what should i know about buying a business Archives - Page 19 of 29

Published April 13, 2020

If you are the child of an entrepreneur, then you probably grew up in the family business. You might have napped in the back office and done your homework at your parent’s desk. Your chores might have included taking out the trash or washing dishes. Now that you are an adult, your parents might assume that your path in life includes taking over that family business so they can retire.

What if that’s not what you want?

You aren’t alone. Not everyone follows in their parents footsteps, and if you’ve found a separate passion along the way that you want to pursue, you should. The key to a happy life is doing something that you love, and (hopefully) with some discussion your parents will see things the same way.

There’s no way my parents are going to be okay with me doing anything else. Now what?

First of all, have you even asked? Any family with a family business needs to have a discussion about the future of the business and the possible succession to the next generation. If you haven’t had this discussion yet, no time is better than right now.

If you really don’t want to take over the family business, and your parents are counting on just that – there is a solution where both sides win.

Approach your parents with the idea of selling the business and then using some of the proceeds to buy a business that you can be passionate about, thereby preserving the entrepreneurial legacy of the family while at the same time pursuing your own dreams.

By selling their business they can also get a financial return on their investment of time, energy and money while simultaneously helping you on your own journey to business success. If they see that they can potentially both make some money and give you the key to your own happiness – what parent isn’t going to want that?

Start the conversation now, then talk to an experienced and qualified business broker (like us) about what comparable businesses have recently sold for – and what businesses currently on the market might meet with your goals for business ownership.

Are you the child in a family business and want to know what comparable businesses have sold for? Do you have questions about what type of business you could buy? Please feel free to leave comments or questions here and we would be happy to help.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com
12995 South Cleveland Avenue, Suite 249
Fort Myers, FL 33907

https://news.gallup.com/opinion/polling-matters/216674/business-gets-bigger-even-americans-prefer-small.aspx

Smaller Is Better – How Buyers And Sellers Can Compete Against Big Business

Posted in Buyers Articles, Sellers Articles

Published April 6, 2020

According to a Gallup poll, the small business model is still favored by the public – so businesses large and small can help themselves by trying to stay true to the “smaller is better” model.

“Forces are pushing U.S. companies toward mergers, consolidations, acquisitions and growth. Yet, Americans continue to show strongly negative attitudes toward ‘big’ business, coupled with a continued strong attitudinal affinity for small business. This poses an essential dilemma for large enterprises attempting to build and maintain a thriving business-to-consumer customer base.

The basic data are clear. Gallup’s most recent research shows that 70% of Americans have ‘a great deal’ or ‘quite a lot’ of confidence in small business, more than three times the 21% confidence rating for big business.”

What can someone who is looking to buy a business or someone who is considering selling do with this information?

Think about why people prefer small businesses over huge corporate conglomerates. Attention. Customer service. The ability to understand local community needs. Those are the areas where smart small business owners can focus in order to set themselves apart from the big businesses that could otherwise easily destroy them with volume pricing. The way you put those ideas into practice is by making your business as accessible and customer-experience focused as possible.

If you are buying a business, you need to make this consideration when you take over the helm. Regardless of the old owner’s practices, you need to focus on customer service and community involvement. If your new business doesn’t have a website or social media presence – create one. Make you business accessible both on and offline. Come up with creative marketing strategies that will position your new enterprise as a pivotal member of the community. Sponsor related community events. Donate money or supplies when the occasion calls for it. Join local festivals and parades. You need to keep your focus on the local customer because their loyalty to you is your only weapon against the intrusion of huge corporations into your industry space.

If you currently own a business and are considering selling now or in the near future – your focus needs to be nearly the same as someone just about to take over as a new owner. You absolutely must have a decent website, one that gives real-time information about the goods and services you offer. You need a social media presence that you update several times a week, if not daily. You should be growing your business always, even if your near-future plan is to sell because a business with a solid path toward growth is going to fetch a much better selling price than a business that is stagnant. The creative marketing strategies above can and should be used to solidify your business in your area as a community business.

Big business will only win if small business stops paying attention to what matters most – local, loyal customers and their ability to access your business how and when they want to. Online presence and community presence will put the business you buy and the business you hope to sell in a great position to succeed.

Are you thinking about buying a business and were worried about how a small business can compete with the industry giants? Have you considered selling your business and want to know more about how implementing the ideas here can help your sale? Ask us! Leave any questions or comments here and we would be happy to help.

Want to read the Gallup article? Click here:

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com
12995 South Cleveland Avenue, Suite 249
Fort Myers, FL 33907

Pandemic Making You Question Your Life Choices? Why Now Is The Time To Buy A Business

Published March 30, 2020

It’s an uncertain time. A global pandemic, the closure of everything from businesses to parks and a constant stream of terrifying information. While we all hunker down for the foreseeable future, it might seem like current circumstances should put your future dreams on hold.

Guess what? If your dream is business ownership – you don’t have to wait.

This time away from normal life might be giving you a chance to rethink – well, everything. Are you really happy on your current path? Is there something you’ve always wanted to do but life got in the way? Have you always envisioned life as the owner of your own business, waking up each morning to do something you love instead of just punching a clock?

Maybe now is the time to have a conversation with a business broker about what types of businesses would meet the goals you have for business ownership. Then, instead of endlessly scrolling on Instagram you could be searching for the perfect business – the one that would set you on the path to the life you’ve been dreaming of.

Think it’s impossible to buy a business right now because of Covid-19? It’s not.

Why?

First, the buying and selling of businesses is the job of business brokers. Business brokers don’t have their own licensing category in terms of professional regulations – so they are licensed as real estate brokers. The good news is in most states real estate is considered an essential service, meaning business brokerages are currently operating – albeit remotely.

Next, the vast majority of the business buying process can be done without breaking social distancing guidelines. Business searches can be completed via your laptop from your couch. Conference calls and video meetings are always available, and quite frankly something we already do with regularity. Documents can be shared securely online. Business site visits can be done via virtual tour. Our brokers can even arrange in person contact or on site visits if absolutely necessary, as we have implemented protocols whereby appropriate social distances are kept in place, no one shakes hands and all common surfaces (like door handles) are cleaned both before and after.

Make use of this time away from the day-to-day grind to decide if you really want your old life back once all of this is over. Spend your free time searching for businesses, talking to the owners of businesses you like and getting yourself on the path to business ownership.

Have you always wanted to own your own business and this pandemic is making you question your life choices? Do you want to know what types of businesses are in your price range and would meet your goals for business ownership? Ask us! Leave any questions or comments here and we would be happy to help.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com
12995 South Cleveland Avenue, Suite 249
Fort Myers, FL 33907

Buying A Business? How Much Of A Project Do You Want?

Published March 23, 2020

If you are in the market to buy a business – you probably already have a bit of an idea what you want. A dream industry, a long-sought location or a passion project turned entrepreneurial goal.

Ok, great – you know what you want. That’s step number one. Now, the questions get a bit harder.

Once you enter the business search process, you will likely find a number of businesses that might be a good match. How do you decide which one is the right one?

Here’s where a big factor comes in, one you may not have considered.

How big of a project do you want?

What do we mean by that? Like anything in an open market, businesses can run the gambit from wildly successful and exquisitely organized to lightly congealed and barely successful. Circumstances from even the far ends of the spectrum could end up a great buy for a particular buyer – you just need to decide where you want to fall on that spectrum. A wildly successful and exquisitely organized business is going to probably cost a lot up front – but you won’t have as much of a project to contend with. Similarly, the opposite end of the spectrum will get you a business for a great price – but you might need to do a lot to get that business to a good place.

To decide where you fall on that spectrum, think about what your goals are for business ownership. If you have a bit more capital to invest and are looking for something stable – look for businesses that have great numbers, great reviews and many years of existence. If your goal is to make the most of your money and you like a challenge, then something nearer the barely successful end of the spectrum might be right for you. A bit of effort – some re-branding, a few staffing and protocol changes, perhaps some remodeling, a marketing plan, retooling of customer service – these are the things you may have to do to get a red-line business back in the black. An entrepreneur who wants a serial-entrepreneur lifestyle (one where you buy a faltering business, grow it to a certain metric and then sell for a profit before finding your next venture) would be well-suited for this lower end of the spectrum.

How can you decide how much of a project you want? Think about what will make you happy day-to-day.

Do you want to just go to work and keep it simple, or are you someone who would be bored with that and needs a challenge? Once you decide, talk to an experienced and qualified business broker. Discuss the amount of capital you are willing and able to invest, as well as your optimal project-level. They will be able to take this information and find businesses that will be a good fit.

Are you considering buying a business but hadn’t considered how much of a project you are willing to take on? Do you need help finding a business that will fit with 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
12995 South Cleveland Avenue, Suite 249
Fort Myers, FL 33907

Are You Being Ignored? 3 Ways A Business Buyer Can Stand Out From The Crowd

Published March 16, 2020

There are a lot of potential business buyers out there. So many, in fact, that around 90% of people who talk to brokers and sellers about purchasing a business never do. What does this litany of tire-kickers mean to the 10% of buyers who actually want to and will buy a business? It can be really difficult to get anyone to take you seriously.

How do you pull away from the pack and let the other side know you’re for real?

Be Upfront

Business brokers get calls every day from prospective buyers, but what you as a buyer need to realize is the 90% have muddied the waters. Most business brokers aren’t going to give you the time of day if it appears to them like you aren’t serious – it isn’t worth their effort or energy. Your initial conversations with a broker will be a vetting of sorts, where you will be asked about the amount of capital you have available to invest in a business, your work experience and your goals for business ownership. If you are evasive or vague with your answers, it will immediately send up red flags for the broker. Someone who is serious about buying a business will be forthcoming with the amount of capital they have because it would be foolish not to. They will also be willing to talk about their experience and goals because that’s the only way a broker can really help someone get the right business. Why would you waste your time as a buyer looking at businesses you could never afford or are completely ill-prepared to own?

Don’t Drag Your Feet

One of the most important qualities an entrepreneur must have to be successful is the ability to be decisive. Eternal back-and-forth “I want this business, I don’t want this business” conversations will never get you any closer to your goals of business ownership. It will also do nothing but frustrate the sellers and brokers involved. Once you have the necessary information, make a decision and stick to it.

Be Realistic

There is no such thing as the perfect business, so constantly passing on businesses because they didn’t have perfectly organized records or because the decor didn’t suit your style means you aren’t really sure you want to buy a business. You are buying cash flow, not furnishings and paint colors, so you need to be looking at businesses from a big-picture perspective. You also need to make realistic offers. Coming in with an absurdly low offer tells the seller you have no interest in a real negotiation, and if the offer is bad enough you stand the chance that the seller will refuse to work with you at all.

The message here is if you are serious about buying a business, then you need to take the process seriously and show the brokers and sellers involved that you are ready and willing to put together a realistic deal. By showing your intentions through your actions, you will be able to differentiate yourself from the sea of buyers who will never make it to business ownership.

Are you looking at businesses to buy and it feels like no one is taking you seriously? Would you like to know how to put yourself in the 10% category? Please ask us! Leave any questions or comments and we would be happy to help.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com
12995 South Cleveland Avenue, Suite 249
Fort Myers, FL 33907

The Paperwork Series: The Licensing For Business Buyers

Published March 9, 2020

Buying a business is no small task, and many first-time buyers are initially intimidated by the paperwork required to make a sale happen.

The good news is the paperwork, contracts and red tape required for buying a business are totally do-able.

You just need to stay on top of requirements, have patience and have the right help.

The last (and possibly the most aggravating) part of the paperwork you will come across in a business transaction has to do with the licensing involved when starting or running a business.

A very important note on licensing – you absolutely must have all your licensing in place before you take over as owner of the business. Any procrastination on your part will probably lead to major issues. Any procrastination on your business broker’s part could also be a problem. Any good business broker should be helping their buyers wade through the paperwork jungle. Some brokers leave their clients high and dry, postponing important licensing issues until the last minute. Your broker should be helping you get the information necessary to get the proper licenses and permits. If they aren’t, you might need to find better help.

Your licensing requirements will depend on where the business is located, what goods or services it provides and your role in the business itself. For example, a small pizza shop that does not serve alcohol will have to comply with licensing requirements from the Division of Hotels and Restaurants but not the Department of Alcohol, Tobacco and Firearms. If you are buying a contracting business, you may need to have the appropriate contractor license for your state. Each state, county and city will also require specific licensing requirements depending on what the business is and where it is located in relation to state, county and city boundaries.

Just like all of the other paperwork requirements we have discussed in previous articles – this is a great example of when a business broker is worth their weight in gold. As we already mentioned, any good broker should be helping you with licensing requirements or referring you to a licensing professional. They should also be advising you on when each part of the licensing process should be started and when it needs to be complete.

If you don’t want to pay the fees of a licensing professional, you should know that it is absolutely possible to do your own licensing – but it will take a good dose of patience and plenty of perseverance.

The best advice is to get all of the necessary licensing information from the seller (through your broker) and then go through each licensing requirement one at a time. You should print all applications regardless of whether or not you will be submitting them online as many government agencies have time-out procedures on their websites (so if you take too long to fill out your application online it will time-out and you will have to start over). Printing the applications allows you to fill everything out beforehand so you don’t have timing issues. You should also have everything in printed form and kept together because in many cases an application will require approval and signatures from multiple agencies – so it is best to take everything with you.

You should also understand that all government agencies are very large bureaucracies, and as such the red tape involved can be extensive and open to interpretation. What do we mean by “open to interpretation”? If you have a question on one part of a specific application, you might call one day to get an answer. The next day, when you speak to someone else in the same office, you might get a completely different answer. Although frustrating, this difference in opinion is totally normal. Just follow the instructions of the government agent you are currently dealing with, and try to deal with that one specific person every time (not always possible).

The best way to deal with licensing? Ask questions, lean on the experience of your business broker and stay on top of deadlines.

Do you have more questions about the licensing requirements in a business sale? Would you like to know more about what’s included? Ask us! Feel free to leave any questions or comments and we would be happy to help.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com
12995 South Cleveland Avenue, Suite 249
Fort Myers, FL 33907

The Paperwork Series: The Commercial Lease For Business Buyers

Published March 2, 2020

Buying a business is no small task, and many first-time buyers are initially intimidated by the paperwork required to make a sale happen.

The good news is the paperwork, contracts and red tape required for buying a business are totally do-able.

You just need to stay on top of requirements, have patience and have the right help.

As you near your closing date, you will also be nearing the day when you sign your commercial lease. Almost all business transactions are for the business itself – not for the associated real estate, so in almost all cases you will be dealing with a commercial lease when you buy a business. The timing for signing your commercial lease will be one of the clauses mentioned in your purchase contract.

Navigating the negotiation of a commercial lease and acting as a buffer between buyers and typically difficult property managers is yet another example of why a good business broker is instrumental in the success of a sale.

Property managers are difficult by nature because it is their job to protect the owner of the property from anyone who might not be able to pay the rent. Businesses, especially small businesses, are inherently very risky – so many property managers are hesitant to allow new owners to take over the lease at a location. You should expect a thorough vetting process, and should be prepared to disclose your financial statements and your resume. Your new landlord wants to make sure you have the experience necessary to keep the business successful and the capital to pay the rent during the transition to new ownership.

The inherent risk of small business also means you should expect that your lease will be essentially the same price as the lease the current seller is paying. Most property managers are not going to renegotiate for a much lower price. Why not? Keeping the current tenants at their current rate means more money for the property owner, so be ready to pay essentially the same rent (if not more).

Commercial leases are similar to the purchase contract because they are very extensive. You should review them carefully with your business broker and your business transaction attorney. Just like your purchase contract, any attorney unfamiliar with the business transaction process will be hesitant to advise you to sign a commercial lease simply because it is so extensive. Listen to the advice of your business broker and your business transaction attorney as they are best suited to advise you in this situation. Also be aware that most commercial leases are fairly standard, so although you may be able to negotiate some small parts of your lease – it will largely stay as it was for the original tenant.

Do you have more questions about the commercial lease in a business sale? Would you like to know more about what’s included? Ask us! Feel free to leave any questions or comments here and we would be happy to help.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com
12995 South Cleveland Avenue, Suite 249
Fort Myers, FL 33907

The Paperwork Series: The Purchase Contract For Business Buyers

Published February 24, 2020

Buying a business is no small task, and many first-time buyers are initially intimidated by the paperwork required to make a sale happen.

The good news is the paperwork, contracts and red tape required for buying a business are totally do-able.

You just need to stay on top of requirements, have patience and have the right help.

After you have signed non-disclosure agreements and have had a chance to check out a few businesses, the next set of paperwork you will encounter will be your purchase contract.

What is a purchase contract?

When you find a business you really like, you will put together an initial offer with your business broker and present that offer to the sellers. This initial offer opens up the negotiating table, and after a bit of back and forth between both parties you will hopefully have your amended offer accepted by the sellers.

Your initial offer, once accepted, essentially becomes the purchase contract. This contract is basically a guide for what will happen during the transaction process.

What will it include?

It will vary from transaction to transaction because businesses are inherently complex and each one is very different from the next. Some basic items the purchase contract will cover? The price offered, the length of the due diligence period and the length and scope of training are a few of the things covered in your contract, but there will also be many more.

The complexity of this agreement is one of the major reasons the professional help of an experienced and qualified business broker is necessary for a successful transaction. Drawing up a purchase contract on your own could leave you in a lurch if you forget something critical.

An important point about seeking professional help with your purchase contract: your business transaction attorney could also help you with the purchase contract – however, notice we said business transaction attorney. Your family law attorney or the attorney you used for a civil lawsuit are not going to understand a purchase contract the way a business transaction attorney would. Remember that an attorney’s sole purpose is to protect you from any and all risk – and all businesses come with an inherent amount of risk. This contradiction means it will be tough to properly advise you if your attorney has never been a part of a business transaction. The solution is to use the advice of a business transaction attorney and business broker instead.

Do you have more questions about the purchase contract in a business sale? Would you like to know more about what’s included? Ask us! Feel free to leave any questions or comments and we would be happy to help.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com
12995 South Cleveland Avenue, Suite 249
Fort Myers, FL 33907

The Paperwork Series: The NDA For Business Buyers

Published February 17, 2020

Buying a business is no small task, and many first-time buyers are initially intimidated by the paperwork required to make a sale happen.

The good news is the paperwork, contracts and red tape required for buying a business are totally do-able.

You just need to stay on top of requirements, have patience and have the right help.

We’ll start with the first paperwork you will come across, the non-disclosure agreement. This is an agreement you must sign in order to learn the name and physical location of a business that interests you.

Why do you have to sign it? When a seller puts their business on the market, the confidentiality of that for-sale status is crucial for protecting the business. When confidentiality is breached an entire staff can quit, vendors can cancel contracts and the competition may move in for the kill.

The non-disclosure agreement protects the confidentiality of the business by creating legal repercussions for a buyer who discloses the business inappropriately. You as a buyer can avoid these repercussions by keeping the information you are given to yourself and by following the instructions of your broker in regards to any financial documents or associated information you are given.

What if I don’t like a portion of the non-disclosure agreement? Can I cross out the portions I don’t like before I sign it? No, you can’t. Non-disclosure agreements are standard documents, and as such changes are not permitted.

If you are uncomfortable signing the non-disclosure, consider the reason it is needed. If you were selling your own business, you would want legal repercussions in place to protect that business. You wouldn’t be comfortable handing over sensitive and/or proprietary information to just anyone in that same way you probably wouldn’t be comfortable handing your personal tax return to the strange guy sitting next to you at a coffee shop.

You should discuss any reservations you have with your business broker, but understand that your refusal to sign a non-disclosure agreement will probably put a stop to your ability to buy a business.

Do you have more questions about the non-disclosure agreement and what it means for you as a buyer? Would you like to know more about the business buying process? Ask us! Please feel free to leave any questions or comments and we would be happy to help.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com
12995 South Cleveland Avenue, Suite 249
Fort Myers, FL 33907

Business Buyer Questions: What Can I Afford?

Published February 10, 2020

What can you afford?

This is an important question, but a vastly more important question is…

What can you REALISTICALLY afford?

Anyone around for the real estate crash of 2008 knows that a major contributor to that disaster was people buying homes they had no business buying. Great big loans were common, and eager home buyers leapt at the chance to buy dream homes that were well out of realistic reach.

While one would hope that we’ve all learned our lesson, there are many instances in the business market today where buyers make a 2008-esque mistake. They purchase a business they can’t realistically afford and guess what happens? Failure. Time and time again we’ve seen buyers bite off more than they can chew, use up all of their free capital and end up having to walk away six months after the closing table.

How do you protect yourself from this disaster?

Have a frank and honest conversation with your business broker when you start the business buying process. Your broker needs to know what funds you actually have available and what you are willing to risk. It should go without saying that you should be using as little of your free capital as possible for the purchase of your new business.

Why?

You are going to need cash available for a litany of things when you take over the helm. Payroll, inventory, licensing – there are day to day costs that will need to be paid in order for the business to continue running long enough for you to get profitable.

What we’re trying to drive home here is if you have $100,000 available – don’t look at $100,000 businesses. Look for businesses well below your max budget so you leave yourself some financial wiggle room in your early days as owner.

Are you currently looking for businesses to buy and want to know what you can realistically afford? Would you like to know more about how much free capital you should leave yourself? Ask us! Leave us any questions or comments and we would be happy to help.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com
12995 South Cleveland Avenue, Suite 249
Fort Myers, FL 33907