be your own boss Archives - Page 11 of 21 - Infinity Business Brokers

Published December 21, 2020

If entrepreneurship is your goal, there are more decisions to make than just picking a business off a list of listings. Figuring out the RIGHT business to buy is crucial to success. Here’s how you do it:

Dig deep.

What do we mean by that?

You need to figure out what you want. When you buy a business, you are buying yourself a life-encompassing job – a job where the buck stops with you. What do you want your future life to look like? Figuring out what really means the most to you, as well as what tools you have to help yourself be successful can mean the difference between buying yourself a successful new business and buying yourself a nightmare.

What factors should you consider?

Your background.

Why is your background so important? Owning and operating your own business is tough. It can sometimes mean long hours, tough decisions and navigating lots of issues. Your background matters because the steep learning curve that happens whenever someone buys a new business will become impossibly steep if you add learning an entirely new industry to the mix. Don’t do that to yourself. Pick a business that compliments the practical experience you already have. If you’ve spent the last 15 years in the manufacturing industry, and have never worked a single day of your life in the restaurant industry – buying a huge bar on the beach isn’t going to end well. Talk to your business broker about your experience and strengths – they can help you find business choices that will compliment your background and set you up for success.

Where you want to live vs. what type of business is actually possible in that area.

It should go without saying that some types of businesses can only be successful in certain areas. For instance, service-type industries (think restaurants, landscaping, housekeeping) do really well in places like southwest Florida where people are coming to second homes for vacation – and probably don’t want to be doing a ton of housework or cooking while they’re here. The same type of service business probably isn’t going to be as successful in a very rural part of Montana, for example. Take a look at the area where you’d like to live. What works there? What doesn’t? Talk to your broker about what businesses do better – and worse – in the area you’d like to end up.

What is your ultimate goal for business ownership?

Are you looking for a goal of making a certain amount of money in the next 5 years? Are you looking for a challenge and are willing to push the envelope with a business that will require more work on your part for a potentially bigger return? Or would you prefer a nice, safe and steady shop without a ton of room for growth – where you won’t have to push as hard but returns won’t be as big either? Your ultimate goal for business ownership will obviously have a big impact on your search. Talk to your broker about your income goals as well as about how much of a challenge you are willing to take on.

Can you realistically get the licenses required?

Red tape can be very strange. There are certain industries in certain states that require a business owner to have prerequisite requirements for an operating license that might be hard to get. Think requirements to have x amount of years doing a specific type of work before you can even apply for a license. Some licenses require background checks, fingerprinting and the like. Ask your business broker about the industries you are interested in. The licensing requirements for an industry might preclude you from owning the business you think you want, so figuring out licensing limitations will be important early on in your search.

The message here is buying yourself a new life needs more than a cursory search through listings. You need to dig deep and decide what you want your life to look like, then have a discussion with your broker about what type of businesses will fit with those goals.

Are you considering buying a particular type of business and have questions about whether or not it will meet your goals? Do you have questions about licensing requirements? Would you like to know more about the business search process? Ask us! 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

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Are You A No-Offer Business Buyer? How To Be Taken Seriously

Posted in Buyers Articles

Published December 14, 2020

If you’ve been looking for a business to buy for a while, you may have run into a problem that some buyers encounter – no one will take you seriously.

Maybe it’s your broker or the seller’s brokers that you have come across, maybe it’s the sellers themselves. Whoever it is, they don’t look at you as someone who is serious about buying a business. What they see is someone who is on an eternal search, and therefore someone who isn’t worth their time and energy.

How can you prove them wrong and show that you are a serious buyer? Make an offer.

“I don’t want to make an offer on every business I look at.”

Of course you don’t, and you shouldn’t. What we mean here is if you are seriously considering a business, the only way to know for sure if the business is going to fit your goals is to get to the due diligence process. In this process, you are allowed an in-depth look at all aspects of the business, from financial statements to contracts – then you can decide if it really is the right business for you.

“If I make an offer, I’m stuck with that business whether I like it or not, right?”

Absolutely not. If, during the due diligence phase you come across a reason why you don’t want the business – you will have the opportunity to back out of the deal before anyone reaches the closing table. The system is designed this way because businesses are inherently complex, so your ability to get a good look at what you’re purchasing is part of the process. Then and only then do you have to make a final decision about buying.

If you’ve been looking at businesses for an extended period of time without even entertaining the idea of making an offer, then don’t be surprised if brokers don’t take you seriously.

There are plenty of “tire-kicker” buyers out there who inquire about countless businesses – over enormous amounts of time – without ever making the move to buy one. On the other hand, serious entrepreneurs come on the scene with goals in mind, do a targeted search of available businesses, then make offers.

If you were working in the business market or trying to sell your own business, who would you take more seriously?

Are you a buyer who has trouble getting sellers to take you seriously? Do you have additional questions about why it is a good idea to put an offer on the table? Please leave us a comment or question 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

Do You Have Enough Capital? The Big Question For Buyers

Published December 7, 2020

When the dream is owning your own business, you have a lot of questions.

A big one is “how much money do I need to buy a business?“

There’s an issue with this question. The issue is the answer – it depends.

It depends on what type of business would be right for you.

Many new business owners walk into the business market under the mistaken assumption that anyone can own and run any type of business. Nothing could ever be farther from the truth. To keep your new business profitable, you will need to be able to both navigate and compete in the market you are in. If you have little to no relevant experience in your business, there is likely no way for you to stay competitive. To avoid this pitfall you should look for businesses in industries where you have practical experience. By staying with what you know you will avoid the potentially catastrophic learning curve that comes with learning a new business and a new industry at the same time.

Every industry is going to have options in terms of price. There will be some larger, well-established – and thus highly priced businesses as wells as smaller, more affordable businesses with room for growth. Focus first on the type of business, then look at price.

It depends on how much capital you have available, and how you allocate that capital.

Do you have enough money ready and available to buy and run a business? You should really have at least 50% of a purchase price if a seller is offering seller financing, and all cash or third-party financing already in place if seller financing is off the table. You need to allow for not only the purchase price, but all of the other costs involved in a business sale – like fees for licensing and money available to keep the business running until you are able to start turning a profit at the helm.

Be honest with your business broker about how much capital you have available for your new venture and then listen to their advice about what you can reasonably afford.

It depends on what your goal for business ownership is.

Are you looking to invest almost all of your capital in order to buy a well-established, highly profitable business – or are you looking to hang onto more of your funds and buy a business that has lots of room for growth? You will likely have to work a bit harder in the second scenario, but you will have the benefit of having enough funds to ride out any issues that you come across.

You will have to decide what you want your day to day life to look like, and discuss those desires with you business broker.

The message here is there’s more to look at than just the price of a business. You need to figure out your goals, look for industries where you can be successful and then decide how you’d like to allocate the money you have available.

Are you thinking about buying a business? Do you have questions about seller financing and the best type of business for you? Ask us! Leave us a comment or question here, and we will be happy to help you on your business ownership journey.

Michael Monnot

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

Metrics Of Health – Why Buyers Should Consider More Than Price

Published November 30, 2020

If you are a prospective entrepreneur looking to buy your own business, you may have already noticed the unique nature of business listing prices – they seem to be all over the place.

How do you as a buyer interpret the listing price of a business as it relates to its fiscal health?

Listing prices are typically based on the cash flow the business generates, but there are other aspects that will speak to the overall health of a business which buyers should pay attention to. Here’s a few to consider:

Consistent Numbers

If a business has very consistent numbers, it might mean less risk for a buyer. Remember that the value of a business to you is the earnings it will have in the future. Consistency year over year is what you are looking for. Many businesses will have seasonal fluctuations that have everything to do with the local economy and seasonal shifts and nothing to do with the health of the business. If you are seeing large annual fluctuations, ask your business broker if those fluctuations are merely seasonal or something more problematic.

Operating Profits

In order for you to pay yourself and pay back any debt you incurred with the purchase of the business the business will need to be generating operating profits. A business with numbers that consistently show operating profits will be a better bet than a business that is only breaking even. A caveat here – a business that isn’t doing so well but has easily remedied issues (like staffing changes, adding a marketing plan where none exists, etc.) might be a good deal if you can get it for a great price.

Diverse Customer Base

In a business that has a diverse customer base the loss of a single customer will not be as catastrophic as it would be for a business with only a small handful of clients. Look for both a large number of clients and clients across a diverse spectrum.

Reputation and Brand

A business with a great reputation or a very well established brand will have a more loyal clientele, meaning less work for you as the new owner. Instead of having to spend your time rebuilding a poor reputation you will be able to focus your marketing time on acquiring new customers.

Good Managers

If a business is well managed by the staff without the owner having to be present 100% of the time – and if those managers/staff are willing to stay on if the business changes hands, it can be a good sign for a potential buyer. It will mean less disruption when the business changes hands and less of a learning curve for you as a new owner because there will be staff present to help with many aspects of day-to-day operations.

If you need help determining if the listing price of a business really reflects reality, talk to your business broker. They know the current market, what recent comparable businesses have actually sold for and what aspects of a business can bring the most to a new owner.

Are you a future business buyer who has questions about the value of businesses you have seen for sale? Have you come across businesses that seem over or under priced? Leave us a comment or question and we will be happy to assist you with your business search.

Michael Monnot

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

Future Entrepreneur? A Few Thoughts

Published October 12, 2020

We would all love to be our own boss, to be completely in charge of our own destiny. If entrepreneurship seems somehow out of reach, you should know there are easier paths to business ownership than coming up with a groundbreaking and inspired idea and building a successful and thriving business from the ground up. What follows are a few thoughts for the entrepreneur inside of you – waiting to succeed.

You can skip the build-out and buy existing.

The inspired idea would be nice, but it’s not necessary – or the easiest path. Typically, buying a business is a safer bet than building one from scratch. You get to take over as owner of an already built-out location with trained employees and a proven set of operating procedures. This can be a fantastic first step into business ownership because it skips all the disadvantages a start-up will encounter, like establishing a customer base and building cash flow.

It is not, however, a fool-proof way to enter the world of business ownership. You need to choose a business that is profitable, or one that has easily-remedied issues that will make it profitable quickly (like customer service issues that could be handled by replacing some of the staff). You need to choose a business that has room for growth, and if it is a retail business, one with inventory that customers still want.

Look for something in your wheelhouse.

When you are beginning your foray into business ownership a big step is choosing the type of business you will buy. Be very careful with this step because it is where many new entrepreneurs get into hot water. DO NOT buy a business you know absolutely nothing about. If you are someone who has enjoyed the bar-scene for a long time, but you have never spent so much as a minute working in the bar/restaurant industry, then buying a bar is a terrible idea.

Look at industries where you have some knowledge or experience, as this familiarity will save you from complete disaster. Taking over a business for the first time is hard enough – you don’t want to add starting from scratch in a brand new industry to the equation.

Find the right help.

The smartest step any budding entrepreneur can make is to talk to an experienced business broker. That first conversation can tell you what your options are, help you figure out your next steps and get you launched on the path to business ownership. A broker will be an invaluable asset. They can help you find businesses that are right for you, be a buffer during the negotiations between you and the seller, assist you with licenses/permits, help you put together contracts – the list goes on and on.

The message here is if entrepreneurship is your goal, there’s really no reason you can’t start planning a way to reach that goal. Talk to a business broker today!

Are looking for help with finding the right business for you? Do you have questions about the business buying process? Ask us! Please feel free to leave us a comment or question, and we will be happy to help you on your journey to business ownership.

Michael Monnot

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

Buying A Business? Commercial Lease 101

Posted in Become a Business Owner, Business Broker Why & How, Buyers Articles

Published September 28, 2020

You’ve found a great business and are excited to start negotiations with the sellers – but here’s a thought you may not have considered. That’s not the only negotiating you’re going to have to do.

When you buy an existing business, you typically are not buying the physical space that the business occupies.

Most businesses come with a lease, and that lease comes with a landlord and/or property manager.

Most landlords accommodate transfers easily, but not all do. Deals can get hung up on the lease when the landlord refuses to grant the transfer or has decided to change the lease terms dramatically. They can also get hung up if you don’t start working on the transfer until the last minute.

The most important thing you can do as a buyer is get your hands on a copy of the current lease as soon as possible, and then deal with any lease issues long before the day you are supposed to close your deal.

Once you have the lease, the language you would typically want to see is in the section of the lease that has to do with transfers or assignments of the lease. Does it say something along the lines of “any assignment will not be unreasonably withheld”? If it does, you are probably in good shape. This type of language means the landlord would have to come up with a very good reason to keep from transferring the lease to you.

Landlords, for the most part, are concerned with keeping a rental space filled and generating rental income. Some, however, are unwilling to reassign leases (at least initially).

This is a part of the business sale process where your business broker will be an invaluable asset. They can act as a buffer between you and a difficult landlord, and can help to negotiate your new lease or the reassignment of the old lease to keep the lease rates reasonable.

Another way to keep the lease from holding up your closing is to be forthcoming with your financial information when the landlord asks for it. Most landlords are going to want to see some kind of financial statement that proves you have the capital to keep the business open. It would be foolish for them to rent to a tenant who will be forced to close the business doors only a third of the way through the lease. Some landlords also want to see some kind of resume or work history to show you have the experience necessary to keep the business running and profitable.

You should also be aware that in some cases the rental rate will slightly increase from what the seller is currently paying when you get a new lease. You can negotiate a lease extension at the same rate, but eventually your new lease may come with a new rental rate. You will also be responsible for coming up with the deposits necessary for the lease.

The message here is your business won’t be much of a business if you can’t get a lease assigned to you for the space. Deal with lease issues early on and the won’t become a big headache in the end.

Are you a business buyer who has questions about business leases? Have you had a deal fall apart because of a difficult landlord? Please feel free to leave us a comment or question here, and we will be happy to assist you with any lease questions.

Michael Monnot

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

Could Vs. Should – Buying A Business Without The Right Help

Posted in Become a Business Owner, Business Broker Why & How, Buyers Articles

Published September 21, 2020

If you’ve ever bought a house or have even just rented an apartment, you know the importance of agents in those transactions. Your real estate agent or your rental agent helped you with locating potential properties, let you in to take a look around, assisted with your purchase or lease contract and was there throughout negotiations. While it is possible to buy a house on your own or rent your own apartment, it’s definitely easier with someone who knows what they’re doing by your side. When it comes to the small business market, the same will be true. It’s going to be much easier with help.

Business transactions are inherently very, very complex.

If you’ve never been through a business transaction before you are probably going to have an impossibly difficult time navigating everything that needs to happen. That’s where business brokers come in.

A business broker is a transaction agent. Their job is to get a business sale from start to finish. They help buyers by guiding you through from you initial contact all the way past the closing table.

Your broker will talk to you about your goals for business ownership, the amount of capital you are able to invest, the areas where you would like your business to be located and your education/experience. Your broker will then help you with your business search, narrowing down the choices based on your feedback. Once you have found a business or two that interests you, you will sign nondisclosure agreements to gain access to the business name and some cursory financials. If you like these businesses your broker can schedule conference calls with the sellers as well as site visits when there are no employees or clients around. Your business broker will then help you write your offer which, if accepted, will become the purchase contract. The business brokers will act as buffers during negotiations between you and the seller – a very important role. They will also negotiate with your future commercial landlord and property manager to ensure you get a fair lease. Your broker will also help you with the licenses and permits required for you to take over as owner.

This is a big list – and it would be quite an undertaking for someone who has never been through it before. Very few business transactions go through successfully without help. An experienced and qualified business broker has not only been down this road many times before, but they know where the pitfalls are going to be and can help you avoid them.

The message here? Could you buy a business without a business broker? Maybe. Should you? Definitely not.

Are you considering buying a business but aren’t convinced you need a business broker? Do you have more questions about what a business broker can do to help you throughout the transaction process? Please feel free to leave any comments or questions. We would be happy to help!

Michael Monnot

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

Follow The Rules: How To Keep From Killing Your Deal

Posted in Become a Business Owner, Business Broker Why & How, Buyers Articles

Published August 31, 2020

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

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

Published August 24, 2020

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

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

Published August 10, 2020

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