Future Entrepreneur? A Few Thoughts

 

We would all love to be our own boss, to be completely in charge of our own destiny. If entrepreneurship seems somehow out of reach, you should know there are easier paths to business ownership than coming up with a groundbreaking and inspired idea and building a successful and thriving business from the ground up. What follows are a few thoughts for the entrepreneur inside of you – waiting to succeed. 

 

You can skip the build-out and buy existing.

 

The inspired idea would be nice, but it’s not necessary – or the easiest path. Typically, buying a business is a safer bet than building one from scratch. You get to take over as owner of an already built-out location with trained employees and a proven set of operating procedures. This can be a fantastic first step into business ownership because it skips all the disadvantages a start-up will encounter, like establishing a customer base and building cash flow.

 

It is not, however, a fool-proof way to enter the world of business ownership. You need to choose a business that is profitable, or one that has easily-remedied issues that will make it profitable quickly (like customer service issues that could be handled by replacing some of the staff). You need to choose a business that has room for growth, and if it is a retail business, one with inventory that customers still want.

 

Look for something in your wheelhouse.

 

When you are beginning your foray into business ownership a big step is choosing the type of business you will buy. Be very careful with this step because it is where many new entrepreneurs get into hot water. DO NOT buy a business you know absolutely nothing about. If you are someone who has enjoyed the bar-scene for a long time, but you have never spent so much as a minute working in the bar/restaurant industry, then buying a bar is a terrible idea.

 

Look at industries where you have some knowledge or experience, as this familiarity will save you from complete disaster. Taking over a business for the first time is hard enough – you don’t want to add starting from scratch in a brand new industry to the equation.

 

Find the right help.

 

The smartest step any budding entrepreneur can make is to talk to an experienced business broker. That first conversation can tell you what your options are, help you figure out your next steps and get you launched on the path to business ownership. A broker will be an invaluable asset. They can help you find businesses that are right for you, be a buffer during the negotiations between you and the seller, assist you with licenses/permits, help you put together contracts – the list goes on and on.

 

The message here is if entrepreneurship is your goal, there’s really no reason you can’t start planning a way to reach that goal. Talk to a business broker today!

 

Are looking for help with finding the right business for you? Do you have questions about the business buying process? Ask us! Please feel free to leave us a comment or question, and we will be happy to help you on your journey to business ownership.

 

 

 

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 You Need A Transaction Broker: Protect The Deal Itself

Business sales are inherently complex. There are many aspects of the process of buying or selling a business that can be very different from the buying and selling of anything else.

 

If you have bought or sold a home, for instance, the business sale process will seem very foreign. There is usually more money changing hands, more complex financial issues, commercial leases needing to be negotiated, licensing and permitting concerns – the list goes on. How does one navigate this complex process? You employ the services of a professional business broker.

 

 

What is a business broker?

 

They are sometimes also known as transaction brokers, meaning they represent the transaction itself. 

 

Typically each side of the deal will have their own broker, and both essentially represent their party’s part of the transaction instead of representing the people themselves. This is why it is possible to have one broker for both the buyer and seller side of a deal. If both parties can trust the broker involved, having only one person as a go-between can make negotiations less difficult. 

 

Why is the business broker representing the transaction itself a good thing?

 

When a lot of money is changing hands things can get out of control very quickly. Business deals are messy. If the deal starts to go south, as most do at some point in the process, the broker is there to protect the deal. This is different from what an attorney might do in the same situation – an attorney’s job is to protect their client from any and all risk. If business brokers were employed to do the same thing, prevent any and all risk, it would be impossible to get a deal to closing because all business dealings – business sales included – come with a fair amount of risk.

 

The broker or brokers representing the transaction is what gets deals done.

 

Having someone to keep the deal moving is truly helpful, but you should also be able to trust the broker or brokers involved. Your broker is there to help you navigate this incredibly complex process and to help you either successfully sell or successfully purchase the right business for you. A good broker will go the extra mile for their clients because your eventual success as a business owner or seller leads to your broker’s success within a healthy small business market. 

 

Are you thinking of buying or selling a business and want to know more about the role of a business broker in the process? Please leave us a question or comment here, and 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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Buying A Business? Commercial Lease 101

You’ve found a great business and are excited to start negotiations with the sellers – but here’s a thought you may not have considered. That’s not the only negotiating you’re going to have to do.

 

When you buy an existing business, you typically are not buying the physical space that the business occupies.

 

Most businesses come with a lease, and that lease comes with a landlord and/or property manager.

 

 

Most landlords accommodate transfers easily, but not all do. Deals can get hung up on the lease when the landlord refuses to grant the transfer or has decided to change the lease terms dramatically. They can also get hung up if you don’t start working on the transfer until the last minute. 

 

The most important thing you can do as a buyer is get your hands on a copy of the current lease as soon as possible, and then deal with any lease issues long before the day you are supposed to close your deal.

 

Once you have the lease, the language you would typically want to see is in the section of the lease that has to do with transfers or assignments of the lease. Does it say something along the lines of “any assignment will not be unreasonably withheld”? If it does, you are probably in good shape. This type of language means the landlord would have to come up with a very good reason to keep from transferring the lease to you.

 

Landlords, for the most part, are concerned with keeping a rental space filled and generating rental income. Some, however, are unwilling to reassign leases (at least initially).

 

This is a part of the business sale process where your business broker will be an invaluable asset. They can act as a buffer between you and a difficult landlord, and can help to negotiate your new lease or the reassignment of the old lease to keep the lease rates reasonable.

 

Another way to keep the lease from holding up your closing is to be forthcoming with your financial information when the landlord asks for it. Most landlords are going to want to see some kind of financial statement that proves you have the capital to keep the business open. It would be foolish for them to rent to a tenant who will be forced to close the business doors only a third of the way through the lease. Some landlords also want to see some kind of resume or work history to show you have the experience necessary to keep the business running and profitable.

 

You should also be aware that in some cases the rental rate will slightly increase from what the seller is currently paying when you get a new lease. You can negotiate a lease extension at the same rate, but eventually your new lease may come with a new rental rate. You will also be responsible for coming up with the deposits necessary for the lease.

 

The message here is your business won’t be much of a business if you can’t get a lease assigned to you for the space. Deal with lease issues early on and the won’t become a big headache in the end.

 

Are you a business buyer who has questions about business leases? Have you had a deal fall apart because of a difficult landlord? Please feel free to leave us a comment or question here, and we will be happy to assist you with any lease 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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Could Vs. Should – Buying A Business Without The Right Help

If you’ve ever bought a house or have even just rented an apartment, you know the importance of agents in those transactions. Your real estate agent or your rental agent helped you with locating potential properties, let you in to take a look around, assisted with your purchase or lease contract and was there throughout negotiations. While it is possible to buy a house on your own or rent your own apartment, it’s definitely easier with someone who knows what they’re doing by your side. When it comes to the small business market, the same will be true. It’s going to be much easier with help.

 

Business transactions are inherently very, very complex.

 

If you’ve never been through a business transaction before you are probably going to have an impossibly difficult time navigating everything that needs to happen. That’s where business brokers come in

 

 

A business broker is a transaction agent. Their job is to get a business sale from start to finish. They help buyers by guiding you through from you initial contact all the way past the closing table.

 

Your broker will talk to you about your goals for business ownership, the amount of capital you are able to invest, the areas where you would like your business to be located and your education/experience. Your broker will then help you with your business search, narrowing down the choices based on your feedback. Once you have found a business or two that interests you, you will sign nondisclosure agreements to gain access to the business name and some cursory financials. If you like these businesses your broker can schedule conference calls with the sellers as well as site visits when there are no employees or clients around. Your business broker will then help you write your offer which, if accepted, will become the purchase contract. The business brokers will act as buffers during negotiations between you and the seller – a very important role. They will also negotiate with your future commercial landlord and property manager to ensure you get a fair lease. Your broker will also help you with the licenses and permits required for you to take over as owner.

 

This is a big list – and it would be quite an undertaking for someone who has never been through it before. Very few business transactions go through successfully without help. An experienced and qualified business broker has not only been down this road many times before, but they know where the pitfalls are going to be and can help you avoid them. 

 

The message here? Could you buy a business without a business broker? Maybe. Should you? Definitely not.

 

Are you considering buying a business but aren’t convinced you need a business broker? Do you have more questions about what a business broker can do to help you throughout the transaction process? Please feel free to leave any comments or questions. 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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The Justifiable Offer: Why A Low-Ball Is A Bad Idea

You’ve done the searches. You’ve analyzed your options. You’ve done a few conference calls with sellers and you think you’ve found the right business for you. Your next step is a big one, and your decisions here can absolutely make or break your chances of buying this business. It’s time to make an offer.

 

Your offer is important for a number of reasons. The offer you put together (if accepted) will become the purchase contract. This contract will include not just the final sale price but many other parts of the transaction that will need to be negotiated. Think the length of your training period, the terms of the deal and how existing contracts will be assigned – just to name a few.

 

This all-important document essentially contains all the parts of your deal that will need to be negotiated. The fluid nature of an initial offer/purchase contract means the first version – your version – is just a place to start those negotiations. It should go without saying that you need to start off on the right foot. 

 

 

The relationship you have with the seller, although not a permanent one, will be critical to the success or failure of your transaction. You have to talk to this person, meet with this person, iron out a deal with this person and then most likely work side by side with this person during your training period.

 

This is not a relationship you want to start with a perceived slap in the face.

 

What do we mean by that? You do not want to low-ball a seller just to see how desperate they are or how great of a deal you can get. People who intentionally low-ball business sellers aren’t business buyers. They’re tire-kickers. Your initial offer speaks volumes to a seller about how serious you are and what it’s like to work with you. You are making a financial offer for something that seller has invested countless hours in, has spent years building and has made sacrifices to maintain. Yes, business transactions shouldn’t be emotionally driven, but in the small business market it really can’t be helped. No one wants their blood, sweat and tears treated like a cheap car.

 

What should you do instead?

 

Make a JUSTIFIABLE offer.

 

A justifiable offer is a simple concept – it’s something based in reality and backed up by data. You’ve looked at the numbers, you’ve considered the current market and you’ve come up with a number that makes sense – not the lowest, rock-bottom price you’d love but something you feel (based on the data you have) is fair.

 

Making a fair offer tells a seller that although you may not want to give them their full asking price, you are a person interested in making a deal happen. You are someone who values their business and all they’ve invested. 

 

How do I make sure my initial offer is fair? Talk to your business broker about what you’d like to offer, and then listen to their advice. They know the market, and can give you insight into whether or not the number you’ve come up with will be a good point to start negotiations.

 

The message here is simple. If you are serious about buying a business the best way to start your transaction is by making a fair and justifiable offer. 

 

Have you looked at businesses and want to know more about how sellers come up with their listing price? Do you have questions about what an initial offer/purchase contract entails? 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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Buying? Why Are Good Businesses For Sale?

 

If you are someone who is interested in buying a business, you are more than likely looking for a profitable business that has a good share of the market and a great location. You are probably not going to be willing to buy a business that is on the fast track to failure and bankruptcy – so as you begin searching for businesses you may have pondered a pretty big question.

 

Why would anyone sell a perfectly good business?

 

This question is a very important one to ask as you search for businesses, and it is a question that any business seller should be willing and able to answer. If you are unable to get an answer from a business owner, this could be a major red flag.

 

Here’s something many people don’t understand. Most of the reasons for selling a business have very little to do with the business itself. A large percentage of the time a business is on the market because of the personal life of the owner, not because the business itself is somehow in trouble.

 

Let’s look at some reasons for selling that have more to do with the owner than with the business:

 

Retirement. This one goes without saying. An owner who is ready for another chapter in life is willing to sell a perfectly good business so they can move on.

 

Divorce. When husbands and wives are partners in a business, sometimes the business gets sold as part of the divorce.

 

Partnership disputes. Most partnerships start well, but not all end that way. If there is a breakdown in a partnership where both parties want out, it can mean putting the business on the market.

 

Medical reasons. If the owner or a member of their family has a medical condition that will take precedence over the business, or will keep the owner from being able to run the business, the business will likely end up on the market.

 

The kids decided not to follow in the family footsteps. Many small business owners have their children work with them in the business, but when the time comes for mom and/or dad to retire the kids may want to do something else.

 

There are many reasons that a perfectly good business ends up on the market, the key is to find out the real reason the owner is looking to sell. If the reason has little to nothing to do with the business itself, then you are looking at a potentially great business acquisition.

 

Are you looking for a business to buy, but have come across many that seem too good to be true? Do you have questions about how to find out the real reason a business is for sale? Leave us a comment or question here, and we look forward to working with you on your road to business ownership.

 

 

 

Michael Monnot

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

www.InfinityBusinessBrokers.com

 

 

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Follow The Rules: How To Keep From Killing Your Deal

Buying a business can be (and often is) an intensely frustrating process. When you have questions, when negotiations are in full swing – even getting initial information usually means you spend a lot of time waiting. Waiting for the seller’s broker to contact the seller. Waiting for the seller to get together the documentation you’ve requested. Waiting for an attorney to look over a contract. Waiting for approval by your new commercial landlord. Waiting for licensing and permitting requirements to go through. It takes an enormous amount of personal patience to see it through.

 

This huge patience requirement can make you feel a little crazy – maybe even crazy enough to try and push the process along by yourself.

 

What do we mean by that?

 

The process of buying and selling businesses comes with a rather rigid set of rules. The majority of those rules seek to protect the deal on two fronts. They protect the confidentiality of the transaction itself and they protect the buyer and seller from each other.

 

Why does a transaction need confidentiality and why shouldn’t you push to break it? Breaching confidentiality might not only kill your deal, it could potentially cause a fatal blow to the business you are hoping to buy. Business sales happen under a strict veil of confidentiality for a few very important reasons.

 

The most important of these reasons is the incorrect but pervasive assumption that a business for sale is a business on the brink of failure. This notion can destroy a business if the news gets out that it’s on the market. Employees can panic and leave. Clients can cancel big contracts. It can be devastating. As a buyer you have to keep the for-sale status of prospective businesses under wraps. You will not only be required to sign non-disclosure agreements – you will be forbidden from talking to staff on your own, from emailing the owner directly (in many businesses the owner’s email is accessible to their staff), from calling the place of business and asking for the owner, from visiting the premises without permission, etc.

 

While it might be tempting to email or call the seller because you’re tired of waiting for the brokers and attorneys involved to get you the information you’ve been asking for – don’t. One seemingly insignificant point of contact can cause a disastrous cascade. The rules exist for a reason. You have to follow them.

 

This leads us to the second set of rules that protect the buyer and seller from each other. Even if you are following the rules that protect confidentiality to the letter, it might be tempting to bypass the intermediaries and talk one-on-one with the seller (if you somehow have their home phone number, for example). Don’t do this either.

 

Why?

 

The better question is why do the intermediaries, the business brokers, exist? They exist because the complex tangle of a business transaction requires experience and it also requires a buffer. A seller is selling their blood, sweat and tears – something that may be their life’s work. They have a deep personal connection to their business – and a buyer can quickly and easily derail a deal by asking the wrong question, by making an innocent assumption, by saying the wrong thing. Those questions and remarks can offend a seller to the point that they will refuse to work with you – and your deal is dead.

 

Follow the advice of your broker and keep the flow of communication between you and the seller flowing through the people who you hired to keep your deal on track. Negotiations are far easier when the seller is still willing to talk to you.

 

The message here is the rules that cover your business transaction are there for a reason. Someone, somewhere messed up their chances of becoming a business owner – and their cautionary tale will keep your deal safe.

 

Are you a business buyer who thinks the rules are a pain and want to know more about why they are so important? Do you have a story about a derailed deal that could have been protected? Please leave any questions or comments 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

 

 

 

 

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How To Buy The Family Business When You Aren’t Family

If you think about the quintessential small business, you likely see a family-run business – one owned by mom and dad and staffed by children and other family members. While the initial intent of many family business owners may have been to pass the business on to the next generation, there are many times when these family businesses go on the market instead.

 

 

A family business on the open market can be a good buy for a business buyer because they are typically run with a lot of drive, passion and care – all of which translates into a strong and successful bottom line.

 

Problems can arise, however, because the person buying the business isn’t a member of the family.

 

I’m looking at buying a family business, what problems might I face?

 

First, you may have a hard time keeping critical staff after the transition because those critical staff may be related to the original owners. The loyalty for those original owners can be hard to replicate, so you as a buyer need to make an effort to get to know each member of the family who works in the business (and plans on staying) and understand what their roles and responsibilities are. Building a good relationship with each family member will help to keep them on your payroll – and hopefully also keep their loyal clientele.

 

This leads us to our next issue. Many family businesses retain their customer base because that customer base has loyalty and trust for the family. As a new face within the business, you will need the current owners of the business to help you with maintaining that customer loyalty. You can work on customer retention by having the seller introduce you to important regular customers and by possibly keeping the seller on as a consultant for a time after you purchase the business. The key to a successful transition is consistency – which leads us to our last point.

 

The final problem many buyers run into when purchasing a family business? Making too many changes too fast. The business you are buying is successful because the family that runs it runs it in a specific way – a way that keeps the customer base happy. Every business buyer wants to make their own mark, but massive changes right out of the gate in an already successful business will more than likely end in disaster. Changes are possible, but a buyer needs to take the time to see what parts of the business work.

 

Buying a family business can pose a special set of challenges, but those challenges are worth it when family-run means a great buy.

 

Do you have questions about buying family-run businesses? Would you like to know what family businesses are currently on the market? Please feel free to leave 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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How To Get Your Deal To Close – Managing Reality and Expectations

No matter what the economic climate looks like, there are always businesses changing hands. Buyers and sellers are always working together – but even in the most favorable of circumstances some deals are destined to die. 

 

Why?

 

The main reason that deals fall apart before they hit a closing table? Unrealistic expectations

 

Business buyers and business sellers come into the business transaction process with an idea in their head of how that transaction is going to go and what they will get out of the deal. The problem with this initial vision is they are almost always an impossible reality. Businesses and business transactions are complicated, messy and involve many moving parts and personalities. Considering your business transaction with a focus on reality will help you immensely in having a successful sale or purchase.

 

 

First and foremost, there is no possible way that you are going to get everything you want. If you are buying a good business, you are not going to get it for a rock-bottom price. If you are selling, you are not going to get 10 times what businesses like yours are actually selling for. Business deals are full of negotiation – and not just about price. You will have to negotiate things like the length of due diligence, the length of the training period, the terms for seller financing, the clauses of a new lease – the list goes on. Be realistic in the negotiation phase of your business transaction. Go in knowing that there will need to be a lot of give and take from both sides of the transaction if you are going to get a deal done.

 

Another major issue that requires a reality check? We’ve already mentioned it – personalities.

 

There are a lot of people in a business transaction. There is a seller, a buyer, a couple of business brokers, business transaction attorneys, CPAs, landlords and property managers – and each one of these people will be seeing the transaction unfold from their own unique point of view. You need to be realistic because there are going to be times during the negotiation that one or more of these personalities are going to clash. For the most part, differing opinions can be sorted out, but only if all sides stay in the negotiation. Going into your business transaction with the understanding that problems will absolutely be a part of the game will help you see the end goal instead of focusing on temporary personality clashes.

 

Keep your expectations in the realm of reality and you will have a much better chance of reaching a closing table.

 

Are you thinking about selling your business and are curious about what businesses like yours have actually sold for? Would you like more information on the process to buy a business? Please feel free to leave any questions or comments 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

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Buying A Business In 2020? What The Q2 BizBuySell Report Says For You

BizBuySell’s Second Quarter Insight Report shows what a roller coaster of a year 2020 has been. There was a promising start, then March hit and the business-for-sale marketplace sort of ground to a halt. None of this is news to prospective business buyers, as many who were already looking or were engaged in negotiations when the bottom dropped out saw lending dry up and deals fall apart.

 

Guess what? There’s finally some good news.

 

The Q2 Report shows that the small business market is picking back up again.

 

 

Here’s what you need to know:

 

The market is slowly returning to normal, with 71% of the owners surveyed saying they are back to work and open after the initial shut downs.

 

Many buyers are currently seeking pandemic-proof businesses – so much so that these businesses are booming. What do we mean by pandemic-proof? All across the country consumers are adjusting to a new normal where take-out food and delivery services are in high demand, where school happens at home and the majority of shopping is done from a couch – and the businesses that have adapted their model to continue producing throughout the pandemic are now at the top of buyer’s lists. The new Insight Report shows some 60% of prospective buyers are currently looking for a pandemic-proof business. What does this means for you as a buyer? If this is the direction you want to go, you’ll need to act fast when these “essential” businesses hit the market.

 

Another section of business buyers are searching for businesses in trouble, some 28%, hoping that with a rock-bottom price and some patience they can turn the ship around. If you are a buyer looking for one of these low price deals, be careful. You shouldn’t buy a depressed or closed business just because the price is good. You should have a clear plan in mind to get the business back on it’s feet again and have metrics in place as part of your business plan that give you a definitive point to pull the plug and move on.

 

In the industries that were hit hardest by the shut downs, another opportunity for buyers revolves around the sudden glut of built-out commercial spaces that are suddenly available. With many businesses deciding to keep their doors closed despite the reopening of local economies – many down on their luck business owners are selling in order to get any return on their now permanently closed business venture. Some 58% of current business owners who are doing well are actively looking for other businesses to buy in order to expand into those now vacant (and sometimes coveted) locations.

 

The point here is although the market is nowhere near where it was at the very beginning of 2020, it is showing some signs of life again. A careful, creative and motivated buyer can make the best of the current market and find themselves a booming pandemic-proof business or one at a low, low price. Talk to your business broker about which choice would be best for your situation.

 

Do you have questions about what the Insight Report says about the current state of the business-for-sale marketplace? Would you like to know what opportunities are available in your area? Please fell free to leave any questions or comments. We would be happy to help.

 

 

 

Michael Monnot

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

www.InfinityBusinessBrokers.com

 

 

 

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Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

5111-E Ocean Blvd
Siesta Key, FL 34242




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