The One Broker Approach: Why Having Your Own Broker Is Key To A Successful Business Purchase

 

We’ll start this one by saying as a caveat that if you end up with a dreadful broker who never returns your phone calls, doesn’t show up to scheduled meetings on a regular basis and is all around just bad – by all means, find a new broker.

 

Caveat aside, many business buyers come to the business-for-sale marketplace and try to play the field, and this never ends up working in their favor.

 

What do we mean by playing the field? If you’ve emailed 30 brokers in a small local area to request information on potential businesses, then you are doing yourself and your prospects for business ownership a big disservice.

 

Why?

 

Your business search needs to be focused in order to be successful, and in order to have a focused business search you need to have a relationship with a good broker.

 

This relationship should start with a conversation about several very important things – things that won’t come across if all you are doing is shooting email requests to everyone in the area.

 

Your initial conversation with a broker might start out as an inquiry into one specific business, but it shouldn’t stay that way for long. A good broker is going to ask you questions that will let them know what direction you want business ownership to take and then help narrow your focus to just those businesses that would fit with your goals.

 

What should a broker be asking you?

 

They should ask about what your goals for business ownership are. If what you are hoping to achieve is a very flexible schedule so you can spend more time with your kids, then some businesses are definitely out of the question. If schedule isn’t a priority, but making as much money as possible is – then a very different business would be for you.

 

They should be asking what your passions are. Entrepreneurship is no picnic. It can be an enormous amount of work, so you need to be doing something that you can be driven and passionate about or you will end up miserable.

 

They should ask about your experience. If you’ve never worked so much as a single shift in the restaurant industry, then it would be a terrible idea to buy a bar or restaurant. Business ownership is tough, especially if you are brand new to entrepreneurship. You don’t want to add learning an entirely new industry on top of it – you will be setting yourself up for failure.

 

They should be asking about your finances. You might think you have enough money to buy a particular business, but the reality of buying is that you need far more money than just enough to cover the listing price. You need enough to write the closing check, enough for the deposits for your utilities and lease, enough to buy new inventory, enough for licensing fees, enough for the first few rounds of payroll – the list goes on. A good broker doesn’t want to set you up for failure, so knowing your financial situation will allow them to find you businesses you can actually afford.

 

The point here is only by having a relationship with a single broker (who knows these very key things about you and about your business ownership goals) can you have any hope of finding the right business.

 

Approach you search for businesses by searching for a good broker first – then you can count on that relationship to bring you the businesses you should see.

 

Have you sent a ton of email requests but haven’t actually had a conversation with a broker yet? Do you want to know more about why a relationship with a good broker is so important for your success in purchasing a business? 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

www.InfinityBusinessBrokers.com

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Selling? The Questions Your Broker Should Be Asking Buyers

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

www.InfinityBusinessBrokers.com

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Why Feedback Matters: Helping Your Business Broker Help You

 

Are you just beginning your business search? Your first step should be talking to an experienced and qualified business broker about what you are hoping to get out of business ownership.

 

What do you want your life to look like? How much money would you like to spend and how much do you need your new business to earn? Where do you want your business to be located? A good broker will take your answers to these first and basic questions and put together a list of listings for you to consider.

 

Here’s an important point in the process that some buyers miss:

 

Once you have those initial listings take a good, hard look at them and then decide not only if you like or dislike a business – but WHY.

 

Was it the location? The net/gross earning? The number of employees? By giving very specific feedback your broker can fine-tune the search, giving you better choices as the search process progresses. If you are vague with your feedback or give none at all, you will more than likely just continue getting businesses you don’t like – a counterproductive waste of time.

 

A good business broker can point you in the right direction and help you find the right listings, but they can only be effective in that capacity if you give them feedback. Lots of feedback.

 

Why can’t I just look at everything? Why do I have to keep giving feedback?

 

Giving very specific feedback on why you did or didn’t like a business will make your business search more efficient – weeding out listings that you wouldn’t have liked well before you have to take a deep dive. It also helps show your business broker that you are a serious buyer who is willing to put in the work required to get a deal done. No one wants to work with someone that isn’t going to participate – and buying a business is a complicated process best traversed by someone who is willing to do what’s needed to see it through.

 

Another note here. Negative feedback about why you disliked or hated something about a business is important, as you don’t want to end up with a business that will make you unhappy – but feedback about why you liked something is also pivotal to success. Did you really like that a particular business had X number of employees or did you love the type of area where a business was located? Don’t just give your broker the negative feedback. Telling them what you liked about businesses will be just as important as what you didn’t.

 

Are you beginning your business search and want to know more about how feedback can help streamline the listings you see? Would you like to know what businesses are currently available that would meet your goals for business ownership? 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

www.InfinityBusinessBrokers.com

 

 

 

 

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Buying A Business? Don’t Sign A Million NDAs (Do This Instead)

If you’re excited about buying a business it might be tempting to spend your days scouring the internet for business listings and then requesting information on everything that even slightly matches what you’re looking for.

 

 

Don’t do that. Here’s why:

 

Businesses are bought and sold under a veil of confidentiality. That confidentiality exists to protect the business while it is being sold (you can read more about why here). What this means for you as a buyer is you can’t just look up a listing and immediately get all of the information on a business for sale. There’s a layer of legal protection that you need to get past before you can gain access to the information you need. That layer involves signing a non-disclosure agreement (NDA).

 

Signing the NDA means you can’t disclose the name of a business, the location of a business, any proprietary information you will now have access to – even the for-sale status of a business. You will have to sign a NDA for each business listing individually. If the business brokers involved are doing their job, you shouldn’t be able to sign the NDA until you’ve had a conversation about why this business fits with your goals for business ownership and if you actually have the funds necessary to make a sale happen. The importance of keeping the for-sale status of a business under wraps means a broker should only be allowing NDAs to be signed by potential buyers who could actually be buyers – not hundreds of random tire-kickers.

 

The necessity of confidentiality might initially seem frustrating as a buyer, but it’s not just the business itself this process helps. As a buyer, you don’t need to be wasting your time signing dozens and dozens of NDAs for businesses that would never have suited you in the first place. It’s a colossal waste of your own time and energy.

 

Here’s what you should do instead. Call a few business brokers. Have conversations with them about what you hope to get out of business ownership. Talk to them honestly about the amount of funds you have available for your new venture. See if you think you and a broker would work well together.

 

This initial conversation will help a good broker find listings that will actually check all of your boxes. Then you can efficiently sign NDAs for businesses that may work for you.

 

A very important note here. Once you have a broker you like – don’t go and sign NDAs on any listings without them. Once you’ve signed another broker’s NDA your broker can’t help you anymore. NDAs are tied to specific businesses, and are therefore tied to the listing and the listing broker. Your broker can request the NDA on your behalf for a listing that isn’t theirs and still maintain the buyer-broker relationship with you. If you go around your broker and sign a NDA they didn’t request they legally and ethically can’t even give you advice. The relationship has now shifted to whatever broker has the listing – a broker you don’t know and who doesn’t know you. 

 

The message here is although the process of searching for businesses has a few more steps than other big purchases like a house or car – those steps exist to make the process more efficient for everyone – including you. Find yourself a good broker, maintain that relationship by only having your broker request NDAs and be patient with the process.

 

Are you shopping for businesses and weren’t aware that signing NDAs tied you to listing brokers? Do you have questions about what businesses currently for sale you meet your goals for business ownership? Ask us! Leave any questions or comments and we would be happy to help you on your business search.

 

 

 

Michael Monnot

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

www.InfinityBusinessBrokers.com

 

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Ready To Take The Plunge? Buying An Existing Business

Have you always wanted to own your own business but aren’t sure how to take the plunge?

 

 

 

One path to entrepreneurship that many choose is to buy an existing business. This can be a good option for a number of reasons.

 

First and foremost, the business has already been set up for you, and the business model has been proven because the business is currently up and running. The location is equipped and a customer base has been established too.

 

What do you need to do to get started if this is the path for you?

 

The first step is deciding on a type of business to buy. More often than not, a budding entrepreneur will start the process by seeing what businesses are available. This is a mistake because it can cause you to fall in love with a business that wouldn’t meet the goals you have for business ownership.

 

When entering a new business venture, you should choose something where you have at least a bit of background or experience. The learning curve for a new business owner is a steep one, and that’s without having to learn an entirely new industry as well. Give yourself a great head start by deciding on an industry before you search, and be sure to pick an industry you know.

 

The second step is to begin your search. Now is a great time to employ the services of a business broker, as they will have access to more business listings than you will be able to find on your own, they will know about businesses that are not yet on the market, and they will be able to market you as a buyer to other business brokers and their sellers.

 

Talk to your broker about the goals you have as a business owner – like how many hours a week you want to work, what type of return you are looking for with your investment, where your experience will suit you best and how much capital you have to invest. Identifying your goals, experience and available capital are critical to finding you a business where you can be successful. If the broker you are working with hasn’t had this conversation with you, perhaps it is time to find someone else to work with.

 

Once you have your goals ironed out and know what industries would set you up for success, you can do a cursory search for businesses by visiting our Business Search page.

 

Once you find a business that fits your goals, you will likely decide to make an offer. This step is then followed by a period called due diligence where you will get a chance to review things like finances and contracts in depth. After this review you will decide if you would like to proceed with the sale or not.

 

Are you ready to take the entrepreneurial plunge? Do you have questions about the search process or are you unhappy with the help you are getting from your current broker? Leave us a comment or question; we look forward to assisting you with your business search!

 

 

 

Michael Monnot

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

www.InfinityBusinessBrokers.com

 

 

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Buying A Business? Step 1: What’s Right For You?

If you think you might be ready to take the entrepreneurial leap, but don’t have a genius start-up idea you can work on in your garage – you don’t need one! Existing businesses get bought and sold everyday, some 500,000+ a year (a number that is on the rise as baby boomer owners enter retirement and list their businesses for sale). These existing businesses can instantly turn you into an entrepreneur, no start-up required. 

 

If you’ve always wanted to be your own boss and think buying an existing business might be for you – the process is fairly straightforward. 

 

Here’s step one: Figure out what type of business would be right for you. 

 

This one might seem obvious, but lots of buyers come to the market without a clear idea of what they want out of owning a business – and then what type of business is going to meet that set of goals. They either have their heart set on a business that will probably meet none of their goals or they don’t really know yet what they’re looking for. Both of these scenarios are going to be counterproductive. In the first, you end up with a nightmare business you hate. In the second scenario you never buy a business at all. 

 

 

Don’t start the process like that. Instead, start by figuring out what your goals are.

 

This one is probably the most important. Sometimes people want to own their own business because they feel like becoming their own boss will solve the problems created by working for someone else. Here’s the thing – business ownership is just as tough as the job you want to leave, it’s just tough for different reasons. Being your own boss isn’t (and shouldn’t be) your only goal. Instead, think about why the idea of business ownership appeals to you. Do you hate your current job because you wish you had more schedule flexibility? Do you wish you could change career paths more frequently because you work hard but get bored easily? Are you hoping to have more time at home to spend with your kids? Would you like to work really hard and make as much money as possible in the shortest amount of time? Are you using the move to entrepreneurship as a way to move to a new area or country? These types of introspective questions will help you come up with well defined goals for business ownership. With goals in hand, you can then look at businesses that will meet those goals – saving yourself a ton of time and effort chasing a daydream business that would end up making you miserable. 

 

Next, pick something you already know

 

If the only thing you’ve done for the last 20 years is work on cars, but you’ve always dreamed about owning your own restaurant – buying a huge waterfront restaurant is probably going to be a colossal mistake. You really need to enter the world of business ownership in an industry where you have some practical experience. The leap to entrepreneurship carries with it a steep learning curve – you absolutely do not want to add learning a whole new industry to that mix. 

 

Third, be open minded about the types of businesses that might work for you when you begin your search.

 

This one can be tough for people because it can be hard to let go of a daydream – even when in reality that daydream would more than likely end up a nightmare. We regularly talk people out of buying certain types of businesses because the goal is successful business ownership – not stressful failure. Talk to an experienced and qualified business broker about what your goals are for business ownership and about your education and experience. You might be surprised by the types of businesses and industries where your goals and experience would help you thrive.

 

Ready to take the first step towards business ownership? Do you have questions about what types of businesses would fit your goals and experience? Ask us! Please leave us questions and comments, we would be happy to help.  

 

Want to read step two? Click here for “Buying A Business? Step 2: Search For Businesses”

Want to read “Buying A Business? Step 3: Make Some Choices” (click here!)

 

 

 

 

Michael Monnot

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

www.InfinityBusinessBrokers.com

 

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Your Commercial Lease And Landlord: 3 Ways To Ensure Success

You’re all set to buy a business. You have the perfect business picked out. It meets all of your goals for business ownership, it’s within your budget for asking price and working capital, you’ve filed all of the appropriate licensing paperwork, finalized the negotiations over the purchase contract – you’re done, right?

 

 

Not quite. One major hurdle business buyers must overcome is one they don’t often consider. The lease and the landlord.

 

In almost every small business transaction, it is only the business itself that changes hands. Most small businesses exist within commercial rental property, and as such the business buying process includes the negotiation of a new lease.

 

Why can’t you just take over the current lease? If you rent an apartment, you sign a new lease whether or not the person who lived there before you stayed for the entire length of the lease they signed – with very rare exceptions the same goes for commercial leases. A landlord wants a new contract when they get a new tenant, so you need to be prepared for this sometimes difficult part of the business buying process.

 

Here’s three tips to keep you from hitting a leasing snag:

 

You will need to prove your experience and finances.

No landlord in their right mind is going to sign a multi-year, large financial contract with someone who has no possible hope of keeping the business afloat. You will need to put together a resume of some sort that shows you have the practical experience to succeed in your new business venture. You will also have to provide the landlord with proof of financial capacity as well. Landlords won’t give a lease to someone who is using every last cent to their name on the purchase price alone. They want to know you’ve set aside enough working capital to be able to pay your rent even if the business isn’t turning a profit for you right out of the gate.

 

You aren’t going to get an amazing deal on rent.

If the current business owner is paying $5000 a month in rent, there is no way the landlord is going to lease the same space for the same business for $500 a month. You will likely pay the exact same rent, or even a bit more. The landlord has no financial incentive to cut you a huge break, because they can just refuse to lease to you and continue to get the current lease rate from the seller. Be prepared to pay what you need to pay. You will also need to come up with security deposits, perhaps first and last month’s rent, lease fees, etc.

 

Expect the landlord (and their property manager) to be exceedingly difficult.

It’s not fair, but it’s a fact of life in small business transactions. Many landlords and the property managers who sometimes represent them are almost impossible to work with. Looking at a business transaction from their side can be helpful. They have no financial incentive to gamble on a new person to take over a space in their property and pay them rent when they already have a perfectly capable tenant in place. Their perspective aside, the fact of the matter is most landlords and property mangers don’t understand the business transaction process, and often cause major issues in the final days before closing. If you are mentally prepared for this road block you will be able to stay calm. You should also keep your business broker in the middle. No good can come of an angry phone call to a landlord from a business buyer. Your broker has probably dealt with this landlord in particular, or someone just like them, dozens and dozens of times. Leave the lease negotiations in their capable hands and any issues will likely be resolved.

 

Dealing with landlords can be excruciating, and this is often compounded by the fact that the lease can only be negotiated after many of the other parts of the business buying process are complete. Stay calm, come prepared with a realistic mindset and proof that you will be a great tenant – then let your business broker do the rest. 

 

Are you considering buying a business and never considered the commercial lease? Are you thinking about buying a business in an industry where you don’t have any practical experience? Ask us! We will be happy to help.

 

 

 

Michael Monnot

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

www.InfinityBusinessBrokers.com

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Have A Favorite Real Estate Agent? Why You Shouldn’t Use Them For Your Business Deal

 

This one happens all the time. We get a call from a real estate agent who is inquiring about one of the businesses we have listed on behalf of a buyer, or is looking for potential buyers for a business one of their clients wants to sell. Perhaps they are a trusted agent for a client, and the client asked that they inquire on their behalf. We even have potential buyers and sellers call and request that we use their real estate agent for their part of the transaction. 

 

We tell them how business transactions work. A real estate agent who refers a client to us will get a referral fee when the deal closes, all they have to do is get us the client’s contact info.

 

Sometimes an agent refuses to divulge their client’s information, demanding instead that we work with them on the deal. We refuse, so the agent moves on to a different broker to see if they can talk someone into working with them. Their clients don’t get access to business information or potential buyers, and are likely unaware that any of this is going on.

 

Why won’t business brokers work with real estate agents? Why do they require a referral of the clients instead?

 

It’s very simple. Real estate agents are very good at what they do – they sell property and homes. What they are not good at and likely know little to nothing about is selling businesses. You can liken the difference between a business broker and a real estate agent to the difference between a plastic surgeon and your general family physician. You would probably be very uncomfortable having your family doctor do reconstructive facial surgery – along the same lines a business broker specializes in the buying and selling of businesses. We would never try to help someone buy a house, it’s just not what we do.

 

What can happen if a real estate agent tries to help you buy or sell a business? Since they don’t know the ins and outs of the business transaction process, there is a good chance you will never see a closing table.

 

If you are a seller, a real estate agent will likely treat your business listing like a listing for a house. They will take pictures, gather some cursory financial information and then post this information on the MLS listing system. This is a complete disaster in the making. The most important part of selling an existing business is maintaining confidentiality. Without confidentiality, you stand to lose customers, employees, vendors and money. The only people who should know that your business is for sale are those who have signed the appropriate non-disclosure documents – not anyone with an internet connection who can search the MLS. A business broker knows how to confidentiality market your business, and they are also well-versed in negotiating leases, licensing and permitting concerns and will have relationships with other brokers and buyers who are currently in the market looking for a business like yours.

 

If you are a buyer, a real estate agent isn’t going to have access to any business listing information without talking a broker into letting them have it (which isn’t likely to happen). Many real estate agents also try to fill out the non-disclosure forms themselves, pretending to be the buyer, but all this does is garner mistrust with any sellers who will then feel like they’ve been duped when the truth is later revealed.

 

We understand your loyalty to your real estate agent – we have many friends in the real estate industry and we have used their expertise for not only our home purchases but also the sales and purchases for our family members. You shouldn’t feel like your real estate agent gets the short end of the deal if they refer you to a business broker – they get paid for handing over information and doing nothing more. They are doing you and your future business transaction a great service by putting you in more capable hands.

 

If you are looking to buy or sell a business, feel free to ask your real estate agent if they have a business broker they would recommend. Just be wary if your agent tries to talk you into letting them take the reins.

 

Have you tried to buy or sell a business using a real estate agent and have a story to share? Do you have more questions about the referral process? Ask us! Please feel free to leave any comments or questions.

 

 

 

Michael Monnot

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

www.InfinityBusinessBrokers.com

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Picking A Broker? Red Flags: What To Watch Out For

Whether you’re in the market to buy a business or have a business that you’re ready to sell – your best bet for success and reaching a closing table is hiring the right help. In the business transaction world that help is a business broker

 

What do business brokers do? They help sellers list their business for sale. They put together marketing packages and business listings and then add those businesses on listing platforms. They keep the confidentiality of the for-sale status of a business in place by vetting buyers and having qualified buyers sign the appropriate non-disclosure agreements. They coordinate conference calls and meetings between buyers and sellers and act as an incredibly important buffer in the negotiation process. They help put together offers and help solidify purchase contracts. They give advice throughout the process, as their experience with business transactions can be invaluable for avoiding common pitfalls that can cause deals to fall apart. They help sort out commercial leases with landlords and property managers. They assist with permitting and licensing requirements. They assist with obtaining financing options. They coordinate with immigration attorneys to obtain Visas for international clients. 

 

It’s a long list. A list you probably don’t want to tackle with someone who is terrible at their job. 

 

How can you tell if a broker is a good broker? You can watch out for red flags.

 

 

Does this business broker have no online presence at all, or a website where the last post was 7 years ago? 

 

The business transaction process, like most things, has gone digital in recent years – from electronic signatures to virtual walkthroughs and the like. If a broker can’t even maintain a basic digital presence, then they probably aren’t up to speed on other aspects of their job either. 

 

Do the listings for a particular broker have a ton of spelling errors or always seem to be incomplete/incorrect? 

 

The business transaction process requires a great deal of attention to detail. If a broker is willing to leave mistakes all over their listings, how careful are they with everything else? A listing and a marketing package are an important first impression of a business for buyers. If all you’re getting is some over-copied tax returns and 15 spelling errors, it might be time to find someone else. 

 

When you contact a broker, does it take them an enormous amount of time to respond?

 

You can’t expect a broker to always pick up your call or immediately respond (they should have other clients and a life outside of work) but you should be able to get in touch with them in a reasonable amount of time. If you have to wait a week for a response, you might need to find another broker. 

 

Does a broker claim to have proprietary formulas or methods that no one else in the business has? 

 

Well, there’s probably a reason for that. Occasionally brokers will claim to have some magic metric (for example – for pricing businesses) that no one else in the industry uses. Every business is unique, so a big part of becoming a successful business broker is understanding that every transaction will be different and each business will require a different approach. There isn’t a better mousetrap – there’s only those who can adapt the process to get a transaction done and those who can’t. 

 

The message here is you want qualified and experienced help – and you aren’t going to get that from someone who is careless with the most important parts of their job. Keep an eye out for red flags as you begin the business transaction process. 

 

Another good metric? Ask any potential broker how much of their business comes from referrals. Someone who does a good job is going to get a great deal of their future clients from the referrals of past happy ones. 

 

Are you looking for businesses to buy and want to know more about how a business broker can help you? Have you considered selling your business and want to know what our marketing packages look like in comparison to others in the industry? Ask us! 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

www.InfinityBusinessBrokers.com

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Do I Have Enough Money To Buy A Business? The Answer Might Surprise You

 

Do you have enough? When you’re considering buying your first business, this is probably the first question you will ask yourself. Why? There’s an unhelpful preconceived notion that you need millions and millions to buy a successful business. Guess what? You don’t.

 

Business prices can vary greatly, even within the same industry. If you are interested in buying a restaurant, for instance, you could get a small neighborhood sandwich shop for $50,000 – or you could shoot for a large waterfront steakhouse that could run you $500,000.

 

How are businesses priced?

Businesses are priced based on a few factors – namely how much money they earn (cash flow), the value of things like vehicles/equipment/furnishings and the value of the current inventory. There are other factors that also play into pricing, like how much comparable businesses have recently sold for, how many years the business has been open – the list goes on. When you first enter the business market it is a great idea to use the advice of an experienced and qualified business broker because they will be able to both explain how a particular business has been priced and also advise you on whether the business is potentially worth what the sellers are asking.

 

How do I actually buy a business?

In the business world cash is king. Most first-time buyers, however, are not coming to the market with large amounts of cash to spend. If you don’t have a ton of cash available then a very large manufacturing business that lists in the millions is probably not for you. There are, however, smaller businesses that can run under $30,000. What you end up spending will depend on what type and size of business would fit with your goals and also what you can afford.

 

What if I have almost no cash available, can’t I just get financing? Yes and no. Buying a business is nothing like buying a car. You can’t walk in with no money down and walk out with the keys. There are a few financing options available to business buyers, but it is important to understand from the start that you will need a fair down payment for any business with any financing option. No one is going to finance 100% of a business purchase.

 

There are a few traditional lending options – like bank loans – but for the most part you will have an incredibly hard time getting any bank to finance a small business purchase. 

 

The Small Business Administration (SBA) has some funding available, but much like traditional lending these loans are often hard to get. A business must meet a rather stringent set of criteria and then the buyer themselves will also have to meet SBA’s buyer criteria.

 

The last and most common financing option is something called seller financing. In this scenario the seller finances a portion of the purchase price to be paid back by the buyer over time. If you are looking to this option then you as a buyer will have to bring some capital to the table in the form of a down payment. For a seller a large down payment shows good faith that a buyer is serious about getting to a closing table. For buyers, a seller who is willing to hold a note like this is a good sign. It means the seller has confidence in the future of the business.

 

No matter how you end up buying a business – be it cash or financing – the most important point is to have realistic expectations and seek some sound advice.

 

When you first talk to your business broker, be honest about the amount of capital you will actually be able to bring to the table. Dishonesty here will eventually come out as you will be asked to prove how much capital you have as a deal progresses. Also be honest with your broker about what you are looking to get out of buying a business – if you just want to be your own boss, if you want a flexible schedule or if you want to follow a passion you’ve always had. With the amount of money you have and the goals you have in mind an experienced broker should be able to find you businesses that will meet with both what you have and what you need.

 

Are you a first-time buyer who has more questions about how businesses are priced? Would you like to know how much of a down payment you would need? Please ask us! Leave a question here, and we would be happy to help.

 

 

 

Michael Monnot

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

www.InfinityBusinessBrokers.com

Comments Off on Do I Have Enough Money To Buy A Business? The Answer Might Surprise You




Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

5111-E Ocean Blvd
Siesta Key, FL 34242




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