Big Mistakes: Don’t Sink Your New Business

Although unfortunate, it does happen. Business buyers get their hands on a profitable business and within six months they are calling us to sell because they are literally days away from complete and utter failure – like having to lock the doors and walk away.



How does this happen?


There are four big mistakes that can cause you to pull the rug right out from under your own feet, but they can easily be avoided if you know what they are and apply some common sense to your new venture.


Spending All Of Your Cash


You might have $100,000 to spend on a business, but that doesn’t mean that you should be shopping for businesses that are listed for $100,000. Buying a business and launching yourself into business ownership is an expensive adventure, and you will need to reserve enough of your capital to keep yourself in the black long enough to get the business generating a profit with you at the helm. You will need cash for licensing fees, for your new commercial lease, for inventory and payroll in your first few weeks as owner – only to name a few. When deciding what you can and can’t afford, be honest with your business broker about the money you have available and they can better assist you with finding a business that will reserve some of your cash.


Ignoring Red Tape


Yes, bureaucracy is annoying. Licensing requirements are confusing, expensive and time-consuming – but that doesn’t mean that you can skate around the requirements. You need to be sure that you are operating your business in accordance with the licensing requirements of your industry, state, county and city. If you aren’t, it is only a matter of time before you are caught – and the consequences can be devastating (think the loss of a liquor license or major fines and penalties, for example). Pay attention to the red tape.


Coasting Too Early (Or Ever)


You found a great little business, and from day one you were lucky enough to be pulling a profit, so you take your foot off the gas and let the business essentially run itself. This always ends in disaster. Think about why this business was great in the first place. The former owner worked incredibly hard to maintain what worked and continually focused on the future growth of the business. That simple formula, always maintaining and growing your business, is the key to success. Owners that stop trying always stop succeeding.


Changing Everything


You bought a profitable restaurant, but you hate everything about it. The decor is dated, the equipment isn’t the top of the line and the menu doesn’t appeal to your vision of restaurant ownership. You spend your first six months of ownership completely gutting the kitchen and dining room, a massively expensive renovation. Then you come up with an entirely new menu that is a huge divergence from what the restaurant used to serve. While you are at it, you also change vendors and essentially every operating procedure. After all of this massive upheaval, you are shocked that you can’t get customers in the door and that all of your staff jumped ship. Where did everybody go? The old phrase “if it ain’t broke, don’t fix it” goes a long way in explaining this most expensive of mistakes. The restaurant in this example was successful because it had a regular clientele who loved the menu and quaint decor and a happy staff who were good at their jobs. New owners who change things before they give themselves the time to understand why certain aspects of the business work (or why they don’t work) are setting themselves up for failure. A new owner is far better off following in the footsteps of the prior owner until they are sure the changes they want to make are changes that will actually improve the business, not hurt it.


If you are looking at businesses to buy – be aware that you need to be careful of too many changes, you need to keep the business growing, you need to stay on top of red-tape issues and you need to be careful with your cash if you want to be successful.


Are you in the business market and are curious about what businesses you could afford with the cash you have available? Do you have more questions about how to avoid the pitfalls we talked about here? Ask us! Leave any questions or comments here and we would be happy to help.




Michael Monnot

12995 South Cleveland Avenue, Suite 249
Fort Myers, FL 33907

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Buying? How You Should Look At A Business


When most first-time business buyers first call us, they have only one requestthey want to go see some businesses. They want to drive by, pop in and take a tour.


This is exactly the opposite of what a new buyer should ask for. You are buying a business, not a house – and the differences between the two are huge.


A house is four walls and the stuff inside. To make a judgement about whether or not a particular house is a good investment, you need to walk around and have a look at those four walls and the stuff inside.


An operating business is not four walls and the stuff inside.


The four walls are usually leased from someone else and the equipment and furnishings are the assets of the business – not the business itself. Yes, when you buy a business you also buy the assets, but that isn’t all you are getting. You are getting cash flow.


You can’t drive by, pop in or take a tour of cash flow. You learn whether or not a business is a good investment by looking at the numbers, by talking to the seller, by going over inventory lists and by examining contracts.


The depreciated value of the equipment, the furnishings, the vehicles, even the color of the paint have very little to do with how a business is priced and should have very little to do with how you judge the price of a business. As such, tours are really not that important. Aesthetics can be easily changed once you take over – so focus on how the business makes money instead.


A better way to look at businesses starts with a conversation with an experienced and qualified business broker. In this initial conversation you and your broker will talk about what your goals are for business ownership and then search for businesses based on those goals. Once you have a few businesses in mind your broker can help you decide if the price is fair based on the numbers and also help you decide if you want to pursue more information.


Want to take a quick peek at what types of business are currently for sale? Use our Business Search Tool by clicking here.


Have more questions about buying a business? Ask us! Please leave any questions or comments here and we would be happy to help.




Michael Monnot

12995 South Cleveland Avenue, Suite 249
Fort Myers, FL 33907


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Buying A Business? Patience Is A Must

We’ve talked about this issue a handful of times, but it is so prevalent in the day-to-day of buying and selling businesses it merits revisiting from time to time. A great business broker spends their work day keeping business deals on track and moving towards a closing table, but they are only one part of a very complicated process.



As such, you as a buyer may get frustrated by the pace of your transaction – but in many cases there is absolutely nothing your broker can do.


What you need to remember is the only cure for tied hands is patience.


Here’s an example:


You are a motivated buyer who is very interested in a particular business and have put a decent offer on the table. You request through the seller’s business broker that the seller send over the information required for due diligence, like financial records, tax returns, etc.


Then you wait. And you wait.


Then the seller sends over partial records, which get forwarded to you from your broker, but the rest of the information you requested has yet to be produced. So you wait.


You constantly call and email your broker, and all they can tell you is they haven’t received the information from the seller so their hands are tied


Why does this happen?


Some sellers go on the market with the initial intention of reaching a closing table, but once they are in the process they realize that selling their business requires a ton of work on top of what is already required for the day-to-day operation of their business (producing information and being available for questions/meetings). Then they completely panic because are shortly going to be out of a job.


These realizations can cause some sellers to develop a decent case of cold feet. It can also cause a seller to be defensive, as constant requests for more financial information can give the impression that the buyer is trying to dig up dirt on the business.


This, of course, is not the case. Buying a business is a huge decision, and most buyers are going to want a thorough look at any business before they pull the trigger.


So how do you figure out if the problem is your broker or the seller?


If your broker is really good about answering your questions, is prompt with returning phone calls and emails and has been forthcoming about the issues they may be having with the other side – then their hands are probably are tied. If it takes your broker ten days to return your phone calls, then the problem is probably the broker.


As with everything in a business transaction, a good dose of patience will go a long way. This does not mean, however, that you have to sit around and wait for a seller to deliver information they have no intention of ever giving you. Talk to your broker if you have concerns about time frame issues, and understand that sometimes there really isn’t anything a broker can do to speed up the process.


Are you a buyer who is having a hard time getting information out of sellers? Are you concerned that the issue may be with your current broker and not with the seller? Please feel free to leave us a comment or question here, and we will be happy to assist you.




Michael Monnot

12995 South Cleveland Avenue, Suite 249
Fort Myers, FL 33907

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Are You Compulsive With NDAs? The Wrong Approach

Are you a buyer like this? Have you requested information on dozens of businesses and then when asked a question about one of these listings – you can’t remember which one we’re talking about?



Are you requesting and then signing Non-Disclosure Agreements (NDAs) like it’s going out of style? Guess what? You are probably NEVER going to buy a business. Never. Not going to happen. Why?


Dozens and dozens of NDAs is not the way a successful buyer finds and then buys a business.


Buying a business requires that you keep your eye on the goal successful business ownership.


What do we mean by that?


First and foremost, signing the NDA should come after you’ve already made some decisions about whether of not a particular business is really what you’re looking for. You shouldn’t buy a business based on where it is, how it looks, or what the tax returns say. This is the information you will be able to access after you’ve signed the NDA. Sure, these are all important parts of a business, but as a buyer you need to be focused on whether a particular business is going to meet your goals for business ownership. The major mistake that unsuccessful business buyers and unsuccessful business owners make is they never considered what they want out of business ownership.


If your goal for business ownership is to have more time to spend with your family and the ability to do things like coach your kid’s soccer team – then buying the bar you think you’ve always wanted isn’t going to work – you’ll have to work seven nights a week. If your goal for business ownership is to make more money than you do at your current job, then buying a huge restaurant with zero restaurant industry experience isn’t going to work – you’ll be bankrupt in six months.


The path to a successful business purchase starts with a conversation. You and your business broker should have a talk about what your goals for business ownership are, about your prior work experience and about the amount of money you are looking to invest in a business. Then, and only then, should you sign NDAs for the businesses that will actually meet those goals. You might be surprised that a business you never would have considered on your own could be the perfect fit.


Narrow down your search, then request the information you need. This will help you keep your eye on the goal of business ownership.


Are you looking for businesses to buy but haven’t had a conversation about what your goals for business ownership are? Do you want to know more about how to successfully buy a business? Ask us! Please feel free to leave any questions or comments here and we would be happy to help.




Michael Monnot

12995 South Cleveland Avenue, Suite 249
Fort Myers, FL 33907


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3 Big Steps For Business Buyers

Ready to buy your own business?



Step 1: Arranging Capital


You could probably guess that step one is figuring out how you are going to pay for your new venture. 


If you don’t have enough cash on hand to fully fund the purchase of a business there are several resources available which you could tap. These options consist of acquiring funds from the Small Business Administration (SBA), traditional financial institutions like banks or seller financing.


No matter what the source of funds, any lender is going to have conditions which you will have to satisfy if you want to be approved for said funds. They are going to require you to have adequate cash readily available for a down payment in addition to having sufficient working capital to sustain the business.


You will need to be aware of and account for costs like closing fees. It is possible to either pay for the closing fees up front or plan to have them incorporated within the amount that you will be financing.


Having financing or at least a down payment in place before you begin your business search will simplify the process of finding the right business for you.


Step 2: Making Offers


You found a business that meets with your goals and have finished going over the initial financial records. You think this might be the business for you. It is time to make an offer, but how do you determine what that offer should be?


First, consult with your business broker. There are considerations that influence price such as the amount comparable businesses have actually sold for, the value of inventory and contracts, the amount of cash flow the business currently generates – the list goes on. By consulting with your business broker you can consider all aspects and decide whether the asking price is fair and how much you are willing to offer.


Step 3: Due Diligence


After an offer is accepted, the offer you submitted essentially becomes the purchase contract and you will move to the next stage – due diligence. This is a crucial step when purchasing a business.  It is due diligence which enables you to figure out whether or not this business is for you. It also helps to determine what price you will be prepared to pay for it.


Due diligence will begin with examining previous years of financial records. You will be able to learn about any unresolved legal actions, relationships with vendors and clients, intellectual property rights including copyrights or patents, as well as any future liabilities.


Once you have all the necessary information you can make an informed decision about whether or not to proceed. This is the nature and necessity of due diligence. Your findings during due diligence may also modify the amount you are willing to pay for the business. 


As soon as you have arrived at what you feel is a complete picture of the business and have also arrived at a price that takes into account what you found during due diligence – you and the seller will negotiate to amend the purchase contract and proceed to the closing table. This step typically requires using the expertise and negotiating skills of your business broker, and possibly a CPA and/or attorney to guide you through the process.


While buying a business might initially seem like a monumental task, when broken down into basic steps it is absolutely possible for any driven future entrepreneur. 


Do you have more questions about the steps required to buy a business? Would you like to know more about the due diligence process? Ask us! Please feel free to leave any questions or comments, we would be happy to help.




Michael Monnot

12995 South Cleveland Avenue, Suite 249
Fort Myers, FL 33907


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Business Buyer 101: How Long Does It Take To Buy A Business?


For most businesses, the time on the market between listing and selling is in the neighborhood of 9 to 12 months. The typical time between an accepted purchase contract and the closing table is somewhere around 30 to 90 days. These industry stats might be helpful for a business seller, but if you are a buyer – what does the process of buying a business mean in terms of time frame? How long will it take a buyer to buy a business?


The answer is it depends. And it’s really complicated.


Yes, that’s a terrible answer, but it’s the truth. Here’s why:


It depends on the industry.

Like any market there are waves of popularity for specific types of businesses – and if the type of business you are looking for is a hot commodity, it might take you a while to get your hands on one. Great businesses in popular categories land under contract very quickly, so you might miss out on a few before you get lucky. What that means for time frame is a lot of waiting around for another shot.


It depends on what’s for sale.

You might have a specific type of business in mind, but within that category the current choices on the market may not hit enough of your criteria to warrant a purchase. Like the popular industry problem we just talked about, waiting for a business to come up for sale that fits what you want could take a while.


It depends on the complexities of the purchase contract.

Even if you luck out and get a business that suits your goals under contract, the length of time to get from accepted contract to closing varies from deal to deal. Some close quickly, in a month or so. Some contracts need to be negotiated for over a year. It depends on many, many factors and varies considerably from deal to deal. You may have many aspects of the purchase contract to negotiate or it may be very straightforward. The only way to know will be to get to this phase of the transaction and then to have some patience with the process. 


It depends on the existence of financing.

If you aren’t paying all-cash for your new business (most people don’t), then the time frame can be prolonged because of financing issues. If you are working out a deal where seller financing is in the mix, that can add another layer to the negotiation process. If you are getting your funding through a more traditional lending institution or through the Small Business Administration (SBA), then the time table of that lender will also play into the mix.


It depends on the motivation of the buyer.

It can be really difficult to make a huge decision like the decision to buy a business, mostly because there is no such thing as the perfect business to buy. Many, many buyers (90%) enter the market and never buy anything. As such, looking at the average time it takes the full population of buyers to buy a business probably won’t be very helpful. You can also be extremely motivated and the business you’re hoping for just isn’t out there at the moment.


The point here is the length of time it takes you to find the right business and then reach a closing table isn’t as important as focusing on making sure the business you end up with fits your goals. It also isn’t as important as staying motivated and patient with the process. If owning a business really is in your future, you will be able to meet your goal.


Have more questions about the process to buy a business? Are you curious about what types of businesses are currently on the market? Use our Business Search tool by clicking here! Otherwise, feel free to leave any questions or comments and we would be happy to help.




Michael Monnot

12995 South Cleveland Avenue, Suite 249
Fort Myers, FL 33907

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Buying? What You Need To Know About Confidentiality

Buying a business is a big task, and there are many steps ahead of you that might seem ridiculous – but all are a necessary part of a successful business transaction.


The most important of these steps is the signing of confidentiality agreements and then keeping that confidentiality in place.


This can be a frustrating part of the process for buyers. The confidential nature of business sales means you can’t have all of the information you want the moment you want it – and you will have to sign non-disclosure agreements for each and every business you seriously consider, all without knowing very much about the business before you do.



Keeping the for-sale status of a business a closely-guarded secret is absolutely imperative for the health (and possibly survival) of the business. When people find out a business is for sale, they immediately assume the worst. A business for sale must be a business on the brink of ruin. Why would anyone sell a perfectly good business?


Well, there are a lot of reasons. Reaching retirement age, the desire to move to a new area, wanting to pursue a different business venture, reaching a pre-planned goal within a business initially purchased for the purpose growth and then a sale – all of these reasons mean a business is healthy, not failing.


In general, however, that false perception that a business for sale is a failing business can cause an enormous amount of havoc in an operating business. The entire staff can quit, customers can go elsewhere, contracts can be cancelled – all things that can severely affect the bottom line.


For you as a buyer, the confidential nature of business sales means you must sign non-disclosure agreements and you must abide by them. Period.


You can’t change the language of the agreement to remove the penalties for you if you break the agreement. Non-disclosure agreements come in a standard form used throughout the industry and are not open for negotiation. If buyers could change the agreement to remove the penalties for a disclosure, then there really isn’t any point in having non-disclosure agreements in the first place.


You also can’t tell anyone who is outside of the transaction that the business is for sale (like your mother-in-law, your neighbor, your golf buddies, etc.). The only people who should have access to any confidential information is the buyer, the seller, the brokers, CPAs and attorneys involved.  


While the confidential nature of business sales might seem like a giant pain – you should consider it a great thing for you as a business buyer. Confidentiality means that the business you want to buy hasn’t been trashed by the careless disclosure of it’s for-sale status by a buyer that considered it before you did. You will get your new business intact and healthy.


Do you have questions about non-disclosure agreements or questions about the business buying process in general? Please feel free to contact us here or comment below. We would be happy to answer any questions you might have.





Michael Monnot

12995 South Cleveland Avenue, Suite 249
Fort Myers, FL 33907




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The Efficient Business Buyer – Less Meetings, More Questions


Buying a business might seem like a monumental task – there’s paperwork, red tape, negotiations, money – but there are better ways to go about successfully completing a transaction than others.


One of the best ways you can be a more efficient business buyer? Ask questions.


Of course I’m going to ask questions! What do you mean?


The process to buy a business starts with looking at general listings and pairing down the list of possible businesses provided by your broker to just a few. For those few businesses, you will be asked to sign a nondisclosure agreement for confidentiality purposes – and then you will be forwarded a marketing package that typically includes information about the business, the physical location, a financial overview, pictures, etc.


At this point many new buyers ask for a meeting with the seller or for a tour of the location, but if all you’ve done is glance at the marketing package – then a meeting or tour will probably end up a total waste of your time. When you are buying a business, you are buying cash flow – so the seller’s personality or the location decor really aren’t that important.




The only way to figure out if a business is really right for you is to dig deeper than just a cursory glance, and you need to do that deep digging right from the start so you can eliminate businesses that aren’t right for your goals – sooner rather than later. The more efficient path? Take a really close look at the information you’ve been provided and come up with a list of questions you’d like answered.


What kinds of questions should I be asking?


Every business is different, so your questions from one business may or may not be the ones you have for another. Here are some general questions to get you started:


What are the seller’s daily duties? What would a typical work day look like for me as the new owner?

How is the income derived? Is it owner-to-prove? What do the tax returns and P&L statements show as far as how much the business makes?

What types of licenses are required for this business? Would I qualify for those licenses?


The moral of the story is any question is a good question, for a couple of reasons. First and foremost it will help you weed out businesses that won’t fit with your goals and expectations. Second, your questions will help your business broker understand what is important to you so they can better refine the search for potential businesses.


Save yourself a ton of time and energy by carefully reviewing information and asking lots of great questions – before you sit down with sellers and go for a back-of-the-house tour.


Are you a new buyer who has additional questions about the process to find the right business? Would you like more pointers on the best types of questions to ask? Ask us! Leave comments or questions here and we will be happy to help.




Michael Monnot

12995 South Cleveland Avenue, Suite 249
Fort Myers, FL 33907


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Learning To Love The NDA – Thoughts For Business Buyers

If you are a business buyer, you should absolutely love the business transaction process – especially the tenant of confidentiality and the need to sign non-disclosure agreements (NDAs). Why? Let’s first talk about why some business buyers hate NDAs.



When you enter the market to buy a business, many new buyers assume the process will be very much like the process to buy a house. Nothing could be farther from the truth. Buying a business does NOT involve looking up businesses for sale and then driving around to look at them before you pick one to buy.


Why? When you buy a business you are buying an existing, operating business.


In order for that business to stay existing and operating the fact it is for sale needs to stay a closely guarded secret. Confidentiality is key.


A breach in confidentiality and the disclosure that a business is for sale can mean very bad things. People naturally assume a business that is for sale is a business that is on the brink of failure, although this is rarely true. When a business sale is disclosed the staff can quit en masse, vendors can cancel contracts, clients can go elsewhere – the list goes on.


These potentially catastrophic consequences mean anyone who is interested in buying a business must sign the NDA before the name and location of that particular business is disclosed. Some buyers hate this and refuse to sign the NDA or fight with brokers about providing their own information to receive the NDA.


The information you provide in order to sign the NDA for a particular business is both simple and straightforward. You must provide your full name, your home address, your phone number and your email. Why do we need this information? Why can’t you use your P.O. box or a business address instead of your home address? The NDA you are signing needs to be tied to one individual – you – so the same address you use on your driver’s licence must be used.


If you really feel uncomfortable providing this information, you should consider that your simple identifying information is paltry in comparison to what a business discloses to you once the NDA is signed. Not only will you now know the name and location of the business that is for sale, you will likely gain access to financial information as well.


You should also consider that the information you provide to get the NDA is the same information you would provide when signing up for a discount card at a grocery store. It’s really not a huge disclosure of personal information when you think about it.   


So why should you love the NDA? The business transaction process, including the NDA, ensures that the business you end up buying hasn’t had a catastrophic disclosure of confidentiality by you or any other prospective buyer before you get handed the keys. It means your new business will transfer to you intact and still operational.


Still need convincing that the NDA is a great thing for you as a buyer? Do you have additional questions about the business buying process? Ask us! Please feel free to leave questions or comments here and we would be happy to help.




Michael Monnot

12995 South Cleveland Avenue, Suite 249
Fort Myers, FL 33907



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Keep It Together – How A Business Buyer Can Help


Business transactions are complicated beasts, and as such they fall apart more readily than they stay together.


If you are looking at buying a business, you will need to do your part to keep your deal together if you ever hope to make the jump to business ownership.


How? By making sure you know what you want and what’s ahead of you.


Are you really, really sure that you want to buy a business? Small businesses are very rewarding ventures, but they are intense in terms of the time and effort that you will need to invest. Are you sure you want to make the move from a 9 to 5 job with two weeks of paid vacation to a life where the buck stops with you? Yes, small business owners decide what hours they work – but the hours necessary can be very long. 


Do you have realistic expectations? Buying a business is absolutely nothing like buying a house, and it takes a lot of time and patience. It also requires many, many moving parts and a good deal of negotiation. Talk to your business broker about what the process will be like so you know what to expect.


Have you done your homework? Do you have the background and experience to own the type of business you are considering? It is far easier to buy a business in an industry where you have some practical experience because you will already know something about how the business is run. If you are trying to enter a completely new industry, you might give yourself an incredibly steep learning curve the moment you take over as owner.


Are you being honest about the funds you have available? Some new buyers assume that they will be able to finance most of the price of a business, or they think they will be able to negotiate for a rock bottom price. Neither of these notions are true. You have to be realistic about what the money you have available will get you, and you need to be upfront when asked to prove your financial capacity. Trying to pretend you have more that you do will absolutely blow up in your face and cause your deal to fall apart.


Are you prepared to be very, very patient? Like we’ve said before, the process to buy a business requires a lot of patience. There are contracts to put together and negotiate, licenses and permits that need to be obtained, meetings, conference calls – the list can be seemingly endless. There are also a lot of people involved – busy people like the brokers, the seller, attorneys, CPAs. Requests for documentation or finalizing of agreements can take a lot of time, so you need to remain patient with everyone involved if you want the deal done.


Do you have questions about the business buying process? Would you like to know what industries would be right for you? Ask us! Leave comments or questions here and we would be happy to help.




Michael Monnot

12995 South Cleveland Avenue, Suite 249
Fort Myers, FL 33907




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Michael Monnot


12995 South Cleveland Avenue, Suite 249
Fort Myers, FL 33907


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