They have a deep personal connection to their business – and a buyer can quickly and easily derail a deal by asking the wrong question, by making an innocent assumption, by saying the wrong thing. Those questions and remarks can offend a seller to the point that they will refuse to work with you – and your deal is dead.

 

Follow the advice of your broker and keep the flow of communication between you and the seller flowing through the people who you hired to keep your deal on track. Negotiations are far easier when the seller is still willing to talk to you.

 

The message here is the rules that cover your business transaction are there for a reason. Someone, somewhere messed up their chances of becoming a business owner – and their cautionary tale will keep your deal safe.

 

Are you a business buyer who thinks the rules are a pain and want to know more about why they are so important? Do you have a story about a derailed deal that could have been protected? Please leave any questions or comments here, and we would be happy to help.

 

 

 

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com
5111 Ocean Boulevard, Suite E
Siesta Key, FL 34242

www.InfinityBusinessBrokers.com

 

 

 

 


How To Buy The Family Business When You Aren’t Family



If you think about the quintessential small business, you likely see a family-run business – one owned by mom and dad and staffed by children and other family members. While the initial intent of many family business owners may have been to pass the business on to the next generation, there are many times when these family businesses go on the market instead.

 

 

A family business on the open market can be a good buy for a business buyer because they are typically run with a lot of drive, passion and care – all of which translates into a strong and successful bottom line.

 

Problems can arise, however, because the person buying the business isn’t a member of the family.

 

I’m looking at buying a family business, what problems might I face?

 

First, you may have a hard time keeping critical staff after the transition because those critical staff may be related to the original owners. The loyalty for those original owners can be hard to replicate, so you as a buyer need to make an effort to get to know each member of the family who works in the business (and plans on staying) and understand what their roles and responsibilities are. Building a good relationship with each family member will help to keep them on your payroll – and hopefully also keep their loyal clientele.

 

This leads us to our next issue. Many family businesses retain their customer base because that customer base has loyalty and trust for the family. As a new face within the business, you will need the current owners of the business to help you with maintaining that customer loyalty. You can work on customer retention by having the seller introduce you to important regular customers and by possibly keeping the seller on as a consultant for a time after you purchase the business. The key to a successful transition is consistency – which leads us to our last point.

 

The final problem many buyers run into when purchasing a family business? Making too many changes too fast. The business you are buying is successful because the family that runs it runs it in a specific way – a way that keeps the customer base happy. Every business buyer wants to make their own mark, but massive changes right out of the gate in an already successful business will more than likely end in disaster. Changes are possible, but a buyer needs to take the time to see what parts of the business work.

 

Buying a family business can pose a special set of challenges, but those challenges are worth it when family-run means a great buy.

 

Do you have questions about buying family-run businesses? Would you like to know what family businesses are currently on the market? Please feel free to leave questions or comments and we would be happy to help.

 

 

 

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com
5111 Ocean Boulevard, Suite E
Siesta Key, FL 34242

www.InfinityBusinessBrokers.com


How To Get Your Deal To Close – Managing Reality and Expectations



No matter what the economic climate looks like, there are always businesses changing hands. Buyers and sellers are always working together – but even in the most favorable of circumstances some deals are destined to die. 

 

Why?

 

The main reason that deals fall apart before they hit a closing table? Unrealistic expectations

 

Business buyers and business sellers come into the business transaction process with an idea in their head of how that transaction is going to go and what they will get out of the deal. The problem with this initial vision is they are almost always an impossible reality. Businesses and business transactions are complicated, messy and involve many moving parts and personalities. Considering your business transaction with a focus on reality will help you immensely in having a successful sale or purchase.

 

 

First and foremost, there is no possible way that you are going to get everything you want. If you are buying a good business, you are not going to get it for a rock-bottom price. If you are selling, you are not going to get 10 times what businesses like yours are actually selling for. Business deals are full of negotiation – and not just about price. You will have to negotiate things like the length of due diligence, the length of the training period, the terms for seller financing, the clauses of a new lease – the list goes on. Be realistic in the negotiation phase of your business transaction. Go in knowing that there will need to be a lot of give and take from both sides of the transaction if you are going to get a deal done.

 

Another major issue that requires a reality check? We’ve already mentioned it – personalities.

 

There are a lot of people in a business transaction. There is a seller, a buyer, a couple of business brokers, business transaction attorneys, CPAs, landlords and property managers – and each one of these people will be seeing the transaction unfold from their own unique point of view. You need to be realistic because there are going to be times during the negotiation that one or more of these personalities are going to clash. For the most part, differing opinions can be sorted out, but only if all sides stay in the negotiation. Going into your business transaction with the understanding that problems will absolutely be a part of the game will help you see the end goal instead of focusing on temporary personality clashes.

 

Keep your expectations in the realm of reality and you will have a much better chance of reaching a closing table.

 

Are you thinking about selling your business and are curious about what businesses like yours have actually sold for? Would you like more information on the process to buy a business? 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
5111 Ocean Boulevard, Suite E
Siesta Key, FL 34242

www.InfinityBusinessBrokers.com


Your Value of Your Business – Is It Realistic?



 

We’ve owned businesses, so we completely understand how much of an investment small business ownership is. Whether you started from scratch or purchased the business from someone else, you had to put a huge amount of capital up to start your life as an owner. You’ve then spent the rest of your time at the helm constantly reinvesting in your business to help it thrive and grow. If you go back and add up all of that financial investment – it’s huge.

 

When the time comes to part ways with this business you’ve invested in there can be an initial urge to put out a price tag that would recoup all of that invested money. The reality is that number is probably well beyond the realm of possibility.

 

 

The harsh truth of the small business market is your business is only really worth what someone else is willing to pay for it.

 

No buyer in their right mind would give you way more than your business is currently (and realistically) worth. Instead you need to price your business based on things like cash flow, your current financial statements, your inventory – you get the idea.

 

To be a successful seller, you need to be smart about your listing price. You want your listing price to generate interest, to be competitive with other businesses like yours that are currently for sale and to be in line with what businesses in your industry have actually sold for. The number you want and the number that makes sense might be very different, but you need to be willing to compromise if you ever hope of reaching a closing table.

 

A quick note here – be wary of a business broker who will let you demand to list the business for whatever you want. A great broker will help you decide on a number that makes sense based on your numbers and the current market. A terrible broker will take your crazy-priced business listing just to get the listing, knowing full well that the business will never sell at that price. The point of listing your business is to sell it, so price it to sell.

 

If your goal is selling, you also have to be prepared for the attitudes of buyers as they relate to the value of your business and the legitimacy of your listing price. Many new buyers don’t consider the vast investment you’ve made or the cash flow the business is currently generating – they incorrectly consider businesses as just four walls and the stuff inside, an asset sale. This misguided attitude means that many initial offers from buyers might seem shockingly low. The important thing to remember when you get a low offer is that it is merely a starting point for negotiations in much the same way your listing price isn’t the bottom number you would like to get out of your business. If your number is realistic and they are a serious buyer you can more than likely reach a middle ground that will make both camps happy.  

 

The message here is to go into the process of selling your business with an open mind – and success will follow.

 

Are you thinking about selling and want to know what businesses like yours are currently selling for? Do you have questions about how the process works? Ask us! Leave any questions or comments here and we would be happy to help.

 

 

 

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com
5111 Ocean Boulevard, Suite E
Siesta Key, FL 34242

www.InfinityBusinessBrokers.com


Buying A Business In 2020? What The Q2 BizBuySell Report Says For You



BizBuySell’s Second Quarter Insight Report shows what a roller coaster of a year 2020 has been. There was a promising start, then March hit and the business-for-sale marketplace sort of ground to a halt. None of this is news to prospective business buyers, as many who were already looking or were engaged in negotiations when the bottom dropped out saw lending dry up and deals fall apart.

 

Guess what? There’s finally some good news.

 

The Q2 Report shows that the small business market is picking back up again.

 

 

Here’s what you need to know:

 

The market is slowly returning to normal, with 71% of the owners surveyed saying they are back to work and open after the initial shut downs.

 

Many buyers are currently seeking pandemic-proof businesses – so much so that these businesses are booming. What do we mean by pandemic-proof? All across the country consumers are adjusting to a new normal where take-out food and delivery services are in high demand, where school happens at home and the majority of shopping is done from a couch – and the businesses that have adapted their model to continue producing throughout the pandemic are now at the top of buyer’s lists. The new Insight Report shows some 60% of prospective buyers are currently looking for a pandemic-proof business. What does this means for you as a buyer? If this is the direction you want to go, you’ll need to act fast when these “essential” businesses hit the market.

 

Another section of business buyers are searching for businesses in trouble, some 28%, hoping that with a rock-bottom price and some patience they can turn the ship around. If you are a buyer looking for one of these low price deals, be careful. You shouldn’t buy a depressed or closed business just because the price is good. You should have a clear plan in mind to get the business back on it’s feet again and have metrics in place as part of your business plan that give you a definitive point to pull the plug and move on.

 

In the industries that were hit hardest by the shut downs, another opportunity for buyers revolves around the sudden glut of built-out commercial spaces that are suddenly available. With many businesses deciding to keep their doors closed despite the reopening of local economies – many down on their luck business owners are selling in order to get any return on their now permanently closed business venture. Some 58% of current business owners who are doing well are actively looking for other businesses to buy in order to expand into those now vacant (and sometimes coveted) locations.

 

The point here is although the market is nowhere near where it was at the very beginning of 2020, it is showing some signs of life again. A careful, creative and motivated buyer can make the best of the current market and find themselves a booming pandemic-proof business or one at a low, low price. Talk to your business broker about which choice would be best for your situation.

 

Do you have questions about what the Insight Report says about the current state of the business-for-sale marketplace? Would you like to know what opportunities are available in your area? Please fell free to leave any questions or comments. We would be happy to help.

 

 

 

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com
5111 Ocean Boulevard, Suite E
Siesta Key, FL 34242

www.InfinityBusinessBrokers.com

 

 

 


Selling Your Business? Tips For Growth Before You Sell



If you are thinking about selling your business, you should also think about maximizing the potential value of your business to buyers before the business hits the market. Many business owners who start the selling process take their foot off the gas, expecting the business to sell quickly and without much effort. If you are considering this approach, you should know that the typical time it takes to get from listing to closing is 9-12 months, an absolute eternity if you stop caring about running your business and plenty of time for you to sink what you’ve built.

 

Instead of trying to coast to the finish line, you should do everything you can to continue the growth of your business by seeking out new customers to add to your base. Increasing your customer base will add value to your business in the eyes of buyers, and will also show them that your business is a good investment because you as the current owner always have an eye on growth.

 

 

Although it can be difficult to find new customers in a small, local area and that difficulty is now compounded by a global pandemic – there are a few relatively simple things you can try to get your business noticed by both new clientele and buyers.

 

Get and Maintain an Online Presence

 

Hop on any major search engine and type in the name of your business. What pops up? If you have no online presence to speak of you should know that in our ever increasing digital world an online absence will reflect very poorly on your business. Why? Any buyer who sees you have neglected the most important avenue for customers to find you will wonder what other aspects of the business you’ve let slide.

 

It is very easy to make yourself visible online. You first need to make sure your business information is both listed and correct on all of the major search engines. Your listings on these sites should include your address, phone number, an email and a short blurb about what you do. Next, you should set up a business Facebook page and regularly post news about your products and services. Finally, ALL businesses need a website. A business without a website is the equivalent of a store without a sign out front. There are many services available to create a website on your own without any tech-savvy knowledge or you can hire a web designer to create one for you. Make sure your website includes the location of the business, the contact information, the hours of operation and the products or services you provide. Make it incredibly easy for people to find you and your customer base will grow.

 

If at all possible, you should also have on your website a way for customers to purchase your goods and services from the comfort of their home. Use an online appointment setting service so customers can schedule your services whenever they want. If you have a restaurant or other food service business, set up an online ordering platform and offer curbside takeout. If you have a retail store, set up an e-commerce platform so your customers can still shop from their couch.  If it isn’t feasible to offer everything you have in your inventory in a digital store, you an certainly take your top sellers and make them available for digital purchase and offer the option of shipping or curbside pickup. Flexible and innovative businesses are the ones that attract new customers and also have the staying power to survive the times. The digital platform is a great way for you to maximize your profits while also showing potential buyers that your business can make it through.

 

Ask For and Respond To Feedback

 

TripAdvisor, Google Reviews and Yelp are where customers look when deciding on a new business to use, so use rating sites like these to your advantage. Ask customers to rate you, and respond in a positive way to any negative reviews by addressing and then fixing that person’s concerns. Showing that you are an engaged owner will not only help your business reputation with customers, it will help with any potential buyers as well.

 

Taking these fairly easy steps to bring in new customers will both add to your bottom line and impress any potential buyers who come in the door. Don’t take your foot off the gas, especially now!

 

Are you thinking about selling your business and want to know more about growing your business with an eye on selling? Do you have questions about the business selling process? Please feel free to leave any questions or comments here and we will be happy to help.

 

 

 

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com
5111 Ocean Boulevard, Suite E
Siesta Key, FL 34242

www.InfinityBusinessBrokers.com


Unexpected Problems: What To Do When Your New Business Gets Sticky



You’re a brand new business owner and you’ve successfully navigated the path of purchasing a business. You took your time and really delved in during due diligence. You paid close attention during training with the seller and took copious notes. You’re pretty sure you’ve got the hang of this new business, and that you know everything about it.

 

 

Until you don’t.

 

Suddenly there’s an unforeseen problem. Something you didn’t find during due diligence. Something that happened out of the blue.

 

What can you do?

 

It depends. If a seller purposefully withheld something like a fatal flaw you will likely have some kind of recourse. If this is the case, call your business broker and discuss what options are available.

 

What if it’s not a secret fatal flaw? Then what?

 

Roll up your sleeves and get to work. Business ownership is tough stuff, and sometimes no matter what’s being thrown at you – you just have to find a way to persevere.

 

For instance, say you just bought a restaurant. Shortly after you take over the whole staff quits because they can no longer get away with things the previous owner allowed. Although a potentially rough situation, it can be solved by working some shifts yourself while you hire new staff or temporarily limiting the restaurant’s hours until you can right the ship.

 

What’s important to remember when you hit those initial and inevitable bumps in the road is no business is perfect and no business is smooth sailing. You are going to encounter problems – your success or failure as a business owner depends on what you do when faced with those problems.

 

It is also important to remember that the buck ultimately stops with you. If you aren’t willing to work with a staff who wants to get away with whatever they want – it’s not the previous owner’s fault when that staff quits en masse. It’s yours. Deal with the fallout and do what you need to do to get a new staff in place. Business buyers who sit on their hands and blame everyone but themselves are probably going to have a hard time as entrepreneurs.

 

The message here is you can research all you want and learn all you can about your new business and still end up with unexpected problems right out of the gate. Just remember that with some thought and hard work you and your new business can overcome anything.

 

Are you considering buying a business and want to know what recourse you might have if a seller hides issues? Do you want to know more about how you can find and deal with potential issues during due diligence? Ask us! Please leave any questions or comments, we would be happy to help.

 

 

 

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com
5111 Ocean Boulevard, Suite E
Siesta Key, FL 34242

www.InfinityBusinessBrokers.com

 

 



Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

5111-E Ocean Blvd
Siesta Key, FL 34242

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

5111-E Ocean Blvd
Siesta Key, FL 34242




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