what you should know Archives - Page 13 of 60

Published February 21, 2022

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

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

Here’s the good news.

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

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

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

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

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

Michael Monnot

Selling Your Business? What To Do When You Hate The Buyer

Posted in Sellers Articles

Published February 17, 2022

Selling your business can be tough. There’s the to-do list of getting the business and your books in order, the extra workload of providing everything a buyer asks for during due diligence and the stress of negotiations. At the end of the transaction process you have to hand over the keys to a business that has been your blood, sweat and tears – usually to a buyer who is essentially a complete stranger.

This last bit of the process, the part where everything becomes final, can bring out an emotional response that sometimes surprises business sellers. Those big emotions can be exacerbated when you really, really don’t like the buyer. Sometimes the distaste for a buyer can even derail a deal.

Here’s how to keep that from happening:

Is the problem is the buyer, or you relinquishing control?

Business owners are a particular breed. They’re decisive, strong-willed and hard working. Most have a type-A personality. This is a great personality while you’re in charge of your business, but it can cause issues when the time has come to hand over the reins. In the vast majority of cases buyers are going to come into a business and make changes. Changes that maybe you as an owner would never make – and the relinquishing of all control over the fate of your business can cause a seller to balk. You need to understand that not only are changes likely to happen, you are probably going to have this kind of negative reaction. Remember that just because the choices this buyer wants to make don’t align with your own – they are likely still a good buyer, perfectly capable of purchasing and running your business. Sellers who aren’t prepared to let go will often project their strong emotions onto their buyer, deciding that it’s the buyer who’s the problem. If you know going into the process that you might feel this way you can be better prepared to keep your big emotions from impacting your deal.

Is the problem a clash of personalities?

The transaction process can be a long one, sometimes forcing together two people who really struggle to maintain a professional relationship. Maybe you and your buyer have differences of opinion on how the business should be run. Maybe you and your buyer fundamentally disagree about everything under the sun. Wherever the clash of personalities comes from, it can be really difficult to remain objective during meetings, negotiations and the like when your buyer is someone you would never engage with in any other situation. If this is the case for you, slow down and take a breath. Remember that point of this transaction isn’t for you and your buyer to be best friends or work together forever. The point is to get to a closing table and get a financial return on all of your investment of time, energy and money that you’ve put into your business. It can be really helpful in the high stress moments to keep your eye on the prize. This type of situation is also where your business broker can be instrumental in the success of the transaction. If you don’t like interacting with the buyer – don’t. Use your broker as a buffer between you for as many situations as possible.

It can be difficult to get a deal to closing when the parties involved aren’t fond of one another- but it’s not impossible. Think about where the animosity is coming from for you, remind yourself that this process doesn’t last forever and keep your broker in the middle.

Have you tried to sell a business and had personality issues with a buyer? Do you have questions about how a business broker can act as a buffer during the transaction process? Please fell free to share your experiences or ask questions. We would be happy to help.

Michael Monnot

Buying A Business? How To Make The Tough Decisions

Posted in Become a Business Owner, Business Broker Why & How, Buyers Articles

Published February 14, 2022

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

Here’s how:

Listen To Reason And Keep Your Emotions Out

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

Trust You Gut

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

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

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

Michael Monnot

Selling? Frustration And Staying The Course

Posted in Sellers Articles

Published February 10, 2022

The decision to sell your business is a big one. Is the timing right? Is the market in a place where I’m going to get the best possible return on all of my investment? Am I ready to sell?

Once you’ve crossed all of those mental hurdles and actually listed your business for sale it can be tempting to enter the same mode one does when you’ve put in a two-week-notice. It’s time to coast and then move on, right?

Not really. It can take a long time to sell a business. Typically something like 9-12 months. Longer if your business is something in a niche market.

We get that ideally you’d like your business to sell right away. Some businesses do sell on an accelerated timetable. Most don’t. If it takes a long time to find the right buyer, you’re in good company. Most sellers have to wait.

It can be frustrating when your business doesn’t immediately sell and it can be tempting to pull your business back off the market because of that frustration. Don’t do that. It takes the right buyer and the right moment – so you need patience.

Even if you’ve found a decent buyer the process itself can seem to drag on. Conference calls, meetings and sight visits scheduled and then rescheduled. Lists of questions to be answered. Due diligence periods. Extensions. Issues with commercial lease negotiations. Issues with licensing. It can seem never-ending – but it’s not. If you stay the course you will eventually reach that closing table.

If you feel like your frustration with the length of time it’s going to take to get you to a closing table is making you rethink selling at all – remember what the alternative is. Working at your business until you’re dead or locking the doors and walking away with nothing. If all that stands between you and a return on all the investment of time, energy and money you’ve put into your business is a process that can feel a little long – is it worth it to pull out? Definitely not.

Are you thinking about listing your business for sale and want to know the average time from listing to closing for your industry? Do you have questions about the length of time each phase of the process typically takes? Ask us! Leave any questions or comments and we would be happy to help.

Michael Monnot

www.InfinityBusinessBrokers.com

Michael Monnot

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

Your Social Media Persona – Why Business Buyers Need To Google Themselves

Published February 7, 2022

You’ve decided you’d like to buy a business, so you start a cursory business search. Listings are purposefully vague (see why here), so after you’ve signed the appropriate NDA you’re finally given the name and address of a potential business.

What’s the first thing you do? That’s easy. You Google it.

In the digital age, this is a natural first step. You want to know everything about this potential business – the good, the bad and the ugly. The internet will absolutely provide all three.

Have you thought about this? If you like a business and want to move forward with conference calls and meetings with the seller (the next step) – they find out who you are too.

Guess what they’re going to do? Google you.

A seller doesn’t just see their business as a building and some inventory. It’s their energy and money, their passion and time spent, it’s employees and customers they consider friends. Simply put, their business is their baby – and they aren’t likely to hand over their baby to someone they don’t feel is up to the job. They want to know that the person who takes the reins is capable, mentally stable and likely to succeed. Does the you that exists online look like that?

Does your online persona appear professional, or do you exist on the internet as someone who you would think twice about hiring as an employee?

It’s easy to get sucked in to the darker side of social media by going on long political rants, engaging in heated comment arguments, by posting funny memes, pictures and videos that even on a good day are problematic. Engaging with friends and strangers through a screen tends to remove the socially acceptable filters that you would normally have during in-person interactions.

While it might be fun to be able to do and say things you normally wouldn’t – it can be a huge problem when people who are deciding if they’d like a professional relationship with you (think business sellers, commercial landlords and the like) find the pseudo-anonymous social media you.

Here’s how to keep your online persona from derailing your chances of buying a business. Look yourself up, before anyone else does.

Throw your name into a search engine and see what comes up. Scroll through your social media feeds and have a look. Pretend you’re an employer researching a potential employee.

If the online you is less than professional, take some time and clean up your feeds. Delete posts, comments or accounts. Remove problematic profile pictures. Add back in professional accounts that show your accomplishments.

You wouldn’t show up to a job interview in dirty pajamas yelling about the news. Treat your online existence the same way.

Are you considering buying a business and haven’t considered how you look on the other side of a Google search? Do you have questions about when and how business sellers find out who you are? Would you like to know more about the process to buy a business? Ask us! Please leave any questions or comments, we would be happy to help.

Michael Monnot

Buyer Question: Why Would Someone Sell A Great Business?

Posted in Buyers Articles

Published January 31, 2022

The root of this question is a mistaken assumption that any business that someone is willing to sell is obviously a business on the brink of failure. People hear a business is for sale and they immediately conjure images of giant, yellow liquidation signs and lost jobs.

The truth is businesses large and small are bought and sold every day, and for the most part businesses on the market – especially those with the best chance of selling – aren’t just good businesses, they’re great. A business with great prospects to sell has solid numbers backed up by years of steady growth. It has a well-trained staff and a large customer base. It has established name recognition in the community and a well-implemented marketing strategy.

So why would anyone in their right mind sell a business like that?

Retirement.

No one lives forever, and successful businesses are bound to outlive their founders. A seller looking to retire is probably selling in order to fund their retirement plans.

Personal reasons.

Health or family issues sometimes mean that you can’t continue doing the job you are currently doing – either because you physically can’t or because your family obligations mean moving somewhere else. When a business owner has to leave town or take a protracted leave of absence, the best path is usually to sell the business.

A serial entrepreneur.

Some entrepreneurs buy a business and then build it to a pre-planned metric of some kind – be it size or profits, and then sell to move on to the next business project. Think of it like flipping a house, only they’re doing it with businesses instead.

Burn out.

Doing the same thing for extended periods of time can cause some business owners to burn out a bit, not on the idea of entrepreneurship but of the specific business they currently own. These sellers are looking to take the profits from this sale and move to another industry. They’re a bit like serial entrepreneurs – except the initial motivation for owning the business was different.

See a trend among these categories of sellers? Not one is motivated by the desire to get off a sinking ship. They all have different motives for getting the most out of the sale of their current business – and that motivation means they are working hard to make the business as strong as possible so they can get the best return on their investment of time, money and energy.

These types of sellers and the businesses they run are good news for business buyers. You can be assured that a business you buy from someone like this is in pretty good, if not great shape.

Have you thought about buying a business but wondered why anyone would sell? Would you like to know what businesses are currently on the market in your area? Please feel free to leave questions or comments, we’d be happy to help.

Michael Monnot

The Boomer Exit: Why Now Is The Time To Buy A Business

Published January 17, 2022

It’s all over the news. A mass exodus of employees from the workforce in the last 18 months. Sure, the pandemic was largely to blame – but many of those who left or lost jobs during the pandemic haven’t returned to those same jobs now that the economy has rebounded. While some of this exodus and failure to return has been blamed on stagnant wages and working conditions there’s a portion of this exodus that can be very important of you are considering buying a business.

That portion? Baby Boomers.

Many Baby Boomer business owners had plans to close up shop, sell their businesses and retire in the pre-recession era of 2007 – but the economic collapse in 2008 meant many of those business owners had to stay in the workforce and wait for a better time to cash out.

Guess what? Now is that time. The Baby Boomer generation isn’t getting any younger, and many are well past the age they had hoped to retire. With the economy in a good place any smart business owner on the threshold of retirement isn’t going to waste the opportunity to sell while the selling is good.

What does that mean for you as a business buyer? There are going to be a lot of really great businesses hitting the market. Long-term businesses that not only survived the recession – they were strong enough to weather the pandemic as well. Businesses with good reputations and staying power. Businesses with experienced ownership and a devoted clientele. The kinds of businesses any prospective buyer hopes to find. A bonus? There will be a lot of them.

This influx of businesses to the market can change the game in your favor. The large supply of listed businesses means we’ve shifted to a buyer’s market – one where you will have more choices and a bit more negotiating power.

What should you do if you think you might want to try and buy one of these great retiring-Boomer businesses? Don’t wait. Once the Boomer businesses have all changed hands we’re likely looking at a shift to a seller’s market and fewer choices in terms of long-standing businesses out there for sale. Talk to a qualified and experienced business broker today about your goals for business ownership, the capital you have to invest and the industries you think might work for you. They can help you find great businesses to consider so you can get on the path to your entrepreneurial dreams.

Have you recently considered business ownership and want to know what businesses are currently listed on the market? Do you have questions about the benefits of buying a long-standing business instead of a brand new one? Ask us! Leave any questions or comments and we would be happy to help.

Michael Monnot

Want To Become An Entrepreneur? Why The Trade Offs Are Worth It

Published January 10, 2022

So you think you want to buy a business and start off on a career as an entrepreneur?

Before you spend too much time daydreaming of becoming the next Branson or Zuckerberg you need to consider some very big trade-offs that your new life as a business owner will require.

Controlling Your Time Versus The 8 Hour Workday:

You may have hated your 9 to 5 job, but working for someone else offers you the opportunity to have something many entrepreneurs don’t – time off. If you are buying a business so you can have more control of your time, the good news is you will. Your work schedule will absolutely be up to you. The caveat here is that work schedule is going to have to cover more hours than your traditional job did, so you need to be mentally prepared to work nights, weekends and take working vacations (if you are able to take vacations at all).

The Need To Reinvest Versus A Standard Paycheck:

One of the best ways to grow a small business is to reinvest your money in every way you can. What this means from a trade-off standpoint is you may end up making far more owning your own business than you ever did working for someone else, but that money really belongs back in the business if you want to be successful. You should also be prepared to go without paying yourself in the very beginning because you will need working capital available for things like inventory and payroll when you first take over.

Your New Priorities Versus Punching A Clock:

Working a traditional job means that you have to punch a clock, but the time when you aren’t at work belongs to you – and you can use that time for your family, your friends and your hobbies. When you own your own business, that business becomes your baby, and as such it will require you to make sacrifices in terms of the time you were once able to dedicate to the non-working parts of your life. The good news is you won’t have to ask your boss and hope that you can get the day off for your daughter’s ballet recital, you will be able to accommodate those all-important things in your non-working life. You will just have to find a way to balance the needs of your business and the priorities in your life.

Should these trade-offs scare you away from buying a business? Absolutely not! Owning your own business means that every expenditure of time, energy and money comes right back to you instead of going to someone else. The rewards of flexibility and control over your own destiny make any trade-offs worth it in the end. You just need to be aware that these trade-offs will be necessary so you can be prepared for business ownership.

Do you have questions about the trade-offs business ownership requires? Would you like to know what the schedule looks like for a business owner in the industry you are considering? Please feel free to ask questions or post comments here. We would be happy to help you on your journey to entrepreneurship.

Michael Monnot

www.InfinityBusinessBrokers.com

Have The Right Help? Why An Experienced Broker Won’t Show You Every Business In Town

Posted in Become a Business Owner, Business Broker Why & How, Buyers Articles

Published December 27, 2021

You’ve just entered the business market with the intent of buying yourself a small business, and you are shopping around for a business broker to help you.

There are many factors that separate the good brokers from the bad – but one of the big ones is experience.

Rookie brokers make lots of mistakes, and if you’ve hitched yourself to their wagon for your transaction then you get to live those mistakes right along with them.

As experienced brokers, it can be very frustrating to try and work with these newbies. It becomes increasingly difficult when they are trying their hand at the business transaction process alone and without any guidance (or if they have an experienced broker they work for who has given them little to no training).

One of the major ways this lack of experience shows through? Too many showings.

What do we mean by too many showings?

If you’ve ever bought a house, you know that going to see a plethora of homes is part of the game – especially in a fast-moving market where a house might have multiple offers the first day it lists. This is not, however, how business sales works – so newbie business brokers (especially those fresh out of the real estate industry) will sometimes try to play the same game by attempting to line up a litany of businesses for their clients to see. It doesn’t work.

First of all, when you are buying a business, you are buying an existing business – one that is open and running with staff and customers. The importance of confidentiality means that the staff and customers can’t know the business is for sale. Therefore, a business seller can’t have a parade of semi-curious buyers waltzing through the front door on a regular basis – it would make confidentiality impossible.

If done properly, the process to go see/tour a business is much more extensive:

It starts by having a conversation with your business broker about what you are looking for in a business and what your goals are. You will also talk about how much capital you have to invest in a business, and your broker will then take that information and find you a number of listings to look at that will be within your budget and meet your entrepreneurial goals. Out of that initial batch of potential businesses, you will typically be asked to narrow down the choices to just a few – think two or three – that peak your interest. You will then sign non-disclosure agreements for those listings in order to receive the marketing package, complete with the name and physical location of the business. After thoroughly reviewing the marketing materials for your few choices, you will probably prefer one business over the others. Your broker will help you form a list of additional questions you have for the sellers, and you will be given an opportunity to ask those questions during a conference call including the sellers, the brokers involved and you. After all of those steps have passed and you are still very interested in the business, your broker will set up a walk-through of the physical location of the business either before or after business hours when the staff and customers are gone.

What you can’t do in this process is decide that you want to spend a few days touring businesses and line up 5, 10 or more “showings” with your broker. No experienced broker worth their salt is going to waste their seller’s time by trying to coordinate a visit when the buyer hasn’t even bothered to narrow down their choices or ask any good questions. It’s just not going to happen. They’re also not going to put the confidentiality of the business at risk by having too many unfamiliar people coming to the business to meet with the seller during business hours as the staff will know something is up.

If you ask for this type of multi-tour approach and your broker says “Sure!”, beware that you probably have a rookie on your hands. The experienced brokers on the other side of the table aren’t going to play along, and you will be stuck seeing only the businesses listed by fellow rookie brokers.

If you are serious about buying, get yourself an experienced broker and go through the proper steps. You will end up only seeing the businesses that are right for you instead of wasting your own time looking at businesses that don’t fit the bill.

Are you a first-time buyer with more questions about the business buying process? Have you had an experience with a rookie broker that you’d like to share? Please feel free to leave comments or questions and we would be happy to help.

Michael Monnot

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

www.InfinityBusinessBrokers.com

Buying? How To See Past A Rough First Impression

Posted in Buyers Articles

Published December 13, 2021

We all know that first impressions are of the utmost importance. It’s why business people wear suits and why car dealerships keep the cars on their lots shiny and clean.

Business buyers who come to the business marketplace looking for an immaculate, shiny business are in for some serious disappointment.

Why?

Businesses (small businesses in particular) can initially seem like ugly monsters. At a cursory first glance a business that has recently listed might seem outrageously overpriced, have seemingly unintelligible financial records and look like an unorganized mess teetering on the brink of collapse. These terrible first impressions, however, mean that buyers regularly pass over perfectly good businesses just because they aren’t perfect.

Why do they look so bad?

Small business ownership is a tough gig. Owners who are very capable of holding everything together and helping the business grow may not be so great at keeping their books organized or at explaining why they listed the business for the price they did. As a buyer, you want a strong business, so overlooking businesses because the current owners focus more on the strength and growth of the business instead of focusing on neatly curated paperwork would be a very big mistake.

Another major first impression hurdle is the aesthetics – peeling paint, outdated decor, dirty floors – but again the point here is you want a business with an owner focused on the bones of the business itself, not someone who only worried that the place stayed immaculate.

How do I see past the ugliness?

Get some professional help. Business brokers look at ugly (but wonderful) businesses every day, and they can help you as a buyer navigate the shoddy paperwork and stained carpet to see what you really would be buying underneath. When you buy a business, you aren’t really buying furnishings and a sign anyway – you are buying cash flow – so having someone to help you determine what the cash flow looks like for the businesses you find interesting can go a long way towards helping you make a decision.

As you start your business search try to remember that in the business-for-sale world, it’s not the first impression that counts.

Have you been searching for a business but haven’t found one that doesn’t come across as a complete train wreck? Would you like advice about how to see past the first impression to find great businesses? Please ask us! Leave comments or questions and we would be happy to help.

Michael Monnot

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