Why “Any Business That Makes Money” Is A Bad Idea

Don’t set yourself up to hate your new business.

 

 

This one happens more than it should. A prospective buyer calls a business broker and asks for “any business that makes money” – a colossal mistake.

 

Here’s why:

 

Business ownership is tough. It usually requires long hours, a fair amount of grit, resilience and enough passion for what you’re doing to sustain you long term. Sure, entrepreneurs own businesses so they can make money, but the making money part can’t be the only thing keeping you in the game. You have to have a business you won’t hate that allows you to maintain a life you don’t hate or there’s no way this path will be sustainable. 

 

If you call a good broker and ask for any business that makes money they should immediately tell you you’re approaching the process from the wrong direction.

 

Here’s a better approach:

 

Why do you want to own your own business? Is it because you have a deep passion for something? Is it because you’re tired of working for someone else and want to be your own boss? Do you want your own business so you can be more in control of your schedule? Are you looking to incorporate members of your family into the business so you can work together? These broad, sweeping questions about your motivation for business ownership are very important. If you are buying a business because you want to have more control over your schedule (so you can spend more time with your kids) a large restaurant that requires you to work 7 days a week isn’t going to give you the flexibility to be the soccer coach for your kid’s team. A different type of business could. This initial soul-searching of sorts is critical for deciding what your most important goals for business ownership are and then focusing only on businesses that will fit those goals. 

 

Once you have some goals and priorities in place – what are you good at? What kinds of practical experience do you have that could help you with your new business? Going back to the restaurant example above – if you’ve never worked so much as a minute in the restaurant industry you are going to have an almost impossibly hard time owning and running a large restaurant. The learning curve for an entrepreneur is a steep one, and if you add learning a whole new industry to the mix you are setting yourself up to to fail in spectacular fashion. Tell your broker about your education and experience. When combined with your goals information about your experience can be used to find great businesses that will set you up for success. 

 

Have you always wanted to own your own business but aren’t sure what type would meet your goals and fit with your experience? Do you have questions about businesses currently on the market? Ask us! Leave any questions or comments here and we would be happy to help.

 

 

 

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

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Don’t Download – Why You Need To Make Up Your Own Questions

You’ve found a business or two that you really like. You’ve filled out the NDAs and have the marketing packages in front of you. You’ve scheduled a conference call or a meeting with the sellers and the brokers, and your broker has asked you to come up with a list of questions.

 

So, what do you want to know?

 

 

It can be tempting in this situation to just Google “lists of questions for business buyers” and then bring that list of questions with you. Don’t do that. If you need to look up a list of questions to ask it’s likely that you haven’t done any research on your side.

 

Here’s what we mean:

 

Have you thoroughly read the marketing package you received once you signed the NDA? This one becomes blatantly obvious once you start asking boiler-plate questions that were clearly answered in the material you were already given. This tells the seller that you don’t really care about details and are willing to waste everyone’s time. If you were selling a business that was your blood, sweat and tears would you be willing to give the keys to someone who can’t be bothered? Probably not.

 

Have you researched the local market, the industry in general, the area where the business is located, etc.? If you are serious about buying a business you should want to know everything about not only the business but the industry and local area as well. Again it will show your lack of dedication to the process if you go into that first meeting and ask something a simple internet search could have told you or that you probably should already know if this is the business you’re hoping to buy.

 

Have you read the list of questions you’re going to ask? This one might sound crazy but it happens with frankly alarming regularity. People will either ask or send a list of questions to be answered that are from a completely different arena. Like a person looking at a small café who asks about the stock options available to investors. Once again this shows everyone involved that you probably don’t care.

 

See the recurring theme? Your meetings and calls with a seller are critically important opportunities to gather the information you need to make an informed decision about whether this business will be right for you. These interactions are also pivotal in terms of showing a seller that you’re a serious buyer and someone capable of taking over the business that they care about. Don’t waste your own time by not taking the opportunities to ask great questions.

 

Are you looking at businesses to buy and aren’t sure what types of questions you should ask? Do you want to know what kinds of information you would need for a particular industry? Ask an experienced and qualified business broker for help! You may also leave any questions or comments here and we would be happy to help.

 

 

 

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

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How To Avoid 6 Big Business Buyer Mistakes

If you are considering buying a business for the first time you’d probably like to avoid any mistakes. No one wants to walk into their new business and immediately mess something up, right? One of the best ways to avoid mistakes is to learn about common missteps and then work to avoid the blunders of those who have come before you. 

 

What are some typical blunders that inexperienced entrepreneurs make? Here’s six:

 

Naming the business after yourself:

When deciding on a name for your business it can be tempting to just name it after yourself. Here’s why you shouldn’t. Your business name is pubic information, and will also become your brand. While that might be fine for a social media influencer it can be an issue if you have a business that you want to be able to sell. You don’t want to work forever, so when the time comes to retire or move on to another venture you might have to also sell your name to a new owner. You can avoid this by coming up with an original name instead. 

 

Buying a business you know nothing about:

First-time business ownership is hard enough without having to start from zero. If you have always wanted to buy a restaurant, but have never worked in one – it would be a big mistake to choose that industry. Choose a business in an area where you have practical experience because as the owner of a business, you need to know what the business needs.

 

Not doing your homework:

Why is the business for sale? Is it just because the owner is retiring, or are they jumping off a sinking ship? You will have the due diligence phase to determine what the problems are, and then you will have the opportunity to amend your offer or walk away from the deal all together. This is a critically important step, as you don’t want to discover problems after the business is already yours.

 

Changing too much too soon:

Unless you are buying a business with a horrible reputation, a new owner should tread carefully with regards to changing the business. You bought the business because it was an established company with a good reputation, and you don’t want to drive away customers familiar with the brand by immediately dismantling everything they know about the business. The established image may have more to do with the bottom line than you know, so make changes slowly.

 

Not leaving yourself enough cash:

It may take several months to get a business transitioning to a new owner in the black, so leave yourself enough operating capital to keep the doors open. Many new owners walk into a functioning business and immediately spend far too much on unnecessary improvements, digging themselves a very deep financial hole in the process.

 

Not understanding the importance of marketing:

You may have bought an already established business, but that doesn’t mean that you can forgo the push to keep the business growing. Most established businesses already have a customer base, but keeping those customers coming back and bringing new ones in is a responsibility that now falls to you. Advertising and marketing need to be a top priority as the new owner.

 

The most important thing you can do as someone who wants to become a business owner is find the right help. If this is a process you’ve never gone through before, find a good business broker to help you along the way. Having assistance through this process will save you from making many of the mistakes that first-time business buyers make.

 

Are you thinking about buying a business for the first time, but want to avoid the blunders listed above? Do you have additional questions about the business buying process? Contact us or leave a question here and we will be happy to assist you on the road to business ownership.

 

 

 

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

 

 

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Buying A Business? Why Research & Questions Should Be Your Top Priority

We get it. Once you’ve decided that you are ready to make the leap and buy a business it can be hard to keep from going directly to the shopping phase. It’s fun to look at business listings and envision yourself as the owner. Guess what? Shopping for businesses in this way is unproductive and ultimately won’t get you what you’re hoping for from business ownership.

 

Why?

 

Any business, large or small, can be condensed down to one major thing. A business is cash flow. You are providing goods or services that you pay for and then your customers pay you. It’s the money in and money out that makes a business successful, and hopefully you’re making more than you’re spending.

 

If a business is essentially just cash flow it really doesn’t matter what color the walls are. Looking at pictures of businesses on the internet isn’t telling you much of the story. Neither is perusing vague P&L statements.

 

What you really need to know about a business is does it generate (or have the potential to generate) the amount of cash flow I need to live day to day as the owner – and is it possible for me to be successful in this industry.

 

How do you figure that out? Research and questions.

 

 

Research the areas where you’d like your business to be. Can you afford to live there? How much would you need to make to have that be possible? Will the area work for you and your family? If you’d love to live on the beach, but your target area has zero schools for your kids you might need to redirect your target area.

 

Research the different industry sectors possible in that area. Do you have any practical experience or education that would make a particular industry better for you than another? Will the industries available in your target area match with your skills? If you’ve always wanted to own a big restaurant but have never spent a single day in the restaurant industry, then looking at food service industry business is likely a mistake.

 

Once you’ve done some research, start asking questions. Have a conversation with an experienced and qualified business broker about the areas you’re considering, your practical experience and education, your goals for business ownership and the amount of capital you have to invest. Ask lots of questions – about the area, about the industries that do well in that area, about what types of businesses would both fit with your experience and with what you hope to get out of owning your own business.

 

Notice something? So far we haven’t said “look at listings” because it isn’t helpful until you know where you want to be and what you need to be successful.

 

Don’t waste a ton of time scouring the internet for your future business. Do some research and then get in touch with a business broker.

 

Do you have questions about the process to buy a business? Would you like to know what types of businesses would match your practical experience? Ask us! Leave any questions or comments and we would be happy to help.

 

 

 

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

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Buying A Business And Legal Advice: When To Take It With A Grain Of Salt

Buying a business is a huge deal. Businesses are complicated, there’s a lot of money changing hands, contracts can be long and need to be carefully negotiated. As a buyer you should absolutely have legal council and they should absolutely go over anything and everything you sign.

 

 

So why are we saying you might want to take legal advice with a grain of salt?

 

First and foremost, business ownership is inherently risky. Entrepreneurship can be rough and there’s no guarantee that the contract you put together for the purchase of a business is going to ensure that you as the new owner will be successful. Purchase contracts are also heavily negotiated, meaning one party (you) will not get everything you want. There will be concessions with the seller if you want a business transaction to happen.

 

Think about the job you’ve hired your attorney to do. Their job is to protect you from any and all risk. Their job is to make sure you get everything you want. See where the problem is? 

 

Here’s another issue. There will be some documents that you need to sign that are industry standards, like the non-disclosure agreements necessary to receive most information on businesses for sale. These industry standard documents can’t be changed, so if your attorney asks to make changes the answer is likely going to be no. You will have to sign the agreement as-is or not get the information you’ve requested.

 

It’s also important to remember that there are many, many specialties in the legal field. Your family attorney who helped you with your uncle’s estate and the probate process isn’t likely to know very much about the legalities of a business transaction. It’s why you don’t go to your kid’s pediatrician if you have arthritis in your knee. You would be better suited hiring an attorney who works in the business transaction arena as they will know how to best protect you without hampering your ability to buy a business.  

 

We aren’t saying you shouldn’t take your attorney’s advice. You definitely should. What we are saying that you need to take that advice as it is meant – to completely and totally protect you. You also need to be sure you are hiring the right type of attorney to give you the best advice possible. 

 

Are you considering business ownership and hadn’t thought about finding a business transaction attorney? Would you like to know more about the documents that you’ll need your attorney to review as part of the business buying process? Leave us any questions or comments, we would be happy to help. 

 

 

 

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

 

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Buying A Business? Invest Your Time + Energy For Success

 

When you are serious about buying a business and ready to jump into the process, you aren’t going to show up one day and own a business the next. It’s going to take time. Probably more time than you thought. Most business transactions take months to get from the initial interest of a buyer all the way to a closing table, and that’s if both sides agree on most things.

 

Why does it take so long? Small businesses are complicated animals, and business transactions have a lot of moving parts. On the buyer’s side of the equation you will be putting together offers, going through documentation, getting your own licenses and permits sorted out, negotiating with sellers, meeting with attorneys and CPAs, talking to your business broker, touring physical locations, negotiating with your commercial landlord, having meetings and conference calls with the seller – you get the idea. It can at times feel like you have a new part-time or even a full-time job.

 

If you really want to buy a business you’re going to need to make the time to do the things that need to be done. You can’t come in and expect it all to be finished in a few days with very little effort on your part. You’re going to have to spend evenings researching. You’re going to have to be patient with the negotiation process. You’re going to have to be willing to put in the work to provide the information about yourself that’s requested. You’re going to have to get your license and permit applications done. You’re going to have to make lots of phone calls and have lots of meetings. It can feel like a long list – but it’s not impossible. 

 

If you’re worried about the amount of time and effort you’re going to have to put into buying a business, don’t. Small business ownership is a life encompassing affair – so if you aren’t willing to put in the effort and energy it’s going to take to get through the business buying process you probably shouldn’t be buying a business in the first place. Remember that all the work that you do before you sign at the closing table is work you are doing to help yourself. All of the time and effort you spend up front will be instrumental for setting you up for success in your new business venture.

 

For example, the bureaucracy that is the licensing and permitting process for small businesses can be complicated and slow. If you drag your feet on licensing and permitting requirements, putting everything off until your closing date is looming, you’re going to be scrambling when the business keys get handed to you and you’re not properly squared away in terms of license requirements. In many cases if you haven’t worked out your licensing requirements you won’t be able to open the business until you get it straightened out. If you stay on top of what needs to be done you won’t cause yourself any issues when it’s your turn to take the reins. 

 

The message here is you need to be prepared to spend some time and exert some effort if you want to become a business owner – but all the work you do will pay off once you get handed the keys.

 

Have you always wanted to buy your own business but are worried about what’s required for the transaction process? Would you like to know what businesses are currently available that would meet your goals for business ownership? Ask us! Leave any questions or comments and we would be happy to help.

 

 

 

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

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Planning Your Trip: 3 Tips For Relocating Business Buyers

 

Maybe it was the lockdowns of the pandemic. Maybe it’s just that you’re burned out. Whatever the reason, you’ve been daydreaming about moving somewhere else and buying a business. Guess what? There’s no better time than now to make the leap.

 

Want some tips on how to start? Here’s 3:

 

Do lots of research:

 

This one might sound obvious, but most people would be shocked at how little research most buyers do before taking a huge leap like this. Take a deep dive into the locations that interest you. If it’s somewhere you’ve only ever visited on vacation, research what it’s like to live there year-round. Is it a seasonal economy that you’ll need to account for when choosing the type of business to buy? Can you afford to buy or rent a home close enough to your business to make your commute make sense? If you have kids – what are the schools like and where do you need to live in order to get your kids into a school where they’ll be successful? What are the property taxes like? Are crazy weather events like hurricanes something you need to think about? The point here is you need to have a good handle on where you both want to and realistically can be long before you start a serious search for businesses to buy.

 

Find the right help:

 

If you’re serious about buying a business in a new area, a local business broker is going to be an immense help. They know the area, the local small business economy, the local licensing/permitting requirements, the major players in terms of commercial property managers – the list goes on and on. Having someone with local experience as your guide will make both finding the right business and navigating the buying process much easier than going it alone or using someone who doesn’t know the area.

 

Have the site visits planned way before you leave for your trip:

 

Seeing a business you are considering is an important step, but what many buyers don’t understand is this step never comes first. Businesses are bought and sold under the protection of confidentiality (see why here), so you can’t just fly into town and waltz into whatever business you please. The steps that are required before you set foot in a physical location go like this:

 

You talk to a local business broker about your goals for business ownership, the industries you’re interested in and the amount of capital you have to invest. They find you business listings that would match your goals and means. If any of those listings look promising you can request more information by signing a non-disclosure agreement for each business you’re still considering. After looking over the information a conference call with the sellers is next, so you can ask questions about the business and see if it’s still a good fit. If after your calls you’d like to see the physical location this can be arranged. It usually requires seeing the business before or after hours when no staff or customers are around and will need to be coordinated between the schedules of the seller, the buyer and the brokers involved. It should be obvious that this process can’t be completed once you’ve landed on your scouting trip and have called a local broker for the very first time. You need to plan your site visits when you are doing your initial trip planning – like before you’ve even bought your plane tickets. It is a colossal waste of your own time to fly in and see businesses you haven’t already vetted, so plan your trip with that in mind. 

 

If you’re considering a big move – now is the time. Contact a local business broker and get the process moving!

 

Have you always wanted to move somewhere else and own your own business? Do you have more questions about the steps of the business buying process? Ask us! Leave any questions or comments and we would be happy to help!

 

 

 

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

 

 

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A Business Is Not A House – And Why This Matters

Yes, we know. Obviously, a business is not a house. Here’s the point we’re trying to make:

 

Some prospective business buyers approach the business buying process as if they were buying a house or maybe even a car. This is an enormous mistake

 

 

They typically call us when they’re already in town, a trip that’s been planned for weeks or months. Did they have the foresight while planning this trip to think of talking to someone about looking at businesses? Nope. They just call to say they’re here. They want us to drop all of the clients we already have meetings and calls with that day to drive them around so they can look at the physical locations of all of the businesses that are currently on the market. They then expect that we can waltz into any business that seems to interest them, introduce ourselves to the staff and management – and ask why the business is for sale.

 

This is NOT how you go about buying a business.

 

You can’t treat a business like a house for a lot of reasons. An operating business is just that – operating. It has a staff, vendors and competition. It has customers on site.

 

There is a misleading perception that any business for sale is a business on the brink of failure. It is this perception that can cause catastrophic losses and serious ramifications if the for-sale status of a business is disclosed to the wrong people (think the staff, vendors, the general public and the competition). An entire staff can quit. Customers can cancel contracts. The list goes on. Confidentiality in business sales is key, so anyone who is serious about buying a business needs to play by the rules of confidentiality. Those rules take planning and they take time

 

How should you buy a business?

 

If you’re looking for businesses that aren’t in your current area, you should call and talk to a local business broker while you are buying your plane tickets or setting up your travel plans to visit your future relocation spot. Talk to the business broker about your goals for business ownership, the industries that you’re interested in and the areas where you have practical experience. You and the broker can spend a few weeks researching and searching – looking for the right business opportunities in your new area.

 

Once you have found a few businesses that interest you, you will be required to sign non-disclosure agreements before you are allowed to know the business name or location. The non-disclosures will also give you access to further information, things like P&L statements and past tax returns. You can use that information to narrow down your choices and then request a conference call with the sellers of the businesses that still interest you. By looking at the cursory financial information and talking to the other side you can decide if any of the businesses on your list will still fit with your goals. Those that do will be your final list, and these are the businesses worth seeing in person

 

Some buyers have a hard time with this concept – that they can’t tour physical locations as the first step. Here’s what you need to remember: an operating business has value because an operating business creates cash flow. You are buying this cash flow – not a physical space, so seeing it in person isn’t as important as it would be for something like a house.

 

The veil of confidentiality is also so crucially important, even for you as a buyer. You wouldn’t want a business that you are seriously considering to be destroyed by someone else’s careless disclosure of the for-sale status – so understand that the process is built to protect the business that might be yours someday. You will need a bit of patience to see the process through to the end.

 

Don’t treat buying a business like buying a house. Remember that you are buying yourself a future life, and for such an enormous endeavor some pre-planning must take placeso call a business broker long before you get to town.

 

Are you thinking about buying a business and have more questions about the business buying process? Would you like to know what types of businesses are currently for sale in the areas you’re considering? Ask us! Please leave any questions or comments, we would be happy to help.

 

 

 

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

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Buying A Business? Why You Should Be Decisive And Make An Offer

 

You think you’re ready to buy. You’ve researched the market and found that in the industry you’re considering there is room for growth. This industry will suit you because you already have practical experience and familiarity. You’ve searched for businesses and discussed the options available for sale with your business broker, and you’ve settled on one choice that really interests you. The next step is to make an offer – but that idea seems terrifying. What if it turns out this isn’t the business for you?

 

It’s hard to make big decisions. You can research, ponder and then research some more – but at the end of the day the only way to move forward is to act.

 

 

 

Here’s the good news.

 

There are two types of offers that you can make, and you should consult with your business broker to determine which would work better in your unique situation. One is a Letter Of Intent (LOI) and the other is a Purchase Contract (sometimes just called an Offer). Either way you choose to proceed – you can walk away from the deal if you decide (for whatever reason) that this business isn’t for you. It’s that simple. You will also get ample time to go through the business (financial records, contracts, commercial leases and the like) during a process known as due diligence.

 

Once you’ve submitted your offer you will have both the time and information you need to make an educated and carefully considered decision about a business.

 

What happens if you don’t make an offer? Well, nothing. You don’t get a chance to really look at a business because no owner is going to allow a due diligence level investigation of their business if you don’t have ay intention of actually buying it. If you never make offers you end up in a business buyer purgatory with everyone who is just there to kick tires.

 

If what you really want is to own your own business, you have to start taking those next steps and being decisive. Making an offer tells everyone involved in the deal that you’re a serious buyer and deserve to be treated as such.

 

Do you really want to buy a business, but making an offer seems like a daunting step? Are there questions about the types of offers you’d like answered? Have you made an offer on a business that you ended up not buying and have an experience to share? Please feel free to leave any questions or comments, we would be happy to help.

 

 

 

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

 

 

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Buying A Business? How To Make The Tough Decisions

There are a litany of decisions in any business transaction. Some are small. Some are huge. If you’re going to successfully navigate the process and end up at a closing table you’re going to have to be able to make these decisions – without second guessing yourself to the point where you can’t make a decision at all.

 

 

Here’s how:

 

Listen To Reason And Keep Your Emotions Out

 

Staying reasonable and rational in a highly stressful situation can be tough. It can be easy to let the stress of big decisions overwhelm you and let reason give way to panic – but here’s why you can’t. Choices made while you are in a panic-state can be knee-jerk and purely emotionally driven. The decisions you need to make during a business transaction need to be informed and rational. Go into the process of buying a business knowing the stress will be there – and get the right help. At the very least you should have your own experienced and qualified business broker who can talk you through each step in the process. You can also use their expertise and advice as you think about the decisions you have to make. If you are feeling overwhelmed about a decision or by the sheer number of decisions – talk to your business broker. They know how stressful this process can be and are an objective third party who can help you see your choices from a rational and experienced point of view.

 

Trust You Gut

 

You made the decision to start on a path to business ownership, so while the prospect of actually seeing that vison through to completion can be a bit scary at times – you know in your gut it’s the right path for you. With any monumental life change like buying a business cold feet, nerves and the like should be expected. There’s a difference, however, between decision jitters and a gut feeling that something isn’t right. If you feel like something is amiss, talk to your business broker. Any good broker is going to tell you if they think a particular business would be a mistake for you – and they also are going to agree with you if your gut (and not your nerves) are telling you to walk away. 

 

The message here is although the process of buying a business can be stressful, you shouldn’t allow that stress to keep you from following your path to business ownership. Enlist the right help, stay rational and trust your gut.

 

Have you always wanted to own a business but are nervous about making that dream a reality? Do you have questions about the process required to buy a business? Would you like to know more about the role of a business broker in a transaction? Ask us! Leave us any questions or comments, we would be happy to help.

 

 

 

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

 

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Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

9040 Town Center Parkway
Lakewood Ranch, FL 34202




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