Don’t Be Underfunded: A Big Business Buyer Mistake

You’ve decided to buy a business, congratulations! Entrepreneurship can be one of the most rewarding journeys you can take in life. It can also, however, be your worst nightmare.

 

The difference between success and a nightmare scenario can come down to just two, very basic things – money and reality.

 

 

Let’s look at money first.

 

Guess what? You have to have money if you want to buy a business.

 

Of course you need money to buy a business! This may seem like a silly thing to say, but a fair number of the people who come into the business market are working with little to no capital at all and expecting someone else to pick up the rest. These prospective buyers are relying on funding sources like family members, bank loans, Small Business Administration (SBA) loans and seller financing – but the fact of the matter is the small business world just doesn’t work that way.

 

Family Money

You may have had a conversation or two with your well-off uncle or with your parents at Christmas about helping you get the money together to invest in a business, but we almost never see one of these deals actually go through. Once you start the serious conversations about what dollar amounts you’ll be needing, how long it would realistically take you to pay them back – the checks never get written. If you are depending on a family member footing the bill for your business purchase – you should probably think again.

 

Bank Loans

Even pre-recession it was tough to get a traditional lending institution like a bank to fund the purchase of a small business, but in the wake of all of that financial mess it can be nearly impossible to get a bank to approve a small business loan – even though the economy has improved substantially. 

 

SBA Loans

Yes, it is possible to get funding through the SBA to purchase a small business, but there are some very big hoops that need to be jumped through in order for this to happen. First, you as the buyer need to be approved, and if you don’t have a fair amount of capital to invest already – your chances of that approval are going to be slim to none. If you do manage to get approved, then the business itself will have to be vetted and approved – and like any lending institution post-recession, the SBA is going to be very conservative with how much they are going to lend, who they will lend it to and what businesses will even qualify for that buyer.

 

Seller Financing

Yes, seller financing is very common – but what most first-time buyers don’t understand is that these deals usually mean the buyer is going to pay at least half, if not quite a bit more, of the purchase price up front. No seller is going to take a tiny down payment and hand you the keys, it involves way too much risk on their part.

 

Ok, now let’s look at reality. You have to buy a business you can afford.

 

Again, this might sound silly, but business buyers are usually caught up in the hopes that one of the capital-raising schemes we just mentioned will pan out and therefore look at businesses that are ridiculously out of reach. Think coming to the table with $30,000 and looking at businesses in the $500,000 range. Again – no family member is going to write you a check that big, banks will laugh, the SBA will never approve you or the business in that situation and sellers definitely won’t take you seriously.

 

Even if you could get, say, a family member to loan you the money to buy a business that far out of your current reach – you will  be setting yourself up for failure. What new business buyers leave out of the equation is working capital – that is the money you need to both get the doors open under your ownership and then keep them open long enough to get the business turning a profit long enough to pay back your backers.

 

Just like renting a new apartment or buying a new house, there will be costs at closing that need to be paid – think deposits on a new commercial lease, deposits on utilities, first (and probably last) month’s rent, payroll and inventory starting the moment you take over, transfer fees for licensing, inspection fees – the list goes on and on. 

 

If you only have a small amount of capital to invest in a business, that’s totally acceptable and doesn’t preclude you from business ownership! If you start small, with a $15,000-$20,000 business, you can grow that business into something larger. It just takes some time and some hard work. Many entrepreneurs start small and grow their businesses to a size they initially wanted, or some sell the business after a time for a profit and move up the business ladder that way. Either way, you will have a far better chance at success if you stay within your means. 

 

Don’t make the mistake of starting out underfunded or ignoring reality!

 

Are you a business buyer who doesn’t have a lot of capital to invest? Are you curious about what’s out there in your price range? Ask us! Leave any 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

www.InfinityBusinessBrokers.com

 

 

 

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Buying A Seasonal Business? Understanding And Surviving The Off-Season

Here in Southwest Florida, we have a very unique business climate, but our lessons about seasonality in the business market translate to just about anywhere that sees a seasonal fluctuation.

 

Our area is known as a fantastic place to retire and also as a family-friendly vacation spot, so throughout the year our local businesses see a fairly regular fluctuation in the amount of business they do month to month. Our beautiful wintertime weather means that from October to April our population swells as retirees from the northern states come down to ride out the bad weather in our sunshine.

 

You can blatantly see this fluctuation if you visit at different times of the year. For instance, going to dinner on a Saturday night during “season” (October to April) means a 2-3 hour wait, go to the same restaurant in July and you will likely be one of only two tables in the whole place.

 

 

What does this mean if you are thinking of buying a business in this area (or in any area with seasonal fluctuation)?

 

It means you will need to be a bit open-minded when looking at the numbers, and compare multiple years of numbers instead of looking at only the last several months. In a place without much seasonal fluctuation the most recent numbers may be sufficient, but in our area or any like it – recent numbers won’t tell you the whole story. For instance, if you are looking at buying a business April, then the numbers from January to April will not be a reflection of the next handful of months in the summer. Likewise, if you are considering a business in September, abysmal numbers here might mean the business is doing just fine – you are only looking at the very slow summer months.

 

How do you figure out how to navigate these types of fluctuations? Find a knowledgeable and experienced local business broker who can help you to understand the seasonal fluctuations and can assist you with determining if a business is dealing with a seasonal slump or is in real trouble overall.

 

Another major seasonal business consideration? Keeping some cash on hand. If you are buying a business in Southwest Florida in the spring, then you had better find out how much capital the sellers have needed in previous years to weather the sparse summer and save some money for getting yourself through the lean times. Once business picks up and then explodes in the fall, you will also need to know what staffing considerations you will have to address (like bringing on new staff or bringing back the former owner’s seasonal workers).

 

Your business broker will be invaluable in helping you ask these pivotal questions of the sellers while you are in the negotiating process, and will also ensure you have a proper training period with the former owners post-sale to cover all of the bases.

 

Do you have more questions about how to look at the numbers of seasonal businesses? Would you like to know what types of seasonal businesses are for sale in this area? Ask us! Please feel free to leave any comments or questions here and we will be happy to help.

 

 

 

Michael Monnot

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

www.InfinityBusinessBrokers.com

 

 

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Need Capital? Business Buyers & Seller Financing

Seller financing can make small business deals possible, as it allows buyers (who don’t have all the capital necessary or who are unable to raise funds through more traditional lending sources) the opportunity to buy a great business.

 

 

 

Our economy is in much better shape than it was during the recession, and as such the business market has changed. In the midst of the recession nearly all deals came with a fair share of seller financing as traditional lending was essentially nonexistent and any buyers in the market weren’t flush with cash. This was great news for buyers as they could consider businesses that would have otherwise been out of their range.

 

Now that the economy has dramatically improved, the tides of seller financing have turned.

 

First and foremost, the improved economy means there are more cash buyers coming to the table that will directly compete with those who need a seller financed deal. In terms of recently completed deals, seller financing still holds as a close second to cash, but now buyers need to come with at least 50% down if they hope to compete with other buyers and get a deal to closing. There are, of course, exceptions to this rule as every business deal is different – but the days of financing more than half of a transaction are probably gone for good.

 

It is also easier now than it was just a few years ago to get more traditional bank financing or a SBA (Small Business Administration) loan, but many financial institutions are still gun-shy about risky small business deals as the memories of the recession are still relatively fresh in everyone’s mind.

 

What if I can’t get a bank loan and the business that I’m interested in doesn’t qualify for a SBA loan? How can I get seller financing?

 

If you are interested in seller financing, let your business broker know as it will help in narrowing your purchase options. Your broker can look for business sellers who have indicated they would be open to a deal that includes some seller financing. Next, you need to be prepared to offer at least 50%, if not more, of the purchase price up front if you want any seller to take your seriously. No one is going to finance 100% of the deal or anything close to it.

 

Do you have more questions about financing options for the purchase of a small business? Would you like to know what the terms look like for a typical seller financed deal? Contact us today or leave us a comment or question here. We would be happy to help!

 

 

 

Michael Monnot

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

www.InfinityBusinessBrokers.com

 

 

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Business Broker 101: Making The Right Choice

Our industry sometimes gets a bad rap, but as professionals who deal with other business brokers on a daily basis – we get it.

 

Like any industry, there are great brokers who excel at their job, and then there are those who are not so great. This article is meant as a peek into the business broker world and a quick education of what business brokers (should) do with the hope of helping business buyers and sellers choose a professional who will be a help – not a hindrance.

 

 

For starters, what is a business broker? A business broker is someone who assists business buyers and business sellers with the business transaction process. They (depending on the state) are licensed and insured to do this type of work, and although the business world is very different than the real estate world – they are often licensed as real estate brokers.

 

You can liken what a broker does to the buying and selling of homes, but with some MAJOR differences. First, business brokers aren’t typically selling property. They are selling existing businesses, and most businesses don’t own the property where they are located – they lease it from someone else. Second, the marketing and sales process for a business is very different from the same process for a house. For example, business sales are inherently much more complex and the for-sale status of a business must be kept in the strictest confidentiality (businesses for sale are perceived to be businesses on the verge of failure, which is rarely the case – and without confidentiality the whole staff might quit, clients might cancel contracts, etc.).

 

A business broker is hired by a business seller to list their business on the business market, and also hired by business buyers to help them find and then purchase a business. The commission paid to a broker (or brokers) involved is typically paid as a percentage of the final sale price by the seller.

 

Not all business buyers who come into the market end up buying a business, in fact the rate is probably something like 10% of those who inquire about businesses actually end up buying. For this reason, many buyers find it difficult to get the attention of brokers and sellers until they are forthcoming about their financial information and are ready to make serious offers.

 

Not all businesses that get listed on the market sell, this is also just a fact of the industry. The average rate most brokers hold is somewhere between 20-25% of businesses they list actually sell. If that rate sounds abysmal to you, we agree. Ours is typically closer to 60%, and most good brokers will be in that range. Why don’t businesses sell? Why isn’t the rate higher?

 

There are a litany of reasons why businesses don’t sell. Some businesses are priced way too high right out of the gate, and as such won’t sell because they are far outside the range of what the market will allow. In some cases the sellers refuse to take anything but a full-price, all-cash offer, which almost never happens. Some brokers take listings just to load up on potential calls, but do little to nothing to actually sell all of the businesses they list. We see “marketing packages” that consist of three poorly photocopied pages of old tax returns and nothing else. We deal with brokers (and sometimes sellers too) who rarely, if ever, respond to requests for information. In other cases, a business may not sell because of the time constraints of the sale on the seller’s side. If you have a very niche business, you will need to wait for a very niche buyer. Even if you don’t have a niche business, patience is necessary as most businesses take somewhere between 9 to 12 months to get from listing to closing.

 

Now that you have an idea of how the business of buying and selling businesses works, how do you pick a good broker instead of a bad one? Ask questions. Lots of them. A good broker will have no problem supplying you with answers.

 

If you are a seller, ask to see what a typical marketing package looks like. If you’re a buyer, see how quickly your requests for information and phone calls are returned. Ask any broker what percentage of their clients come from referrals (a high percentage here is a great sign). When you listen to answers to your questions, is the broker being honest with you, or are they just telling you what you want to hear? How important is confidentiality to this broker? How many closings do they typically have a year? Does this broker have their own shop, or are they a part of a much bigger company (and if part of a big company, are the numbers of businesses closed and number of listings just theirs, or are they including the corporate numbers)? Are they properly licensed and insured to do this type of work? Is this person only a business broker, or is this a side job that they don’t focus on?

 

The help of a good business broker can mean the difference between success and failure in the business market, so ask questions. Once you’ve found a good broker you can work with – listen to their advice. A good (or great) broker is there to help you, and by helping you and others like you, help the small business community they depend on.

 

Are you a seller who wants to help your business sell with the right help? Are you a buyer who’s had trouble getting attention from anyone in the business? Do you have more questions about the business buying and selling process? Contact us today or leave us a question or comment. We would be happy to help.

 

 

 

Michael Monnot

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

www.InfinityBusinessBrokers.com

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You Have Enough Time: Due Diligence For Business Buyers

 

 

If you are looking for businesses to buy, then you are probably frustrated by the paltry amount of information you are initially offered when a business peaks your interest. You sign a non-disclosure agreement and you may get nothing more than a few years of P&L statements and a highly abbreviated tax return.

 

How are you supposed to decide if a business is right for you if you can’t find anything out about the business you want to buy?

 

Due diligence.

 

Due diligence is the period of time after an initial offer is accepted where you as a buyer get to go through the business with a fine-toothed comb. Business sales are conducted this way because unlike other purchases – like a home or car – information about an operating business is often proprietary and needs to be kept strictly confidential in order to protect the business itself throughout the sales process (more information about why confidentiality is important can be found here). During due diligence you will be provided with basic business documentation and will also be given a chance to request other documentation you deem necessary.

 

How long do I have once due diligence starts?

 

The due diligence period is typically two weeks – plenty of time if you are using your time wisely. Two weeks is also plenty of time because due diligence doesn’t officially begin until AFTER all of your requested documentation is provided.

 

Two weeks? Are you serious? That hardly seems like enough time.

 

It absolutely is. By the time you get to the due diligence period, you will have had conference calls with the seller, face-to-face meetings, cursory information and initial questions already answered – the due diligence period is strictly a deep dive. Two weeks will be more than enough, especially if (as often happens) you are given a good chunk of the information you requested and it takes a week or two to get the rest. That will lengthen your due diligence period considerably and give you ample opportunity to decide if the business is right for you.

 

If, during your due diligence period, you decide that you don’t want to buy the business – you can walk away. This is another reason due diligence is relatively short. This period pulls a business off the market, so holding a business this way for an unnecessary length of time isn’t fair to the seller or to other buyers in the market who are also interested.

 

The message here is trying to force a seller to agree to a long due diligence period isn’t going to help you decide if a business is right for you. Using your time wisely during a two week due diligence period absolutely is. Ask your business broker about your concerns, and use their guidance during your due diligence period to get the most out of your time.

 

Are you considering buying a business but still don’t think two weeks is enough time for a proper due diligence? Would you like to know what types of special circumstances would lead to a longer due diligence period? 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

www.InfinityBusinessBrokers.com

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Why Your Real Estate Agent Can’t Help You Buy A Business

If you are thinking about buying a business, your first step should involve looking for someone to help you find the right business for you. The right professional for the job is called a business broker – someone who specializes in helping people buy and sell existing businesses.

 

 

In our industry there are a lot of fly-by-night impostors who think that dabbling in the business broker profession is something that can be done on the side to make some extra money. Nothing could be farther from the truth. 

 

The business market and businesses themselves are very complex, and each business and each business transaction is unique. Helping people buy and sell businesses isn’t something you can do without the knowledge, experience and focus necessary to successfully reach a closing table. We’ll put it this way, you wouldn’t trust a general practitioner to do reconstructive plastic surgery on your face, you would use a plastic surgeon instead. Why? They are a specialist. Business brokers are specialists too.

 

The fly-by-night impostors come in all forms. We’ve come across lawyers, doctors and accountants who have tried to pass themselves off as someone who could help someone buy a business – but by far the worst offenders are real estate agents.

 

A real estate agent is a specialist in the buying and selling of homes and property, so many in that profession think they can seamlessly transition into helping people buy and sell businesses. Again, nothing could be farther from the truth. A home and a business are completely different animals, the business market operates by different rules and the set of skills needed for a successful closing on a house are completely different than those needed to reach the closing table for a business.

 

Many real estate agents attempt to dabble in the realm of business brokers by offering to help a client who already bought a house find a business. These agents call us and try to work out some kind of deal where they will represent their buyer clients in the business transaction. Whenever this happens, any business broker worth their salt will refuse to work with a real estate agent in this way.

 

Why? Why can’t I use the real estate agent I already know and trust?

 

You can’t because that real estate agent can’t help you buy a business. They have absolutely no idea what they are doing. As business brokers we would never try to sell you a car or manufacturing equipment for the same reason – we would have no idea what we were doing in that industry.

 

What should happen instead? Your real estate agent refers you to a qualified and experienced business broker, and they get a referral fee for the introduction. They essentially get paid for doing nothing more than exchanging phone numbers, so for the agent it’s a great deal. You as a buyer then get the proper help you need to successfully buy a business. Everybody wins.

 

The point here is you need to be suspicious of anyone who is not a full-time business broker who wants to help you buy a business. Save yourself the headache and get the right help from the start.  

 

Are you thinking about buying a business and want to know more about the difference between a business broker and a real estate agent? Would you like to know more about the process of buying a business? Ask us! Please leave us 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

www.InfinityBusinessBrokers.com

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If It Ain’t Broke – Important Advice For Business Buyers

 

The old adage you have to spend money to make money is absolutely true. Business owners have to invest in things like marketing and improvements in order to keep a business thriving and growing.

 

There is a far more important adage, however, that a new business owner needs to abide by.

 

That adage? If it ain’t broke, don’t fix it.

 

What do we mean by that?

 

When you envisioned your life as a business owner, you likely saw your business as something uniquely your own. Your own designs, ideas, concepts.

 

If you’ve decided to take the entrepreneurial plunge by buying an existing business, you have made a very smart choice because you don’t have to start from the ground up – you get a fully operational business with a proven location on day one. This removes the issues a start-up business would bring – like finding a location, build-outs, buying equipment and furnishings, getting permits, hiring a staff, creating operating procedures, painting, designing a sign – the list is enormous.

 

Getting your hands on an existing business means that while all of that initial work is finished, all of those initial decisions have been made by someone else – the previous owner. This can cause a business buyer to have issues with the aesthetic and/or operational aspects of their new business because it doesn’t exactly match the business they envisioned.

 

As a new business owner, you need to consider this part of buying a business. There will be some things that you don’t like about your new business and some things that you personally would have done differently.

 

Maybe you hate the paint colors. Maybe you think the ordering system is wildly archaic. Maybe you think the layout needs to be completely changed.

 

If you are having these thoughts about your new business – STOP. You bought an existing, operating business that generates cash flow. Every business is inherently complicated, so it would be very difficult – if not impossible – to ascertain what parts of the business work and what parts you can change on day one.

 

You might hate the paint colors, but maybe the rustic charm of the decor is what keeps the regulars coming back. You might not like the ordering system, but it is based on the vendors your business needs to survive. You might hate the layout, but it is the layout that creates the efficiency that keeps the business alive.

 

New business owners who are hung up on their own vision of what their business should be walk in on day one and immediately embark on a very expensive major renovation, rewrite the operating procedures and change all of the vendors and staff without taking the time to figure out why the business is successful. This always, always ends in complete disaster.

 

We aren’t saying you can’t change things. What we are saying is patience is the name of the game. Give yourself a few months to decide what works and what doesn’t, why the previous owner did things the way they did. Once you really understand the business as a whole, you can make small changes to slowly guide the business toward your vision.

 

Don’t fix what isn’t broken!

 

Are you thinking about buying a business, but haven’t seen anything that matches the vision you have for business ownership? Would you like to know more about how buying a business can be a better choice than starting from scratch? Please leave us any comments or questions 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

www.InfinityBusinessBrokers.com

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Start Here! How To Begin Your Business Search

 

You’ve decided to break out on your own, to become your own boss.

 

It’s time for the business search stage of your journey to entrepreneurship.

 

Here’s how to start:

 

Think about what industry you would like to work in.

Do some general research in the fields where you have some practical experience. Having a background in the field you are entering will be critical to your success as a new business owner. Practical experience can be work experience, education or time spent on a particular type of work. For instance, if you are someone who has spent the last few decades restoring old cars for fun – an automotive business might work for you. Experience in one industry might also translate well to another, so keep an open mind when you first start your search. You might be surprised by the businesses that meet your goals for business ownership. Once you have an industry or two in mind, do a cursory search of the business listings within those industries to get a general idea of what’s available. You can start your search by clicking here.

 

Hire a business broker.

Business brokers act as intermediaries in a business transaction. They can talk to you about your goals for business ownership, your background and the funds you have available – then make suggestions for the businesses currently on the market that fit within those criteria. As we said before, keep an open mind when it comes to your initial business search – there are many, many options out there. It is also important to use a business broker because they have access to business search sites that you may not be able to use on your own, they know of businesses that are not yet on the market and they can market you as a buyer to the business sellers they know.

 

Try to find out as much as you can about your desired industry.

In every sector, there are positives and negatives to business ownership.  It is important during the business search process to try and discover what these positives and negatives are. Check industry organization websites, articles written by those who already work in the industry, blogs created by industry insiders – you get the idea.

 

No matter what industry you end up in, it is important to think about your goals when beginning your business search.  You and your business broker should work together to determine what businesses might be right for you – then you can follow up by finding out everything you can about that industry.  By starting your search this way, you are sure to end up with a business you love.

 

Have you always thought about owning your own business, but don’t know what type of industry would be right for you? Do you have questions about the business search process? Please feel free to leave 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

www.InfinityBusinessBrokers.com

 

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The Reality Of A Dream – What Business Would Be Right For You?

Can your dream business actually make you happy?

 

Daydreams are fun, but daydreams about business ownership can turn into a nightmare when first-time business buyers try to force an unrealistic dream into reality.

 

What’s the most common daydream turned nightmare? Food service. Sure, you may have always thought it would be fun to run your own cafe or sit at the end of your own bar – but if you’ve ever watched the plethora of reality TV shows about restaurants or bars on the brink of failure – you may have noticed a common theme. The food service businesses in the most trouble were bought by people who had no idea what they were doing because they had never worked a day in the industry.

 

 

This is where it is important to confront your daydream with reality. Would you know what you were doing if you took over a bar tomorrow? What are you hoping to get from owning a cafe?

 

More financial freedom? A break from the 9 to 5 work schedule? The ability to love what you do for work? Probably, but here’s what you may not have considered.

 

Financial freedom is only going to come from a good deal of success in any industry, and that good deal of success is going to more than likely mean (at least initially) long hours for you as the owner. You will probably have to be at your bar or restaurant every day, and the hours will be long and likely run late into the night. These long hours and inconsistent (if any) days off can make even the most dedicated new owner burn out, meaning you will once again hate what you do for work.

 

How can you avoid having your dream turn into a nightmare? Be realistic and focus on your goals instead.

 

If you’ve never worked a single day in the industry you’re considering, then it’s probably a bad idea to buy into that industry. Business ownership has a sharp learning curve on it’s own, you don’t want to turn that learning curve into a cliff by trying an industry where you have no practical experience to fall back on.

 

You should choose a business based on the goals you have for owning a business. Do you need nights and weekends off because spending time with your kids is important? What would your ideal work schedule be? How much money will you need to make in order to sustain your lifestyle? What is a realistic amount of money you could invest in a business right now? Are you looking at owning a business for the long-haul or are you thinking more along the lines of serial entrepreneurship? These types of questions are going to very quickly narrow your focus to just those businesses that will fit with the life you’d like to have.

 

We aren’t saying no one should by a food service business. Perhaps the life you’d like to have totally matches with the life of a bar owner – what we are saying it’s incredibly important to figure that out long before you write a big check and someone hands you the keys.

 

Need help figuring out what businesses would fit with your entrepreneurial goals? Ask an experienced and qualified business broker. A discussion about what you’d like to get out of owning your own business is an all-important first step.

 

Have you always wanted to buy your own bar or restaurant, but now aren’t sure if that’s the right business for you? Would you like to know what types of businesses would fit your goals? Please ask us! Leave any questions or comments, we would be happy to help.

 

 

 

 

Michael Monnot

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

www.InfinityBusinessBrokers.com

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3 Reasons Why A Business Buyer Needs Their Own Broker

 

In the world of business transactions, it is the seller’s side that pays the commission of the broker (or brokers) involved – so why would a buyer need their own relationship with a broker since they don’t have a business to list?

 

There are many reasons why it’s a good idea to have a relationship with your own broker, here’s a few:

 

Someone Who Actually Knows You

 

Entering a transaction with only the seller’s broker (who you haven’t spent any time talking to other than signing an NDA on a specific listing) means that the broker probably knows little to nothing about your goals, your situation and what you are hoping to get out of business ownership. If a broker doesn’t know any of these things about you, how can they properly advise you on a business? The short answer is they can’t. You need to have a relationship with a broker before you are sitting at a negotiating table, hopefully long before. A good broker is going to ask you questions, lots of them. They should find out how much capital you have available, what your past work and educational experiences have been, your goals for business ownership, what you hope your work day will look like, what your dream business would be, how long you hope to own any business you purchase, what industries you are qualified to work in, what industries interest you – just to name a few. Buying a business is a huge decision, and having an expert involved who already knows all of these details about you as a buyer will be instrumental in successfully finding you the right business to buy.

 

A Buffer And A Negotiator

 

You are about to write a very big check to a complete stranger so you can buy their business – a business that has been their life and probably their baby for some time. Both sides will have serious emotional and financial attachments (you to your money and the seller to the business) so it can be tough to get through negotiations without one side or both ending up offended (and killing the deal). A business brokers acts as a buffer between the two sides, allowing forward progress while keeping the two sides away from each other. This role as a buffer during negotiations can be pivotal to the success or failure of a transaction.

 

Help For A New Owner

If you’ve never owned a business before (and even if you have) the lease, property managers, laws, red tape, licensing, permitting, etc. can be daunting and overwhelming if you don’t have help. Having your own broker ensures that you both know what needs to be done and have assistance with making it happen.

 

What if you already know the broker involved? Can you make a transaction happen with only one broker?

 

Yes. If your broker has a listing that fits your goals, then it can definitely be appropriate to only have one intermediary. The key to success in this situation is the broker needs to know both you and the seller.

 

If you are on the road to business ownership, don’t try to go it alone. Having an experienced and knowledgeable broker who knows you can make the transaction process go more smoothly and will greatly improve your chances of finding the right business for you.

 

Are you new in the market and are wondering what you should look for in a buyer’s broker? Have you already tried to shop the market on your own and have a story to share with other prospective buyers? Please feel free to leave comments or questions below, we would be happy to help.

 

 

 

Michael Monnot

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

www.InfinityBusinessBrokers.com

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Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

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




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