be your own boss Archives - Page 2 of 20 - Infinity Business Brokers

Published June 19, 2023

Coming up with a brand new business idea is a big challenge. You have to figure out a concept, find a location, come up with operating procedures, hire and train a staff, build out your space – the list is a long one.

If you’ve ever wanted to own your own business there’s a way to do so without having to start at ground level. You can buy an existing business instead – one that has a proven location, concept and track record.

If this sounds like it might be the right path for you, here’s your next question.

How are you going to pay for it?

In the small business world there are essentially 4 ways to finance the purchase of a business. Let’s take a look at your options:

Seller Financing

This one is probably the most common. A buyer comes up with a substantial down payment and then the seller of the business finances the rest. This option is popular because small business funding can be difficult to get from a traditional lending institutions like a bank, so sellers will offer creative financing to open up the pool of buyers for their business. This is also popular among buyers because a seller who is willing to keep some skin in the game tells you volumes about how they view the future profitability of their business. They don’t get paid unless you succeed. A few caveats for this financing option. You will need to bring a large down payment, 10 or 15% isn’t going to cut it. Also, if you do end up defaulting on this loan the seller will get the business back.

SBA Loan

The Small Business Association (SBA) does offer loans in the right situation to people buying a small business. There will be a fair share of bureaucracy with this financing option, as well as certain metrics both the buyer and the business itself will have to meet in order for the loan to happen.

Investor/Family Funds

In some situations a buyer is able to procure funds from loans made by family, friends or investors. This option should include a contract or written agreement by all parties that spells out every aspect of the loan – how it will be paid back, what metrics are necessary, how one or more parties can be bought out of the agreement should the need arise, etc.

Your Own Cash

Lastly, you can always use your own cash to fund the purchase of a business. Perhaps you have a decent amount of money in savings, maybe you’re considering refinancing your home or pulling funds out of investment accounts. This option will alleviate you from owing money to others but must be considered carefully if you are going to be investing all of your available cash into the purchase of a business.

If one or more of these financing options seem doable for you, the next step you should take is to have a conversation with an experienced and qualified business broker. They will be able to talk you through the options available to you and help you decide which option will best meet your goals for business ownership.

Have you always wanted to own your own business but weren’t sure how you would fund such an endeavor? Would you like to know more about how seller financing works? Do you have questions about the process required for a loan from the SBA? Ask us! Leave any questions or comments here, we would be happy to help.

Michael Monnot

I Have A Business Idea: Should I Buy A Business Or Start One Instead?

Published June 12, 2023

If you want to own your own business there are basically two avenues to make that happen. You can start your own original business from the ground up or you can purchase an existing business. The path you choose will depend on many factors that relate to the risks involved in starting a business versus the risks for buying one.

In general it’s probably easier to buy an existing business. The concept, location and operating procedures are all proven because the business is currently open and running. The employees have already been hired and trained, the licensing and permits needed have already been approved, the inventory or goods for sale will work because they are currently selling – you get the idea. A tried and true method almost always works better than an unknown.

If it’s easier to buy a business, is it always a better choice than a start-up? No, it depends on what your vision for business ownership is.

You might be someone who just wants the flexibility and control business ownership affords you, and while you do have industries and types of businesses that would suit you in mind you aren’t stuck to one particular idea of how a business must be. Good financials, a good location, a good reputation – these are the things that matter to you. If your desire to be a business owner is born out of wanting to reach life goals but the path doesn’t need to be a certain way – purchasing an existing business is probably the right idea for you.

On the other hand if you have an entirely new business idea and the means to bring it to fruition coupled with needing that business to be exactly the way you envision it – a start-up is likely a better route.

A caveat to the start-up route. Say your dream is to open your own café to sell the baked goods from your grandmother’s recipes and coffee. Sure, you could find an empty commercial space and build it out to your liking – but you’ll have no idea if the location and concept are going to work. A likely safer bet is to find and purchase an existing café that is similar to what you envisioned and then make small changes (after you’ve run it for a while and have a gauge on what your current clientele will accept as far as changes) until it’s exactly the way you want it.

Whichever path you think might suit you a great first step is to have a conversation with an experienced and qualified business broker. They will be able to point you in the right direction, either by finding you listings that would suit your needs or by referring you to a commercial agent to find your new space.

Do you have a vision for business ownership and aren’t sure which path is right for you? Would you like to know what businesses currently for sale might work for your goals? Ask us! Leave any questions or comments and we would be happy to help.

Michael Monnot

Buying? Why You Need To Stay On Good Terms With The Seller

Posted in Buyers Articles

Published May 29, 2023

The people who buy and run businesses are a strong bunch. Lots of drive, lots of passion and typically a very type-A personality. When you get two people in a room with this personality type it can sometimes go south in a big way without a lot of provocation. This is an enormous problem if the people having issues are the buyer and seller of a business.

You aren’t going to like everyone you meet, and if you are buying a business you’ve fallen in love with you might very well hate the seller. Maybe the two of you have drastically different world views. Maybe you have drastically different visions for the future of the business. Maybe the negotiation of your deal got a little ugly at times. Whatever the reason you and the seller aren’t fans of each other it is absolutely in your best interest to maintain an amicable relationship with the seller.

Why? You will need them for a bit.

Business deals take a long time to get to a closing table. You might need to work with this seller for months on a deal and that will be vastly easier if you can be cordial to each other and keep things professional. It will also be easier to find points of compromise within the purchase contract.

In addition to the time it takes to put a deal together, most purchase contacts contain language spelling out the terms of a training period for a new owner – usually two weeks of training after the closing happens. If you can keep your relationship with the seller peaceful this training will be pivotal to a smooth transition and ensuring you know how to successfully run your new business. If a clash of personalities causes major problems you probably won’t have a very useful training experience.

The good news is if you aren’t a fan of the person selling your business – you don’t have to be. You just need to be able to keep it professional throughout the negotiation of your deal and then through the training process.

Have you considered some businesses for sale but weren’t a fan of the owners? Would you like to know strategies for dealing with a seller you don’t like? Ask us! Leave any questions or comments here, we would be happy to help.

Michael Monnot

How To Choose A Business You’ll Love

Published May 15, 2023

One of the keys to happiness is having the ability to get up every morning and go to a job that you love. If you are looking to become a business owner, then you can’t overlook this pivotal aspect – you need to buy a business you won’t hate.

How do you ensure the business you buy is one you’ll actually love? Spend the time before you actually start searching for a business doing some serious personal reflection.

Things to think about:

Where do you want to be in 5 years, 10 years?
What do you really love to do? What in your employment history has brought you enjoyment? What do friends and family see you doing as your “dream job”?
Are there things about your dream business that you would dislike doing? Is this something that you would have to do yourself? Could you bring in a partner or hire someone to do those tasks, enabling you to focus on the parts of the business that are your passion?

Once you’ve considered these thoughts, have a conversation with an experienced and qualified business broker about your goals for business ownership. Are you looking for a passion project? Do you want more flexibility in your schedule? Are you looking for a business with a lot of room for growth?

When you have solidified your goals you and your business broker will work together to find businesses that fit you and the amount of capital you have available.

A caveat here; don’t assume that loving your business means that running it will be easy. Everyone who owns a business works really hard, it’s all about enjoying what you do. This is why determining your goals is such a critical step.

If you haven’t taken the time to consider your goals and the things about business ownership that will mean real happiness, you run the risk of being lured into a great deal on a business that might not be right for you in the end.

Are you thinking about buying a business and have questions about what industries would match with your goals? Do you want to know what businesses are currently available that would work for you? Ask us! Feel free to leave any questions or comments and we would be happy to help.

Michael Monnot

Red Tape For Business Buyers: A Guide

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

Published April 17, 2023

You know how everyone always jokes about what a nightmare bureaucracy can be? If you are buying a business, prepare yourself – you are going to have your fair share of red tape. All of it will need to be completed in the correct order and to the correct level of repetition before you can operate your business.

It can be frustrating and might (at times) feel impossible, but every operating business has made it to the end of this process. Consider it an annoying right of passage.

This is a part of the business transaction process where your business broker can be worth their weight in gold. A good broker will have someone who can help you with any and all red tape, or they will be able to help you themselves. Some business buyers choose to have their broker (or a specialized contractor) do all of the licensing, others are able to get it completed with just a few suggestions. How you handle this part of buying your business is up to you.

Want some pointers? Here’s a sample of our best advice, derived from many trips down bureaucracy lane:

DO NOT PROCRASTINATE!!!

Many red tape items are contingent on one agency completing or signing off before another can even begin, so start early and stay on top of it. You can’t get all of your licensing and permitting done the day of (or even the day before) closing.

Gather All Of The Documents Before You Start:

First you will want to try to get together the list of everything your broker and the seller think you will need. Ask the seller for copies of the licenses and permits they hold, as you will need their license and permit numbers to fill out your own.

Go online and print out every application you think you might need, even if you are going to be submitting them online. A printed version will allow you to collect all of the needed numbers/addresses/names/titles/etc. so you don’t end up timed out of the online application process (they pretty much all have a time limit and then they force you to start over).

Once you have assembled your pile of seller information and printed applications keep all of it together and take it everywhere you go. Many applications require signatures from multiple government agencies or departments.

Naming And The IRS:

The very first step is the naming process, even if you are buying an existing business and keeping the business name the same. Why? Your business will technically have two names, the DBA or “Doing Business As” (also called the Fictitious Name) and the legal name which can literally be “Anything You Want, LLC”. You will need to file your DBA with the Division of Corporations in your state, and the legal name will need to be filed through your attorney or an online legal service like LegalZoom. You will also need to get a Federal Employer Identification Number (also called a FEIN or an EIN) from the IRS.

Operational Licenses:

If the seller currently holds a license needed for the operation of the business, like a liquor license, then instead of starting from scratch you will be using applications for transferring that license. A word to the wise here – don’t rely solely on the information you find online about what is required to get the licenses issued or transferred. Get someone – a real, live person on the phone. Better yet, find the local office (instead of the statewide call center), and get a local agent on the phone. The local agents are the ones who will be processing and issuing your license, so they are the ones you need to keep happy. Another caveat? Be really patient with this part of the process. You can call the same call center three different times and get three completely different answers to a single question.

Local Licenses:

You will also need to get yourself a Certificate of Use and your local Business Tax Receipt or BTR (also called the Occupational License). The Certificate of Use gets issued after your building and fire inspections, your BTR after your Certificate of Use goes through. If you are buying an existing business, you may not need an inspection if the business has had one recently, but you will need to call and check. Again, get a living person on the phone to discuss the requirements and process and you will be far better off than trying to divine what you need from a cryptic government website.

Costs:

Did we forget to mention that pretty much all licensing and permitting applications come with a fee? Yes, they all do. While rarely astronomical in price, the costs will be completely dependent on what applications you are filling out, what inspections you need, etc. Be ready with your credit card or checkbook when you start the process.

It Can Be Done, Really.

This is one of the parts of being your own boss that is not very fun, but with a good dose of patience and a bit of organization it will all fall into place. Most of the real, live people you will get on the phone are very helpful, and remember that your broker is always there as well.

Are you thinking about buying a business, or do you already have a business in mind and are wondering about what kinds of licenses or permits you will need? Are you having trouble finding the agencies you need to get your applications going? Ask us! Please feel free to leave us a comment or question here, and we will be happy to help you with navigating the red tape.

Michael Monnot

Stepping Into Big Shoes: How To Take Over A Beloved Owner’s Business

Published April 10, 2023

Buying a business comes with a unique set of challenges. You have to learn operating procedures, you have to become acquainted with clients and vendors, you have to navigate the licensing and permitting process, you have to develop relationships with your new employees – the list is long.

Sometimes the previous owner was burned out and unpleasant, and as such the employees and clients might be happy to see them go in favor of a fresh face and attitude.

What if the opposite is true? What if you are replacing a highly respected and beloved owner? How do you successfully fill those seemingly enormous shoes?

First, don’t try to emulate the previous owner. Attempting to change who you are will always come across as inauthentic. The best thing you can do is be yourself, even if you are a vastly different person than the seller. Sure, some of the seller’s success came from their personality and the way they interacted with everyone related to the business – but that doesn’t mean that you can’t also be successful. Be authentically yourself, upfront and honest with with those around you and you will show the staff and clientele that you are someone who can be trusted.

Second, hit the ground running. Use the training period with the old owner to learn absolutely everything you can about both how the business runs and why that methodology is successful. Look for ways to grow the business from day one, but implement new growth strategies and marketing ideas while maintaining the operating procedures that have served the business well so far. If you come in motivated and willing to listen and learn (instead of rushing changes and forcing new policies right out of the gate) your staff will feel like their contributions to the business are respected and you can earn their respect in return.

Third, be nice. A truly beloved and respected boss is never an angry jerk, so although you might be very different from the previous owner – as long as you are kind to your new staff that thread of the positive owner relationship will continue.

While it might initially seem intimidating to take over from an owner that everyone is really going to miss – if you can be yourself, be willing to learn and be nice your new business and those in it can learn to embrace you too.

Are you considering a business with a well respected owner and have questions about what the training period will be like? Would you like to know more about how you can successfully navigate the transition to new owner? Ask us! Please feel free to leave any questions or comments and we would be happy to help.

Michael Monnot

Upfront And Honest: How Uncomfortable Questions Help You

Posted in Buyers Articles

Published April 3, 2023

Answering personal questions can be tough. No one likes telling strangers where they live or how much money they have – but if you’re going to buy a business know that these uncomfortable questions are coming.

Why? They are critical to your success.

When you first interact with a qualified and experienced business broker they will ask you questions like these, and if you really want to buy a business you need to be upfront and honest with your answers. The bright side? Giving up some information about yourself only helps your broker help you.

Why do you need to know where I live?

Business sales happen under a veil of confidentiality. This secrecy is important for a number of reasons. There is a powerful misconception that a business for sale is a business on the brink of failure. Although the failure scenario is rarely the case, this misconception can cause catastrophic losses for a business (an entire staff can panic and quit en masse or important clients can cancel contracts). Businesses often have proprietary information or financially sensitive information that will need to be disclosed to a potential buyer during the transaction process, in addition to exposing the for-sale status of their business, so a business seller is putting a lot on the line. To be allowed access to such important information you as a buyer must sign a nondisclosure agreement (NDA). When you sign the NDA for a particular business listing you are asked for your legal name and physical home address. This information is used to verify who you are and to identify you as an individual. There might be ten Matt Smiths in a town, but only one Matt Smith lives at his unique home address. When you consider the gravity of the information that is being exchanged, what you give on the NDA is paltry in comparison with what a seller risks by giving you access to their business.

Why do you need to know how much money I have?

We aren’t asking how much money you have in your bank account. We’re asking how much money you currently have to invest when you purchase a business. If you can’t afford a $500,000 business then it’s a colossal waste of your time (and everyone else’s) to look at $500,000 businesses. We also need to know if you are looking to pay all cash up front for a business or if you are looking for financing options. What we do with the information you provide is find businesses that you can successfully afford and/or financing options you would be able to qualify for. Your honest disclosure of the capital you are working with only helps find the right options for you. You are also going to have to prove to your future commercial landlord that you have enough funds to cover your lease expenses. If you’re going to buy a business you are going to have to get comfortable talking honestly about how much money you have available.

The message here is although you might not want to give up information about yourself a business broker isn’t doing their job if they don’t ask these questions. Giving up potentially damaging information to the wrong person could hurt a business that would have been perfect for you. Showing you businesses you could never successfully afford is a waste of your time and energy. Be upfront, be honest and be willing to help your broker help you.

Do you have more questions about what information is required for the NDA? Would you like to know what businesses fit with the funds you have available? Ask us! Leave any questions or comments and we would be happy to help.

Michael Monnot

Get Comfortable With Sharing: Why Business Buyers Need To Divulge Info Too

Posted in Buyers Articles

Published March 29, 2023

No one likes to talk about deeply personal things with strangers – like how much money you make or exactly where you live. Guess what? If you really want to buy a business you are going to have to get comfortable sharing information just like this with the other parties in your business transaction.

What do we mean?

Well, for starters you are going to have to give your real physical address and full name to a business broker before they are going to let you sign a non-disclosure agreement for a particular business listing. They need this information because it ensures that you are who you say you are and you can be individually identified. For instance, there might be 10 John Smiths living in your area, but only one John Smith lives at 123 Marigold Way.

Next, a business broker is likely going to ask for proof of financials to prove to the seller, whoever is financing your transaction (the seller if your deal includes seller financing, the SBA if your loan is through their program, etc.) and your future commercial landlord/property manager that you indeed have the money that you say you do and that you can successfully purchase the business.

That same group might also want to know your work history, education and practical experience. A commercial landlord isn’t likely to let a new tenant sign a long term lease if they have no actual experience in that particular industry. The rent won’t get paid if you don’t know what you’re doing so they want a tenant who is more likely to succeed than fail. A seller also wants to know that they are handing over their business and employees to someone who knows how to keep the business going and keep everyone employed.

See a trend? You are going to have to get comfortable sharing this type of information about yourself. There’s no way around it. When you share your information you gain access to far more from the other side. You get access to confidential, proprietary and potentially damaging information about a business, you get to go through any and all documentation the business has, you get access to tax returns, contracts, employee files – the list is long. What you are given versus what you give is most certainly slanted in a buyer’s favor.

The message here is business deals are complex and a lot of money changes hands. You are going to need to be upfront and forthcoming with information about yourself if you expect the other side to be upfront and forthcoming with the information you need too.

Are you thinking about buying a business and aren’t super comfortable giving up personal information to gain access to listed business information? Would you like to know more about what business brokers, sellers and landlords do with that information? Ask us! Leave any questions or comments and we would be happy to help.

Michael Monnot

Interested Buying A Franchise? Let’s Talk New Vs. Existing

Published March 27, 2023

Buying into a franchise can be a great option for those who are looking to start their own business from the ground up. Starting your entrepreneurial journey with a franchise does not necessarily mean an easier path, it just means you walk in with an established brand and structure already in place. In terms of the time and money you will ultimately spend, buying into and starting a franchise will be just as much work as starting a business on your own.

What are the major expenses involved in starting a franchise?

The first cost you will incur will likely be the franchise fee. Franchises charge this upfront fee as a way of recouping the costs of training, branding and the support they will provide. The average franchise fee is somewhere in the neighborhood of $30,000, but they can range from less than $10,000 to over $100,000. The franchise fee will depend on the size of the franchise you are buying into, and each individual franchise will have specific requirements to become part of the brand.

There may also be costs related to setting up a location. You may have rent payments and may have to pay for things like landscaping. You may need to have signs made, install new equipment and fixtures, buy new furnishings, and build-out a space.

Any new business will also need to bring in an initial inventory and purchase supplies. There may also be operational needs like advertising and payroll, so you will need to be certain that after all of your starting costs are covered, there is still enough capital left to cover your additional expenses until you are able to turn a profit.

How can you be sure that you have enough to get your franchise up and running and keep it running until a profit starts coming in? Ask questions, lots of questions, during the buying process. You will need to have at least a general idea of how much time per week you will need to work, and how much income you can expect to bring in if all goes well.

Does starting your own franchise location sound a little daunting?

If you are looking for the benefits of owning a franchise without the risk of creating an unproven location, then perhaps buying an existing franchise location is for you. Like with the purchase of other existing businesses you will be getting a turn-key, currently operating business with everything from build-out, staff and operating procedures already in place. The difference with a franchise location is you will need to pay a franchise fee to join the brand – but if you are looking for a business with instant name recognition and a well defined structure already in place this might be the path for you. Ask your business broker about the costs versus benefits of buying an existing franchise location or starting one from scratch.

Does buying a franchise seem like the right path for you, but you have additional questions? Would you like to know what franchise locations are currently for sale in your target area? Ask us! Leave a question or comment here and we will be happy to help.

Michael Monnot

Can You Really Run A Business From The Beach? Thoughts For Buyers

Published March 20, 2023

It’s an entrepreneurial dream. Owning a business run by a trusted management team that allows you to spend your days sipping drinks in a beach chair. It would be nice, right?

The problems come when a prospective business buyer thinks this goal could be realistic with any business or that all you have to do is pay for a business and then sit back, relax and let the checks come in. Nothing could be further from the truth.

While it is possible to get your new business to a point where you can be a semi-absentee owner, you will never be able to completely abandon your responsibility and it will take a while to get there.

What if you buy a business that is currently run as an absentee-owner business? Can’t you just walk in the door and take over this already existing arrangement? The short answer is no.

There are a few reasons. First, the seller’s trusted management system is theirs, not yours. Although it is sometimes possible to maintain management loyalty when a business passes to a new owner – it is not guaranteed that the management in place will have the same amount of loyalty to you.

This can also be a precarious position for a new owner. If you don’t understand the ins and outs of the business, the details of the business that are needed to keep it profitable can go unchecked because you may not know they are (or aren’t) happening. Let this go on for too long and what you will be left with is no business at all.

Is it possible to have an absentee-owner business? Yes, but you have to realize two things.

One, you will never be able to completely ignore your business. Two, there are a few things that need to happen before you can move to an absentee-situation.

First you need to find a good business to buy, and you need to run it yourself for a while (like at least a year) so you know all of the ins and outs. Then you will need to find a good management team (or a single manager if it is a small business) that you are able to trust. Have this management team work alongside you for about the next 6 months so you can be sure they are properly trained. As you begin to relinquish power and responsibilities to your management team, it is incredibly important that you enable this management team to do their job by giving them the power to hire and fire, the power to change inventory, etc. If you’re going to trust them to handle the reins, you have to give them the power to do so. You will also need to come up with a system that will keep you informed of everything going on within the business. Lastly, keep a close eye on your business, even if you aren’t there everyday. Make frequent unannounced visits, go over the financial records regularly, etc.

While it is possible to be an absentee owner in some types of businesses, the majority of business situations are going to require a much larger time commitment from you.

If absentee-ownership is your ultimate goal, bring this up in your initial discussion with your business broker so they can help you to find businesses where this system has the potential to work.

Have you ever considered owning a business, but would ultimately like to be fairly hands-off with the day-to-day operations? Do you have questions about the types of businesses that can be run successfully this way? Ask us! Please feel free to leave us a comment or question here, and we would be happy to help you find a business that fits your goals.

Michael Monnot