what you should know Archives - Infinity Business Brokers

Published September 4, 2023

It might seem insignificant. You had an appointment with a broker for a call or you’re supposed to do a walk through of the business after coordinating with the brokers and the seller. What’s the harm if you let everyone know you can’t make it or if you forget and don’t show?

Keeping appointments is very, very important when you are trying to buy a business. It can make or break your journey to becoming a business owner.

Why?

When you buy someone’s business you aren’t buying a simple physical object. You’re buying someone’s blood, sweat and tears. Most business sellers care a lot about who buys their business because they want the business to continue as a success. They want their employees to be happy and keep their jobs. They want the brand they started to continue in the community.

A business buyer can’t just write a check. You need to have an amicable, professional relationship with the seller. You need them to trust you with their business. You need them to train you when you first take over. You need them to negotiate with you.

This is why it’s so crucial to keep all of your appointments in the business buying process.

Consider these thoughts:

Showing up when you said you would demonstrates commitment and professionalism.

When you’re in the process of buying a business, keeping appointments demonstrates your level of commitment and professionalism to the seller, the brokers, your prospective future commercial landlord and the like. It shows that you value their time and take the deal seriously. Consistently showing up (and showing up on time) for meetings and appointments establishes a positive impression, making it more likely that everyone involved will view you as a reliable and trustworthy part of the process.

Keeping appointments helps you build trust.

Buying a business involves a lot of negotiation and collaboration. Keeping appointments allows you to build trust and rapport with the seller. Trust is vital in a successful business transaction. It can lead to more open communication, smoother negotiations and a greater likelihood of finding solutions when inevitable problems arise.

Respecting everyone’s schedule and time can keep the deal on track.

Time is often of the essence in the business buying process. Missing appointments can lead to delays in decision-making, which might allow competing buyers to swoop in with a better offer or the business’s situation to change unexpectedly. Appointments often need to be made by coordinating the schedules of (at the very least) you as the buyer, the seller, the seller’s broker and your broker. Rescheduling this many parties can take a lot of time – time you might not have if something changes. Staying on schedule ensures that you have the necessary information to make timely decisions, helping you seize opportunities before they slip away.

Keeping appointments might seem like a minor detail in the grand scheme of buying a business – but the impact of this simple act can’t be understated. From building trust to making informed decisions, every aspect of the business buying process is influenced by your ability to honor your commitments.

Are you thinking about buying a business and hadn’t considered how important it it to keep appointments? Would you like to know more about why your relationship with the seller is so crucial to success? Ask us! Leave any questions or comments and we would be happy to help.

Michael Monnot

Natural Disasters (Like Hurricanes) Shouldn’t Stop You From Buying A Business

Published August 21, 2023

Natural disasters shouldn’t stand in the way of your business dreams, they’re a part of life. If you want to live in a place that has a somewhat regular natural disaster risk (like hurricanes in Florida) you have a couple of ways you can think about this risk if your dream is to own your own business.

Deciding whether or not to buy a business should be made with a long-term perspective in mind. Remember that while natural disasters can cause immediate disruptions, they rarely dictate the long-term trajectory of a business. Also, buying a business that has survived and navigated through these types of challenges in the past showcases its resilience and ability to adapt to adversity.

There’s also the needs of a community that occur in the lead up to and after a disaster like a storm. Businesses that are well-prepared for emergencies (or those that provide essential goods and services during recovery) can experience heightened demand. As a prospective business owner, you can identify these emerging needs and position yourself to meet them.

After a natural disaster there can be a surge in construction, renovation, and related services. If you’re considering a business that caters to these industries (such as construction, disaster response, tree removal and the like) a post-disaster environment might present a unique chance to establish yourself in a market with increased demand.

Another potentially beneficial post-disaster situation? Some business owners might be more motivated to sell due to the challenges they’ve faced. This situation can lead to negotiation opportunities and potentially more favorable terms for you as a buyer. If you’re able to see beyond the immediate setbacks and have a solid plan for recovery, you could end up with a business at a better price.

Experiencing a natural disaster first hand can also teach you a lot. It provides invaluable insights into risk management and preparedness. When looking at businesses in a potentially disaster-prone area, you should consider what strategies you might use to safeguard the business and its operations against whatever mother nature throws your way.

Something like a hurricane can initially seem like an insurmountable obstacle to your business ownership dreams, but it should not deter you from pursuing your entrepreneurial goals. Resilience and adaptability really can turn adversity into opportunity – what defines success is your approach.

Have you always wanted to buy a business in a disaster-prone area but have concerns about what something like hurricane season might mean for you future business? Would you like to know more about businesses that do well in the aftermath of a hurricane? Ask us! Please leave any questions or comments and we would be happy to help.

Michael Monnot

The Power Of Practical Experience: Why Business Buyers Should Stay In Familiar Territory

Published August 7, 2023

Practical experience rarely gets the credit it deserves. Aspiring entrepreneurs looking to venture into the world of business ownership really need to follow the age-old adage “stick to what you know” – it can mean the difference between success and failure. Buying a business where you have practical experience offers a multitude of advantages.

Here’s a few:

Practical experience in a specific industry provides buyers with an invaluable understanding of its nuances, trends and challenges. Armed with this knowledge, buyers can make informed decisions and devise effective strategies to navigate the market successfully. This level of insight is often difficult to acquire without hands-on experience in the field.

Buying a business in a familiar domain allows a buyer to hit the ground running. They are already equipped with the skills, know-how and practical experience needed to run the business. This significantly shortens the learning curve and the saves time and resources that would otherwise be spent on learning an entirely new industry from scratch.

Buyers with practical experience are more likely to get approved for a transfer of the commercial lease when a business purchase doesn’t involve the associated real estate. A commercial landlord is going to be far more comfortable with a tenant who already knows what they’re doing.

A deep understanding of an industry also enables buyers to identify gaps and untapped opportunities. Leveraging their practical experience, they can innovate and introduce unique solutions or products to cater to specific market needs. This ability to innovate can give their new business a competitive edge and the opportunity for growth.

Purchasing a business in an industry where you have practical experience is a strategic move that offers you numerous benefits. Beyond the familiarity and knowledge of the industry, you walk in with a competitive advantage and a head start in business operations.

Have you always wanted to own your own business but didn’t think about choosing one in an industry you already know? Do you have questions about what businesses currently available would match with your practical experience? Ask us! Leave any questions or comments and we would be happy to help.

Michael Monnot

Unlocking New Opportunities: How Business Sellers Can Benefit From Immigrant Entrepreneurs

Posted in Sellers Articles, Visa/Immigration

Published July 27, 2023

As the global marketplace continues to expand, business sellers have a unique opportunity to tap into a large pool of motivated and ambitious buyers – immigrant entrepreneurs.

The E2 Visa and EB-5 Visa programs offer a pathway for foreign investors to obtain residency in the United States through entrepreneurship and business ownership. While not all small businesses will meet the qualifications for these visa programs, many do. Talk to your business broker about your business to see if it would work for someone looking to fulfill the requirements for an entrepreneur visa.

Utilizing the E2 and EB-5 Visa programs allows business sellers to widen their potential buyer pool significantly. Immigrant entrepreneurs seeking to relocate to the United States often prefer to invest in established businesses rather than starting from scratch. By considering visa applicants as potential buyers, sellers increase their chances of finding motivated individuals willing to invest in an existing business with a proven track record.

Another benefit to business sellers? Immigrant entrepreneurs participating in the E2 or EB-5 Visa programs are often more decisive when it comes to making a business purchase. As these individuals have specific visa requirements to fulfill, they are more likely to expedite the buying process to meet the necessary deadlines. This increased sense of urgency can speed up the sale and ensure a smoother transition for the seller and the business – even when taking into account delays that can happen because of the necessary bureaucracy when dealing with consulates and immigration officials.

Business sellers may find that immigrant entrepreneurs are also willing to offer more favorable terms during negotiations. For these individuals, securing a successful business is often tied to their immigration status, making them more willing to meet the seller’s asking price or agree to specific terms. This mutually beneficial arrangement can lead to a win-win situation for both parties involved.

For small business owners looking to retire or move on to other ventures, the E2 and EB-5 Visa programs offer an ideal solution to ensure the continuity of their business. By selling to an immigrant entrepreneur, sellers can preserve their business’s legacy and ensure that their hard work and dedication continue to flourish under new ownership.

How? Immigrant entrepreneurs bring with them a wealth of diverse perspectives, experiences, and skills. By selling their business to someone from a different cultural background, sellers open the door to fresh ideas, innovative strategies, and potentially new international markets. Embracing diversity can lead to growth opportunities and increased competitiveness for the business in the long run.

Business sellers stand to gain significant benefits by considering immigrant entrepreneurs as potential buyers for their small businesses. Beyond just a financial transaction, this presents an opportunity for sellers to leave a lasting impact on their business and contribute positively to the American entrepreneurial landscape. Ask your business broker if your business would qualify a visa for the global community of business buyers.

Are you thinking about selling your business and haven’t thought about the immigrant entrepreneur buyer pool? Would you like to know if your business would qualify for the E2 or EB-5 Visa programs? Ask us! Leave any questions or comments and we would be happy to help.

Michael Monnot

The First Impression – Preparing The Physical Location Of Your Business For Sale

Posted in Sellers Articles

Published July 20, 2023

First impressions matter. When it comes to selling your business, the optics and condition of your physical location will play a pivotal role in making a lasting impression on potential buyers. If you are serious about selling your business you need to ensure that your physical location looks its best.

Here are some thoughts on how to get it ready:

The first step in preparing your physical location is to ensure it is clean, well-maintained and aesthetically pleasing. Consider investing in a thorough deep cleaning of the premises – including floors, walls, windows and all equipment. Address any necessary repairs such as leaky faucets, broken lights or chipped paint. A well-kept location reflects positively on the overall state of your business. Why? If you’ve let aesthetic issues slide it can make buyers wonder what else you’ve ignored.

You might be a horizontal filer and know where everything is in the piles of junk littering the corners of your business – but when the time comes to sell you have to understand that a cluttered and disorganized space can be a major turn-off for potential buyers. Streamline your physical location by decluttering areas, removing unnecessary items and organizing storage spaces.

Take some time before your business is listed to create a comprehensive inventory of all assets and equipment included in the sale. Provide detailed information about their condition, age and any warranties or service agreements. This documentation gives buyers a clear understanding of the tangible assets they will acquire, and this mental inventory of what you’re selling can help you see what needs cleaning and/or maintenance before buyers come through.

Don’t forget that it’s not just the inside of the business that matters. Curb appeal can significantly impact a potential buyer’s perception of your business. Invest in exterior improvements like landscaping, fresh paint and well-maintained signage. A visually appealing exterior has the same effect that a well-maintained interior does – it tells buyers that you take good care of all aspects of your business.

Getting your business’s physical location ready for sale requires careful attention to detail and a focus on presenting the space in its best light. A clean, organized and visually appealing space enhances the overall perception of your business and its potential.

Have you considered selling your business and want advice on what you need to fix or replace before you list your business for sale? Do you have questions about what types of feedback buyers give after seeing physical locations for the first time? Ask us! Leave any questions or comments and we would be happy to help.

Michael Monnot

The True Measure Of Success: Emphasizing Cash Flow Over Aesthetics When Buying A Business

Published July 17, 2023

In the world of business sales, it’s all too common for prospective buyers to be swayed by how a business looks. The allure of aesthetically pleasing interiors, new equipment or fancy technology can blind them to the crucial factor that truly defines a business’s success: cash flow.

Cash flow is the lifeblood of any business. It represents the net amount of money moving in and out of a business, essentially reflecting its financial health. A small café with a newly renovated space or a manufacturing business that just invested in all new equipment might look fantastic from the outside – but without consistent, positive cash flow it risks becoming unsustainable. Cash flow ensures that operational expenses, employee salaries and other crucial financial obligations are met. Neglecting to focus on cash flow during the business purchase process can lead to severe repercussions down the road.

One of the main reasons buyers get lured by aesthetics is the misconception that a visually appealing business automatically translates into profitability. While aesthetics can play a role in attracting customers and enhancing brand image, they do not guarantee financial success. A beautiful storefront might draw initial interest, but if it doesn’t convert visitors into paying customers and generate sustainable revenue – it’s merely a façade.

On the other hand, a business that might not have the most captivating exterior or is full of older equipment could be backed by solid fundamentals and robust cash flow. This means the company is efficiently converting its sales into profit, reinvesting in growth and reducing debt – all of which contribute to long-term success.

Focusing on cash flow during the purchase process enables buyers to make informed decisions based on concrete financial data rather than deciding on a business because you like the paint colors and furniture. Conducting a thorough cash flow analysis helps determine whether the business has consistent revenue streams, assesses its ability to weather economic downturns and reveals potential areas for improvement. This is why it is far more important to examine the financial records than it is to do a physical walk-through of the location.

Savvy business buyers understand the importance of looking beyond surface-level charm and instead place emphasis on the financial stability of the business.

Are you looking at businesses to buy and want to know how to determine the cash flow a business is actually generating? Would you like to know more about how to see past a shiny exterior and make a decision based on financial health instead? Ask us! Leave any questions or comments here and we would be happy to help.

Michael Monnot

Selling Your Business? The Benefits Of Offering Seller Financing

Posted in Sellers Articles

Published July 13, 2023

As a small business seller you might find that attracting potential buyers can be a challenging task, especially in a competitive market. Offering seller financing can be a strategic move that sets your business apart from the rest.

Why should I offer seller financing?

Seller financing opens the door to a larger pool of prospective buyers. Many aspiring entrepreneurs, especially those with limited access to traditional bank loans or significant upfront capital, often seek businesses that offer financing. By providing this option, you can attract buyers who may otherwise be unable to make an all-cash purchase.

Offering seller financing also signals your confidence in the long-term viability and potential of your business. This vote of confidence can instill trust in buyers, making them more comfortable with their investment decision. Your willingness to finance a portion of the purchase price speaks volumes about the business’s stability and growth prospects.

Additionally, seller financing provides sellers with an advantage during negotiations. You can potentially command a higher selling price or better terms by offering financing. Buyers may be willing to pay a premium for the convenience of structured payments over time, which can work in your favor when closing the deal. Another bonus? As the buyer makes regular payments you receive consistent cash flow, which can be particularly beneficial if you plan to retire or invest in other ventures. This passive income can provide a safety net and financial stability after the business transfer.

Offering seller financing can be a savvy move for small business sellers seeking to attract buyers and secure a favorable deal. This arrangement not only expands the pool of potential buyers but also demonstrates your belief in the business’s potential and provides you with a steady income stream. Ultimately, embracing this flexible approach can empower the success of your business sale while fostering a positive and productive relationship with the new owner.

Are you thinking about selling your business and hadn’t considered offering seller financing? Would you like to know more about what a typical seller financed deal looks like? Ask us! Feel free to leave any questions or comments and we would be happy to help.

Michael Monnot

Business Buyer? How To Make Sense Of Add-Backs

Published July 10, 2023

Small businesses are complex, and this is especially true when trying to determine whether or not a business is listed for a fair price.

Taking a cursory glance at a tax return or a profit and loss statement can leave you scratching your head when comparing what you see with the listing price. How did the sellers get to that number?

The value of a business comes from it’s cash flow, meaning an operating business has value for a buyer because it generates money. This money isn’t all just cash, however, as an owner benefits from their business in a number of ways. For instance, many small business owners pay for personal expenses as part of their business to minimize their tax liability.

These owner benefits that are funneled through a business can make determining the value to a buyer a bit complicated. To help with clearing up any confusion there is a metric used to determine the value of a small business called Seller’s Discretionary Earnings, or SDE.

SDE simply means that you take anything personal that an owner gets from their business or anything that was a one-time expense (something a buyer wouldn’t have to repeat or worry about) – and you add that amount back into what the business makes so you can determine what the cash flow actually is.

What kinds of expenses get added back?

Discretionary expenses, like paying for a car or cell phone through the business. Think of these like perks that a buyer might not necessarily take, so that expense is added back in to show a buyer what the numbers look like without the added perks taken out.

Extraordinary expenses, like a very high salary paid to a family member who works in the business – a family member who would probably not be staying on once the business is sold. The amount of this salary that is above the industry norm would be added back into the business to normalize the payroll numbers. This way a new owner can see what the cash flow looks like with staff who only take a standard salary.

Non-Recurring expenses, like the cost of repairing water damage from a broken pipe. The new owner wouldn’t need to pay for something like this continually, so the one-time expense is added back in.

Non-Cash expenses, like depreciation. The tangible assets a business has, like the equipment or vehicles, will lose value over time. Although not the only factor in depreciation, you can think of this add-back as something related to what the business writes off for tax purposes.

Once all of these add-backs have been “added back”, you will be able to see the cash flow a business generates. This clearer picture will allow a prospective buyer to decide if a listing price is fair or not.

Still confused? Your business broker is there to help you untangle the parts of the small business world that are inherently complicated – like add-backs and listing prices. Talk to your broker if you think a listing price seems crazy or if you don’t agree with what was added back. They can make sense of the numbers – so you can make an informed choice about how much you would be willing to pay for a particular business.

Do you have more questions about add-backs? Would you like to know how sellers typically come up with listing prices? Ask us! Leave any questions or comments here and we would be happy to help.

Michael Monnot

Navigating the Storm: How Small Business Sellers Can Handle Difficult Buyer Questions

Posted in Sellers Articles

Published July 6, 2023

Selling your business might seem daunting, but it doesn’t have to be. With a bit of preparation you can face anything – even challenging questions from potential buyers.

Handling difficult questions with confidence and transparency is essential to build trust and ensure a successful sale.

Here are some valuable tips on how small business sellers can adeptly handle tough buyer questions:

Prepare, Prepare, Prepare

Anticipate potential difficult questions from buyers and prepare thorough answers in advance. Analyze the strengths and weaknesses of your business and be ready to address any concerns. A well-prepared response demonstrates your knowledge and commitment to the business, instilling confidence in the buyer.

Honesty & Transparency

Honesty is the best policy. If a buyer asks about any shortcomings or challenges your business faces, don’t shy away from discussing them openly. Presenting an accurate and transparent picture shows that you have nothing to hide and can help build credibility with the buyer. There is no such thing as a perfect business, so issues are always part of the deal.

Focus On Positives

While addressing difficult questions, don’t forget to highlight the positives of your business. Emphasize its strengths, achievements and unique selling points. Providing a balanced view that showcases the business’s potential can help offset concerns and showcase its true value.

Listen, Listen, Listen

Listen carefully to the buyer’s questions and concerns. Avoid interrupting or becoming defensive. Active listening allows you to understand the buyer’s perspective better, and it shows that you respect their opinions and considerations.

Ask Your Broker For Help

In complex situations the advice from your business broker can be immensely valuable. They can help you navigate and prepare for challenging questions, provide expert insights and ensure that your responses align with ethical standards.

Keep Your Composure

Dealing with difficult questions can be stressful, but it’s crucial to remain calm and composed throughout the process. Avoid getting emotional or defensive, as it can create an unfavorable impression. Remember that challenging questions are a natural part of any business transaction and handling them with professionalism is key.

Give Facts

Back up your answers with concrete data, such as financial records, sales figures and market research. Providing verifiable information adds credibility to your responses and reinforces the business’s performance and potential.

Talk About Growth

Incorporate a clear vision of future growth and expansion opportunities for the business. Buyers are often interested in a company’s potential for long-term success, so demonstrating a well-thought-out growth strategy can be a major selling point.

The point here is sellers should view difficult buyer questions as opportunities to showcase their business’s strengths. By preparing thoroughly, being transparent and handling inquiries with composure sellers can build trust, encourage interest and ultimately pave the way for a successful business sale. Remember, a positive and confident approach can go a long way in securing the right buyer for your small business.

Are you getting ready to sell your business and want to know what kinds of difficult questions a buyer might ask? Would you like to know more about navigating buyer questions during negotiations? Ask us! Please feel free to leave any questions or comments – we would be happy to help.

Michael Monnot

Is This Where You Want To Live? Thoughts For Business Buyers

Posted in Buyers Articles

Published July 3, 2023

The romance of owning your own business can sometimes give a new buyer blinders about where the business actually is and what that means for the day-to-day life of the business owner and their family.

It’s essential to evaluate the local area where the business is located to determine if it aligns with the lifestyle you’re looking for and it has the amenities you need. Assessing the local area helps ensure that you not only invest in a viable business but also find a community where you want to live and thrive.

An important note here. Don’t trust the outward appearance or your preconceived notions of what a place is like. Google it. Visit. Call schools. Watch YouTube videos. Join Facebook groups to hear what people are really saying. Read the local news. You get the idea.

Here’s some things to consider when looking at not only where you want to work – but where you want to live:

Evaluate the local area’s lifestyle and determine if it suits you, your family and your goals. Consider factors such as climate, proximity to amenities, recreational activities, cultural attractions and community values. Ensure that the local area offers the quality of life you desire, as you will be spending a significant amount of time in this community.

Research the cost of living in the local area to understand its affordability. Compare housing costs, taxes, transportation expense, and other living expenses with your budget and financial capabilities. Ensure that the cost of living is sustainable and aligns with your income potential from the business you plan to buy.

Evaluate the local area’s accessibility and infrastructure. Consider proximity to transportation hubs, major highways, airports and public transportation. Assess the quality of healthcare facilities, schools and other essential infrastructure that may impact your lifestyle and the business’s success.

Consider the safety and security of the local area. Research crime rates, the effectiveness of local law enforcement and any other relevant safety measures. A safe and secure environment is crucial for your personal well-being, the well-being of your family and the success of your business.

Evaluate the level of community engagement and support in the local area. Look for signs of a vibrant community that values local businesses and encourages entrepreneurship. A supportive community can provide networking opportunities, word-of-mouth marketing and a customer base that appreciates local establishments.

It could not be more important to thoroughly research the local area before you buy a business. Your life outside of your business needs consideration just like P&Ls and purchase contracts. Sit down with your family and figure out what everyone will need to be happy and then find a business in a place that will meet those goals.

Are you thinking about buying a business and hadn’t considered researching where you would actually live? Do you have questions about what businesses are currently for sale in an area you like? Ask us! Leave any questions or comments and we would be happy to help.

Michael Monnot