selling a business Archives - Page 5 of 17

Published May 16, 2022

Business ownership isn’t always fun. Think of a repetitive, mundane administrative task that a business requires. As an owner you make time for it and do it because you have to, but that time could absolutely be spent accomplishing something else more productive – like growing your business.

When you think of automation, you probably think about huge corporations who automate manufacturing or delivery routes – but small businesses can benefit from automation too. Many entrepreneurs are either unaware of or discount the potential benefits automation can bring to their business lives.

Ok, what can a small business automate?

Your marketing strategy:

Marketing is the lifeblood of your business – it’s what brings new customers in through the door. Your email marketing and social media exposure are incredibly important – and can absolutely be automated. There are a myriad of companies that can creatively automate your email marketing to ensure you stay active in a customer’s inbox, and there are are also services available that can help manage and schedule your social media posts so you don’t have to.

Your accounting:

Keeping track of invoices, managing your financial records and tracking expenses can be very time consuming – but with accounting software you can automate many aspects of your business accounting. Once you have systems set up and in place your new transactions can be easily categorized, filed and paid.

Your paperwork:

Long gone are the days of physical signatures and fax machines – now most of the paperwork, sales documents and contracts you need can be sent and signed electronically in seconds. Copies are immediately sent to all parties involved, taking another task off your plate.

Your payroll:

If your business is big enough to have employees but small enough that a full-time payroll person isn’t in the cards – there are many services that can take the payroll pressure off of your plate. Set it up and it can run on its own.

A caveat here. There are many, many services/companies/software options out there. It is incredibly important that you do your homework when selecting an automated service to ensure that the time it saves you will be worth it.

Ok, I’ll look into automation – but how can automation help business owners and business buyers?

Business owners:

Another major bonus to automating some of the administrative tasks within your business? When the time comes to sell, buyers will see that you’ve taken the “work smarter, not harder” approach when it comes to your business. This will speak volumes about how you see a business owner’s time as valuable and about how you have placed a priority on streamlining the business to make it successful.

Business buyers:

As you look at how prospective businesses are run and how the current owner spends their time, think “how can I automate this so I can turn the time I would have spent on this task into growth for my new business?” By thinking about the aspects of the business you can automate, you will be better prepared to see the potential of a new business opportunity instead of just what’s currently there.

If you’ve never considered how automation could help your current or future small business, now is as good a time as any to start. Thoroughly research your options – then decide what could help you take some of the drudgery of business ownership off your plate.

Do you own a business and would like to know more about how streamlining your business may impress buyers? Are you considering buying a business and want to know what types of automation would best suit the industries you are interested in? Please feel free to leave any questions or comments and we would be happy to help.

Michael Monnot

Why Sellers Need To Work On Confidentiality Too

Posted in Sellers Articles

Published April 18, 2022

If you are selling your business you probably know how damaging it can be if your staff, customers or frankly anyone finds out that the business is on the market.

Employees can panic and quit en masse, taking their regulars with them. Customers can stop coming in, worried about how much the business might change under new ownership. The community at large might think you’re selling to get yourself clear of a sinking ship (as the misconception that a business for sale is a business on the brink is both pervasive and in the vast majority of cases – false).

While your business is for sale maintaining confidentiality is paramount, but not just in terms of the for-sale status. There are parts of your business that a buyer will need to see – your tax returns, your employee records, your vendor contracts, your client contracts and the like that are also critically important. Your business records and proprietary information need to stay confidential too.

That’s why it’s a good idea to hire the right help – a business broker. Business brokers are able to safely and confidentially market your business to buyers, at first through a purposefully vague listing and then only disclosing any identifying information after a prospective buyer has signed the appropriate non-disclosure agreement (NDA). The NDA also protects the records and information a buyer will have access to from disclosure so you don’t need to worry about confidential information ending up in the wrong hands.

While your business broker and buyers who have signed the NDA do their part to keep the confidentiality of your business transaction in place, you as a seller also need to be careful so you don’t burst your own confidentiality bubble. It happens more than it should, and often it’s the product of an seemingly innocent conversation.

Here’s an example. A business seller flies to see their parents on vacation, and while on the plane headed out of state they strike up a conversation with the person sitting next to them. The conversation turns, as it often does, to what you do for a living. The seller tells this stranger that he owns a waterfront restaurant that he’s currently selling. Later in the conversation he lets slip that this restaurant is in a specific community, one where there’s only one waterfront restaurant. Unbeknownst to the seller, this casual stranger not only lives in this community, they’re very involved in the community’s social scene and have many friends who frequent his restaurant. As soon as the plane lands, the gossip begins, as phone calls to friends include “did you hear the restaurant is for sale?” By the time the seller is on his return flight the damage is done and the entire community knows about his for-sale status.

The point here is you wouldn’t carry around a copy of your business tax returns to show every stranger you meet, so you need to work just as hard as your broker and the buyers who sign the NDA to keep your for-sale status under wraps. Don’t tell strangers, don’t tell your friends, don’t tell your neighbors – you get the idea.

Are you considering selling your business and hadn’t thought about how important confidentiality is? Would you like to know more about how we market your business while maintaining confidentiality? Ask us! Leave any questions or comments and we would be happy to help.

Michael Monnot

You Can’t Sell “Might Be”: Prepping Your Business For A Better Return

Posted in Sellers Articles

Published March 24, 2022

Potential. It’s a powerful word. It gets thrown around in the business arena – but what does it really mean when you’re trying to sell your business?

Any business can have potential. Potential for growth. Like a small restaurant only open for lunch with a devoted local following who would love dinner hours as well. Potential for a new customer base. Like a pressure washing business that has never approached any large neighborhood communities with the hope of securing big accounts.

Here’s what potential isn’t. Potential isn’t worth a whole lot. You may love your business, and you may see the potential your business could have if you implemented some changes – but if you haven’t made those changes yet you can’t ask a buyer to pay a premium for something that MIGHT be. A buyer is only going to pay for what ALREADY IS.

Maybe you’ve been dragging your feet where marketing is concerned and haven’t been pushing for any new customers. You know you could land some new accounts, you just haven’t made the time. The only way to reap the benefits of that potential growth is to implement those changes yourself. An increase in customer base and rapidly growing cash flow are absolutely going to have value to a buyer. The potential for that future cash flow if you leave the work to the next owner? No value at all. No one is going to pay you a premium so they can do more work.

The message here is you can sell your business today, as is – or you can take the time to build the future of your business before you sell. Increasing numbers, increasing accounts, ramped-up marketing and new customers will make your business far more valuable in the eyes of a buyer than just the promise of potential down the road. Turn potential into cash by implementing those changes today.

Are you considering selling and are looking for some ideas on how to grow your business to get a better return? Does your business have potential but you don’t know how to turn that into action? Please feel free to leave any questions or comments and we would be happy to help.

Michael Monnot

Buying/Selling? Why You Really Need A Broker

Published March 7, 2022

Buying or selling a business? Are you ready to negotiate?

No one has ever bought or sold a business without a great deal of back and forth between the parties involved – and many, many deals have died over the negotiating table. Nothing is more frustrating for buyers and sellers than the death of a perfectly good deal. If you are thinking about buying or selling a business, how do you keep your deal alive?

Use an experienced and qualified business broker. A good business broker is essential for success.

Of course you would say that – you’re business brokers. Yes, you have us there – but we would advise you to use the services of a business broker whether that’s what we did for a living or not.

Why? The business selling process and the businesses themselves are both complicated, messy animals. No where does that inherent messiness come out more boldly than during negotiations.

What needs to be negotiated? Essentially everything. The purchase price, the length of the due diligence phase, seller financing agreements, a non-compete clause, a new lease, the value of the inventory, the length of the training period, the value of the equipment and furnishings, the continued employment of certain staff, the closing date – the list goes on and on.

With such a monumental list of things that need to be agreed upon by two parties with vastly different goals it’s no wonder that many deals fall apart. A seller is dealing with handing over a business with which they have strong emotional ties as it has been a very big part of their life. Sellers are also nervous about selling themselves out of a job, essentially becoming unemployed the moment the deal is signed. They want to get as much as they can out of the sale of their business. Buyers, on the other hand, are dealing with writing a huge check to a complete stranger for a risky new entrepreneurial adventure. They want to spend as little as possible so they can keep working capital available.

How do you meet in the middle of such vastly different goals? An intermediary like a business broker.

A broker’s responsibility is to keep the deal together and help it get to the closing table. Your broker acts not only as an experienced advisor who ensures everything that needs to be done gets done, they also act as an all-important buffer between the two parties. Business sellers and business buyers are entrepreneurs at heart – and to be a successful entrepreneur you need a strong and driven personality. If you’ve ever tried to argue with someone who has this personality type – you should understand why a buffer is needed. Too many perfectly good deals have fallen apart because someone asked the wrong question, made the wrong request – and the other side was offended to the point of no return.

Don’t try to go-it alone. If you are serious about selling or buying a business, you need a business broker to help you negotiate your way to closing table success.

Are you thinking about selling your business and want to know more about how a business broker can help you? Do you want to buy a business and want to know more about the negotiation process? Ask us! Please feel free to leave any questions or comments and we would be happy to help.

Michael Monnot

Selling Your Business? What To Do When You Hate The Buyer

Posted in Sellers Articles

Published February 17, 2022

Selling your business can be tough. There’s the to-do list of getting the business and your books in order, the extra workload of providing everything a buyer asks for during due diligence and the stress of negotiations. At the end of the transaction process you have to hand over the keys to a business that has been your blood, sweat and tears – usually to a buyer who is essentially a complete stranger.

This last bit of the process, the part where everything becomes final, can bring out an emotional response that sometimes surprises business sellers. Those big emotions can be exacerbated when you really, really don’t like the buyer. Sometimes the distaste for a buyer can even derail a deal.

Here’s how to keep that from happening:

Is the problem is the buyer, or you relinquishing control?

Business owners are a particular breed. They’re decisive, strong-willed and hard working. Most have a type-A personality. This is a great personality while you’re in charge of your business, but it can cause issues when the time has come to hand over the reins. In the vast majority of cases buyers are going to come into a business and make changes. Changes that maybe you as an owner would never make – and the relinquishing of all control over the fate of your business can cause a seller to balk. You need to understand that not only are changes likely to happen, you are probably going to have this kind of negative reaction. Remember that just because the choices this buyer wants to make don’t align with your own – they are likely still a good buyer, perfectly capable of purchasing and running your business. Sellers who aren’t prepared to let go will often project their strong emotions onto their buyer, deciding that it’s the buyer who’s the problem. If you know going into the process that you might feel this way you can be better prepared to keep your big emotions from impacting your deal.

Is the problem a clash of personalities?

The transaction process can be a long one, sometimes forcing together two people who really struggle to maintain a professional relationship. Maybe you and your buyer have differences of opinion on how the business should be run. Maybe you and your buyer fundamentally disagree about everything under the sun. Wherever the clash of personalities comes from, it can be really difficult to remain objective during meetings, negotiations and the like when your buyer is someone you would never engage with in any other situation. If this is the case for you, slow down and take a breath. Remember that point of this transaction isn’t for you and your buyer to be best friends or work together forever. The point is to get to a closing table and get a financial return on all of your investment of time, energy and money that you’ve put into your business. It can be really helpful in the high stress moments to keep your eye on the prize. This type of situation is also where your business broker can be instrumental in the success of the transaction. If you don’t like interacting with the buyer – don’t. Use your broker as a buffer between you for as many situations as possible.

It can be difficult to get a deal to closing when the parties involved aren’t fond of one another- but it’s not impossible. Think about where the animosity is coming from for you, remind yourself that this process doesn’t last forever and keep your broker in the middle.

Have you tried to sell a business and had personality issues with a buyer? Do you have questions about how a business broker can act as a buffer during the transaction process? Please fell free to share your experiences or ask questions. We would be happy to help.

Michael Monnot

Selling? Frustration And Staying The Course

Posted in Sellers Articles

Published February 10, 2022

The decision to sell your business is a big one. Is the timing right? Is the market in a place where I’m going to get the best possible return on all of my investment? Am I ready to sell?

Once you’ve crossed all of those mental hurdles and actually listed your business for sale it can be tempting to enter the same mode one does when you’ve put in a two-week-notice. It’s time to coast and then move on, right?

Not really. It can take a long time to sell a business. Typically something like 9-12 months. Longer if your business is something in a niche market.

We get that ideally you’d like your business to sell right away. Some businesses do sell on an accelerated timetable. Most don’t. If it takes a long time to find the right buyer, you’re in good company. Most sellers have to wait.

It can be frustrating when your business doesn’t immediately sell and it can be tempting to pull your business back off the market because of that frustration. Don’t do that. It takes the right buyer and the right moment – so you need patience.

Even if you’ve found a decent buyer the process itself can seem to drag on. Conference calls, meetings and sight visits scheduled and then rescheduled. Lists of questions to be answered. Due diligence periods. Extensions. Issues with commercial lease negotiations. Issues with licensing. It can seem never-ending – but it’s not. If you stay the course you will eventually reach that closing table.

If you feel like your frustration with the length of time it’s going to take to get you to a closing table is making you rethink selling at all – remember what the alternative is. Working at your business until you’re dead or locking the doors and walking away with nothing. If all that stands between you and a return on all the investment of time, energy and money you’ve put into your business is a process that can feel a little long – is it worth it to pull out? Definitely not.

Are you thinking about listing your business for sale and want to know the average time from listing to closing for your industry? Do you have questions about the length of time each phase of the process typically takes? Ask us! Leave any questions or comments and we would be happy to help.

Michael Monnot

Michael Monnot

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

Entrepreneurial Legacy: Why Selling Your Parents’ Business And Buying Your Own Is The Right Move

Published November 1, 2021

If you are the child of entrepreneurs, then you grew up inside a business. You did your homework in the back office, you helped out on your days off and you probably became an employee once you were old enough.

When your parents look toward the future, they probably assume that their retirement plan includes handing you the reins. Great, if that’s something you want.

What if it’s not?

It can be difficult to tell your folks that you don’t want the business they consider their legacy – but the reality of taking over a business you don’t have a passion for is you likely won’t be as successful as you could be. Entrepreneurs need an edge that only passion can give you. As the child of entrepreneurs you know this already. Guess what? Your parents know it too.

If you don’t want your parents’ business – you have to tell them how you feel. We know it’s a hard conversation to have, but it’s one you have to face.

The good news? You can still continue your parents’ entrepreneurial legacy. You can fulfil their dream for you to be an entrepreneur and still follow your own passions. How? You can sell their business and buy your own.

Selling your parents’ business can give them a return on their investment in cash – cash they can use for their retirement and also use to help you purchase a business where you can be successful.

For instance – if your parents own a flower shop, but you’ve always dreamed of owning a pizzeria they could cash out on their flower business and then help you with a decent down payment on an established pizzeria. You can then finance the rest of the purchase with your own cash, with seller financing or a loan. You can pay your parents back over time, or let them maintain a silent partner/investor position so they can still have income in their retirement years.

The point here is you can still become the business owner your parents have always hoped you would be without giving up your own dreams and adopting theirs. Have the tough conversation, and then give them the sell/buy alternative for the continuation of their legacy.

Are you the child of entrepreneurs and have always dreaded taking over their business? Would you like to know more about the possible options for a sell/buy scenario? Please feel 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

Selling? The Questions Your Broker Should Be Asking Buyers

Posted in Business Broker Why & How, Sellers Articles

Published October 21, 2021

If you are ready to sell your business, then you might already know the importance of confidentiality during a business sale (if you don’t, read this now).

Keeping the for-sale status of your business as need-to-know-only information will be pivotal to a successful sale, and the best person to help you maintain confidentiality is an experienced and qualified business broker.

Notice that we said experienced and qualified. Like any industry there are brokers who know what they’re doing and those who could care less. You don’t want the latter on your team. You don’t want a broker who responds to every form or email inquiry about your business with an automatic nondisclosure agreement (NDA) – without any idea of who the person is that’s signing it. Allowing dozens and dozens of NDAs on your business opens you up to a myriad of problems.

A prospective buyer should be answering some very important questions before they’re just handed the NDA. If anyone who tries can get access to your business information, the likelihood of maintaining confidentiality (as well as the likelihood of finding the right buyer) will probably be small.

The initial vetting of prospective buyers is critically important, and if your broker knows what they’re doing they will be asking questions like these:

Do they have any practical experience with a business like yours?

You’ve worked hard to make your business what it is today, so you aren’t likely to hand the keys to someone who is destined to immediately drive your business into the ground. Potential buyers need to have some sort of practical experience, training or education in your industry so they don’t have to add learning an entirely new industry to the already steep learning curve of taking over an existing business. This is also very important if you lease your business location, as a commercial landlord is unlikely to transfer a lease to someone who would have no idea what they’re doing. It’s a safer bet for the landlord to have you stay on as the owner and keep paying the rent.

Do they have the financial means to actually buy your business?

The business market is full of buyers who think they can afford businesses they definitely can’t – incorrectly assuming they will be able to finance 80-90% of a sale. In most business deals where financing is involved – be it SBA loans, seller financing or a more traditional loan – a buyer will need to come to the table with a sizeable down payment. A good broker will have a very serious discussion with a prospective buyer about how much cash they actually have available to buy a business, how much financing they would actually be able to get and then only disclose to that buyer businesses they can afford.

Is this buyer who they say they are?

One of the ways confidentiality can be breached is by letting the wrong person sign the NDA for your business. Think a current or former employee who is looking to confirm a rumor or a competitor looking to move in on your niche. Your broker should ask you to come up with a list of people who can’t know the business is for sale, and then verify someone’s identity before handing them the NDA to sign. Good brokers ask a lot of questions, require some personally identifying information and then wait to verify that information before disclosing your business.

The point here is in order to reach a closing table successfully, you need to make sure you have the right help. Ask your broker what they do to vet potential buyers. Are they asking questions? Or do they disclose to anyone who asks?

Are you getting ready to sell your business and want to know more about why confidentiality is important? Would you like to know more about our process to vet buyers? Ask us! Please feel free to leave any 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

Why It’s Not Worth It To “Win”

Published October 18, 2021

Business deals don’t just have a lot of moving parts, they have a lot of people. People with a lot to lose and people with a lot to gain. People who do this kind of thing for a living and are therefore unbothered by potential issues and people who’ve never bought or sold a business who think every small issue is a disaster. People who have to write very big checks and the people who are counting on those checks.

In any situation where you combine a lot of people and relatively high monetary stakes – drama is inevitable. There has probably never been a business transaction where everything was smooth and no one got upset.

Here’s why we bring this up. People who are going to buy a business and people who already own one are a tough bunch. You could call it type-A personality. You have to be strong, resilient, willing to make decisions and willing to take risks to be a successful entrepreneur. This personality, however, can be a bit of an issue when a business is changing hands.

Why? No ONE person can “win” in a business transaction.

The contract used for the sale of a business will end up being a very carefully crafted and heavily negotiated document. Heavily negotiated because businesses are inherently complex, and as such there are a lot of things to discuss and then decide on. How much is the buyer going to pay? Will there be financing of some sort? How will the lease be transferred? How will the licenses be transferred? What are the time frame and responsibilities for both parties during the training period? How long will the seller let the buyer have for due diligence? This list goes on and on.

The reality that essentially everything needs to not only be discussed but agreed upon as well means that neither side is going to get everything they want, exactly as they want it. Everyone, EVERYONE in the deal is going to have to make a few compromises if they want to get a deal done.

What this means for you if you’re a buyer or a seller is you can’t die on your sword every time something isn’t going your way. You can’t be petty about small things because you’re frustrated about something that has happened in the weeks or months that it takes to put a deal together. It means you can’t be petulant and difficult just because you feel like it.

At this point you’re probably saying “I’d never do that” – right? You might.

When a business changes hands, so does a lot of money. It’s a business that is someone’s blood, sweat and tears – and is getting handed to a complete stranger. The entire process can be long and incredibly stressful. It will be very hard for both sides of the table to always remain objective and not feel personally challenged during many parts of the process. You have to go into this knowing that your buttons will be pushed, your stress might get the better of you and your feelings might get hurt.

When that inevitably happens, don’t do this. Don’t make everyone change the time and place for a meeting last minute just because you want to be difficult on purpose. Don’t drag your feet with documentation that the other side has requested just because you think their questions are annoying. Although mildly entertaining for you in the moment, petty nonsense like this only wastes your own time and puts your own deal in jeopardy.

Power plays to “win” will do nothing but aggravate everyone in the deal – a deal that’s hard enough already and doesn’t need the additional drama. Go into your deal knowing that this process will be challenging, but worth it if you can remain patient.

Have you been in a business transaction where emotions got the better of someone and have an experience to share? Would you like to know more about the challenging parts of a business transaction? 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

Saving Yourself From A Nightmare – How To Get Ready For Due Diligence

Posted in Sellers Articles

Published October 14, 2021

Selling your business can be tough and time consuming. In addition to your day-to-day responsibilities as a business owner you have to be available for conference calls and meetings with brokers and potential buyers, you have to host on-site tours, you have to train the new owner and most importantly you have to provide the information and documentation a buyer requests during due diligence.

This last part – the documentation – can become a massive issue if you as a seller aren’t ready with what a buyer will probably ask for long before they actually ask.

Here’s why. Once you’ve accepted an offer from a buyer the due diligence period can begin (where a buyer typically gets a couple of weeks to go through your business records and decide if they want to continue with the purchase) – but it only officially begins once you’ve supplied a buyer with the information they’ve requested. Your business is essentially off the market during this time, so prolonging the time before due diligence starts by being unprepared on your end can keep your business away from the eyes of other potential buyers should this deal fall through.

This part of a business transaction exemplifies the saying “an ounce of preparation is worth a pound of cure” because you don’t want to be scrambling to assemble lists of expenses, months of payroll, multiple years of tax returns, copies of business licenses and permits, leases for your business location, registration information for equipment and/or vehicles, dates of purchase for equipment or inventory, leases or purchase documentation for company vehicles, client contracts, vendor contracts, lists of assets, multiple months of inventory records, employee files – all while the pressure of a due diligence timeline hangs over your head. It can be a maddening and stress-fueled nightmare if you aren’t ready.

The best thing you can do for your sanity, your hopes of reaching a closing table and your relationship with potential buyers is be ready.

Talk to your business broker about what a buyer is going to want to see – then get all of that documentation ready. Create files that can be shared, collect copies of documentation and make sure your financial records are easy to read and decipher. If your books are a mess your broker might recommend having a CPA who specializes in business transactions put your financial records together in a way that will make sense to buyers.

The message here is it won’t be good for you or your hopes of successfully selling your business if you’re trying to do ten years of books in three days. Get ready first.

Is selling your business something you’re considering in the near future? Do your business records consist of hundreds of unorganized pieces of paper currently shoved in a big box under your desk? Would you like to know more about what potential buyers are going to want to see? Feel free to leave any 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