what you should know Archives - Page 16 of 60

Published July 19, 2021

When you’re thinking about buying a business, you’re probably focused on where potential businesses are, on the numbers they generate, on the industries you’re considering – but have you considered your eventual exit from your future business? You should.

Here’s why:

The end-game of your business ownership journey should greatly inform the attributes of the business you buy.

Here’s a few examples:

If you’re game plan is to be a serial entrepreneur – who buys businesses with lots of room for growth with the end-goal of selling those businesses to buy another – then you probably shouldn’t buy a well-established and successful business for a high premium. It doesn’t make sense to flip something when there’s probably not much room for profit. Smaller businesses, faltering businesses with poor management or businesses without any current marketing plan would be for you.

Perhaps you are someone looking for a long term investment, a business you might own for 15 or 20 years. The well-established and successful business mentioned in the last example might be the one for you. If staying around is the plan, a business that has already proven it’s staying power would be a good choice. Look for businesses that are community fixtures, have great numbers and a strong location.

If you’re buying a business with an eye on passing that business down to your kids when you retire – then you really should consider the strengths, weaknesses and passions of any successor before you try to force them to take over a business that you alone thought was a good idea. If you’re an accountant, and your adult daughter’s passion is to someday be a professional baker – then buying an accounting firm for her to take over is probably a colossal mistake. You should either buy a business you both could love, or buy your accounting firm with the exit strategy of selling that firm when the time is right so you can help your daughter buy her own bakery.

The message here is you really need to consider what the end game is if you want to have a successful business ownership experience. Talk to your business broker about what you are hoping to get out of business ownership so your exit strategy can inform your buying choices.

Are you thinking about buying a business and never considered the exit strategy? Does one of the buying scenarios above resonate with your long term goals? Talk to us today and get yourself on the road to successful business ownership.

Michael Monnot

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

Buying A Business? Step 3: Make Some Choices

Want to read “Buying A Business? Step 1: What’s Right For You?” (click here!)

Published July 12, 2021

If you think you might be ready to take the entrepreneurial leap, but don’t have a genius start-up idea you can work on in your garage – you don’t need one! Existing businesses get bought and sold everyday, some 500,000+ a year (a number that is on the rise as baby boomer owners enter retirement and list their businesses for sale). These existing businesses can instantly turn you into an entrepreneur, no start-up required.

If you’ve always wanted to be your own boss and think buying an existing business might be for you – the process is fairly straightforward.

Here’s step three: It’s time to make some choices.

Don’t panic. You don’t have to sign your life away – and you don’t even have to make a final decision at this stage. Once you’ve seen the initial packages for the businesses you found in step two you’ll have some time to consider what they’ve sent you. Using the information you have you can decide if you’d like to proceed with exploring a business or two that you are still very interested in.

This is the point where conference calls between you and the business seller can be extremely helpful. Talking with the current owner can give you insights into the things that don’t necessarily end up on paper. A caveat here. You must prepare questions – good questions – ahead of time. Your business broker will (and should) help you with coming up with great questions to ask. You shouldn’t go into a conference call with a seller blind and ask basic questions that had already been answered by the package you were given. This colossal waste of time for everyone involved might turn a seller off and they could refuse to proceed any further with you. Remember that a business is someone’s baby, so they aren’t likely to hand over the keys to someone who they feel isn’t up to the job.

After your initial call with a seller you can ask for more information, but you aren’t likely to get much more than you already have unless there’s an offer on the table. Making an initial offer can seem daunting – but here’s an important point to remember. Absolutely no money changes hands until after you’ve been given ample time to research the business during a process called due diligence. Due diligence starts after an offer has been initially agreed upon by both parties, and a typical due diligence period is a couple of weeks – plenty of time to review things like contracts, tax returns, inventory lists and the like. Once due diligence is over you can buy the business for the price in your accepted offer, renegotiate the price based on things you found or walk away completely.

During the due diligence process the business is pulled from the market temporarily so you don’t have to worry about other buyers swooping in and buying the business from under you. There can be, however, better offers or backup offers on a business you are considering – so you’ll need to go into the process ready to make a move and decide in a timely fashion whether or not this business is for you.

Don’t forget that you can absolutely walk away at any time if you begin to feel like you wish you hadn’t made your initial offer – so don’t be afraid of this very important step.

Ready to take the third step towards business ownership? Do you have questions about what an initial offer looks like? Would you like to know more about the due diligence process? Ask us! Please leave us questions and comments, we would be happy to help.

Want to read step two? Click here for “Buying A Business? Step 2: Search For Businesses”

Michael Monnot

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

Buying A Business? Step 2: Search For Businesses

Want to read “Buying A Business? Step 1: What’s Right For You?” (click here!)

Published July 5, 2021

If you’ve always wanted to be your own boss and think buying an existing business might be for you – the process is fairly straightforward.

Here’s step two: Find businesses that fit with the goals you established in step one.

Once you know what you’re looking for, the search itself becomes relatively easy. You can peruse business listings on your own (click here to do that now) and your business broker will also find you listings to consider that might fit with what you’re looking for.

Here’s a very important part of your search. You must, must, must give your broker feedback on the listings they’ve sent you. If you love a business, tell them. If you hate one, tell them that too. It’s not going to hurt your broker’s feelings if you don’t love every single listing they share with you. The only way a broker can curate a list of businesses that will get you to your end goal of business ownership is if they know what you want. You should not only give a simple thumbs up or down to a potential business – tell them why as well. Did you like the location but weren’t a fan of the current inventory? Does a business you really don’t like have a couple of features that you would love to see in your future business? The more specific and detailed you can be, the better. Nothing is more counterproductive during a business search than flipping through 10 listings and just saying “no thanks” with no feedback.

Once you’ve found a few listings that seem intriguing you can then sign the nondisclosure agreements (NDAs) for those business listings so you can find out exactly where and what they are. If you’re unfamiliar with this type of NDA – here’s the short version. They’re a major part of the business purchase process because an existing business needs its for-sale status to remain confidential. The only people who should know the name and location of a business for sale are the seller, the business brokers involved and any prospective buyers who have signed the NDA. That’s it. This need-to-know list will protect the business from catastrophes like an entire staff quitting en-masse when they find out the business is for sale.

A note here. You can’t change the NDA. It’s an industry standard document. If you refuse to sign it, no one is going to work with you. Period. What you provide for the NDA (your legal name, physical address) pales in comparison to the proprietary and confidential information you will be privy to once it’s signed – so it’s a more than fair arrangement.

Once the NDA is signed you will be sent some cursory information. Typically that information will include the name and physical location of the business, some cursory financial information and details about things like staff/vehicles/equipment. We need to put a caveat on listing packages here. Like any industry there are great business brokers, terrible business brokers and everything in between. When you first start receiving listing packages it will become blatantly obvious who is doing their job. Some brokers put together comprehensive packages that give you a great understanding of the business you are considering. Some brokers send you two over-copied and blurry images of tax returns. Unfortunately there isn’t much you can do when you are given terrible cursory information other than ask for more. Your broker will be able to help you decipher cryptic tax returns and the like, and will also (hopefully) be able to get more information from the seller’s broker. Know going in that a terrible listing package is not a reflection of the business itself. It’s a reflection of the broker who listed it.

Ready to take the second step towards business ownership? Do you have questions about the NDA? Would you like to see an example of the comprehensive business packages we create for our listings? Ask us! Please leave us questions and comments, we would be happy to help.

Want to read “Buying A Business? Step 3: Make Some Choices” (click here!)

Michael Monnot

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

Buying A Business? Step 1: What’s Right For You?

Want to read step two? Click here for “Buying A Business? Step 2: Search For Businesses”

Published June 21, 2021

If you’ve always wanted to be your own boss and think buying an existing business might be for you – the process is fairly straightforward.

Here’s step one: Figure out what type of business would be right for you.

This one might seem obvious, but lots of buyers come to the market without a clear idea of what they want out of owning a business – and then what type of business is going to meet that set of goals. They either have their heart set on a business that will probably meet none of their goals or they don’t really know yet what they’re looking for. Both of these scenarios are going to be counterproductive. In the first, you end up with a nightmare business you hate. In the second scenario you never buy a business at all.

Don’t start the process like that. Instead, start by figuring out what your goals are.

This one is probably the most important. Sometimes people want to own their own business because they feel like becoming their own boss will solve the problems created by working for someone else. Here’s the thing – business ownership is just as tough as the job you want to leave, it’s just tough for different reasons. Being your own boss isn’t (and shouldn’t be) your only goal. Instead, think about why the idea of business ownership appeals to you. Do you hate your current job because you wish you had more schedule flexibility? Do you wish you could change career paths more frequently because you work hard but get bored easily? Are you hoping to have more time at home to spend with your kids? Would you like to work really hard and make as much money as possible in the shortest amount of time? Are you using the move to entrepreneurship as a way to move to a new area or country? These types of introspective questions will help you come up with well defined goals for business ownership. With goals in hand, you can then look at businesses that will meet those goals – saving yourself a ton of time and effort chasing a daydream business that would end up making you miserable.

Next, pick something you already know.

If the only thing you’ve done for the last 20 years is work on cars, but you’ve always dreamed about owning your own restaurant – buying a huge waterfront restaurant is probably going to be a colossal mistake. You really need to enter the world of business ownership in an industry where you have some practical experience. The leap to entrepreneurship carries with it a steep learning curve – you absolutely do not want to add learning a whole new industry to that mix.

Third, be open minded about the types of businesses that might work for you when you begin your search.

This one can be tough for people because it can be hard to let go of a daydream – even when in reality that daydream would more than likely end up a nightmare. We regularly talk people out of buying certain types of businesses because the goal is successful business ownership – not stressful failure. Talk to an experienced and qualified business broker about what your goals are for business ownership and about your education and experience. You might be surprised by the types of businesses and industries where your goals and experience would help you thrive.

Ready to take the first step towards business ownership? Do you have questions about what types of businesses would fit your goals and experience? Ask us! Please leave us questions and comments, we would be happy to help.

Want to read “Buying A Business? Step 3: Make Some Choices” (click here!)

Michael Monnot

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

Your Commercial Lease And Landlord: 3 Ways To Ensure Success

Posted in Buyers Articles

Published June 14, 2021

You’re all set to buy a business. You have the perfect business picked out. It meets all of your goals for business ownership, it’s within your budget for asking price and working capital, you’ve filed all of the appropriate licensing paperwork, finalized the negotiations over the purchase contract – you’re done, right?

Not quite. One major hurdle business buyers must overcome is one they don’t often consider. The lease and the landlord.

In almost every small business transaction, it is only the business itself that changes hands. Most small businesses exist within commercial rental property, and as such the business buying process includes the negotiation of a new lease.

Why can’t you just take over the current lease? If you rent an apartment, you sign a new lease whether or not the person who lived there before you stayed for the entire length of the lease they signed – with very rare exceptions the same goes for commercial leases. A landlord wants a new contract when they get a new tenant, so you need to be prepared for this sometimes difficult part of the business buying process.

Here’s three tips to keep you from hitting a leasing snag:

You will need to prove your experience and finances.

No landlord in their right mind is going to sign a multi-year, large financial contract with someone who has no possible hope of keeping the business afloat. You will need to put together a resume of some sort that shows you have the practical experience to succeed in your new business venture. You will also have to provide the landlord with proof of financial capacity as well. Landlords won’t give a lease to someone who is using every last cent to their name on the purchase price alone. They want to know you’ve set aside enough working capital to be able to pay your rent even if the business isn’t turning a profit for you right out of the gate.

You aren’t going to get an amazing deal on rent.

If the current business owner is paying $5000 a month in rent, there is no way the landlord is going to lease the same space for the same business for $500 a month. You will likely pay the exact same rent, or even a bit more. The landlord has no financial incentive to cut you a huge break, because they can just refuse to lease to you and continue to get the current lease rate from the seller. Be prepared to pay what you need to pay. You will also need to come up with security deposits, perhaps first and last month’s rent, lease fees, etc.

Expect the landlord (and their property manager) to be exceedingly difficult.

It’s not fair, but it’s a fact of life in small business transactions. Many landlords and the property managers who sometimes represent them are almost impossible to work with. Looking at a business transaction from their side can be helpful. They have no financial incentive to gamble on a new person to take over a space in their property and pay them rent when they already have a perfectly capable tenant in place. Their perspective aside, the fact of the matter is most landlords and property mangers don’t understand the business transaction process, and often cause major issues in the final days before closing. If you are mentally prepared for this road block you will be able to stay calm. You should also keep your business broker in the middle. No good can come of an angry phone call to a landlord from a business buyer. Your broker has probably dealt with this landlord in particular, or someone just like them, dozens and dozens of times. Leave the lease negotiations in their capable hands and any issues will likely be resolved.

Dealing with landlords can be excruciating, and this is often compounded by the fact that the lease can only be negotiated after many of the other parts of the business buying process are complete. Stay calm, come prepared with a realistic mindset and proof that you will be a great tenant – then let your business broker do the rest.

Are you considering buying a business and never considered the commercial lease? Are you thinking about buying a business in an industry where you don’t have any practical experience? Ask us! We will be happy to help.

Michael Monnot

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

Want To Stand Out? 3 Ways Buyers Can Get Noticed

Published June 7, 2021

If you’ve spent any time in the business-for-sale marketplace as a buyer, you may have discovered that it can be incredibly difficult to get anyone (sellers, brokers and the like) to take you seriously. This can be especially frustrating if you are a very serious buyer with money to spend, so what gives?

You can thank the non-serious, time-wasting tire-kickers who came before you.

The nature of the market means something like 90% of buyers who enter the marketplace never buy anything. This can understandably cause those on the other side of the transaction (think sellers and brokers) to resist expending much energy with a new buyer until they’re sure it’s not a complete and total waste of their time.

If you’re in the 10% of actual, serious buyers how do you distinguish yourself from the window shoppers around you?

Be willing to discuss finances:

Sure, no one likes discussions about their personal finances, and it can be really tough to divulge how much money you have to a complete stranger – but if that stranger is your new broker, this is critically important to do. If your broker doesn’t know how much money you are working with, then they can’t show you businesses that would be appropriate, nor will they be able to effectively negotiate on your behalf.

Be honest:

It is incredibly important to be honest, especially about your financial situation if you really want to get a deal done. Fudging or out-and-out lying about the capital you will have available will always come out, especially when the time comes to write a check that you can’t. Other things you should keep off the dishonesty list? Your past experience. A good broker will always try to talk you out of buying a business you know nothing about. Starting in a new venture is hard enough, you absolutely don’t want to add the steep learning curve of a brand new industry to the mix.

Avoid procrastinating:

Nothing is more infuriating for a buyer than a seller who takes forever to respond to requests for information, but it goes both ways. You will absolutely be given an appropriate amount of time for due diligence, and within that time frame you should be able to make a decision as to whether or not this business is for you. Continually asking for extensions and prolonging closings for no good reason can very quickly unravel a deal.

If you are really ready to buy a business and want to be taken seriously – be forthcoming with your capital, stay honest and make decisions in a timely fashion. It will quickly separate you from the never-going-to-buy-crowd.

Are you a buyer who’s been frustrated by the lack of attention you get in the marketplace? Are you ready to make offers and want to stand out from the crowd? Contact us! Leave us a question or comment here, and we will be happy to help.

Michael Monnot

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

Good/Bad? What Was The Pandemic Like For The Small Business Market?

Posted in Buyers Articles, Sellers Articles

Published May 31, 2021

The pandemic was bad, but how bad was it for the small business market?

Well, it depends. It’s been an unprecedented year to say the least. Some businesses couldn’t weather the storm and had to close their doors. Those businesses made all the headlines, but outside of the spotlight many small businesses survived. Sure, some of the businesses who were able to remain open were forced to lay off workers, make cuts and the like – but small businesses and the small business market (perhaps surprisingly) never stopped.

Business owners who were able to pivot – say a restaurant who switched to take out and delivery options, or a manufacturer who was able to switch to producing hand sanitizer – these businesses did really well. So did businesses based in the new “essential” category. The ingenuity of the small and growing business showed itself in the creativity that allowed businesses to not only remain open – but thrive.

On the other side, people forced from their jobs and relegated to staring at the walls of their homes were also forced to evaluate what they wanted out of life. For a lot of them, what they want is to be their own boss – and as such calls from potential buyers never stopped.

What does the last year of the small business market mean for you?

The good news is if your business weathered the last year and you’re thinking about selling – there are absolutely buyers in the market. The pandemic-driven future entrepreneurs are looking to buy, and the fact that your business remained open is an enormous selling point. Talk to a business broker today about what the market currently looks like for a business like yours and what businesses in your industry are currently selling for.

If you fall into that category of budding entrepreneurs who are going to take the hard lessons from the last year and turn them into a more fulfilling life – there is never a better time than now. Sure, there are multi-million dollar businesses on the market – but there are also lots of very affordable business opportunities out there. Have a conversation with an experienced and qualified business broker about your goals for ownership, the capital you have available and the practical experience you have. You might be surprised, not only with the number of business opportunities available to you but also by what types of businesses will check all the boxes for your goals.

Were you thinking about selling your business before the spring of 2020 and now think the time might be right to restart those plans? Are you considering making the jump to business ownership now that the pandemic is winding down? Do you have questions about the small business market in 2021? Ask us! Leave any 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

How Important Is Preparation When Buying A Business?

Published May 24, 2021

The short answer? Preparation is everything.

Think about buying a house. A home buyer doesn’t just drive up to the first house they see with a for sale sign in the yard and write a check. A home buyer researches the local neighborhoods, school districts and property taxes. They hire a real estate agent to help them with their search. They look at various options online and then schedule times to see homes. They also talk to banks so they can get pre-approved for a mortgage.

The process of buying a business is much more complex than the process of buying a house, yet business buyers come to the market overwhelmingly unprepared every day. They want to be driven around town by a business broker to scope out the local business market with no real thought about what they want or need from a business. If you are serious about buying a business, this is not the path to take. Instead, start with these 3 steps:

1. Have a conversation with an experienced and qualified business broker about your goals for business ownership. For instance, if the reason you are considering buying your own business is so you can spend more time with your kids, then buying a large bar that will require your presence for 12 hours a day 7 days a week is probably not a good choice. A good broker will be able to match your goals with the right types of businesses.

2. Talk to your broker about your work history and experience. Your choice of industry will need to take into account what kind of practical experience you have. If you’ve spent the last 20 years as an auto mechanic, then buying a large salon is probably not the best option. Business ownership comes with a steep learning curve so you don’t want to add learning a new industry to the list.

3. With your broker’s help, figure out what you can afford. If you’ve got $80,000 of capital to invest – you have no business looking at $80,000 businesses. It may take you several months to begin turning a profit, and during those months you will still need to pay your lease, payroll, pay for new inventory – not to mention the extra cash you will need during the closing process for things like licensing and attorney fees. Your business broker will be able to tell you what your budget for the purchase of a business should be based on how much money you have. An important note here – don’t lie to your broker about the amount of capital you actually have. Your deal will absolutely fall apart when the time comes to provide proof of finances.

Once you know what you can afford, know what industries would match with your practical experience and have an idea of what kinds of businesses would meet your goals – you can start the business search process, the right way.

Have you thought about buying a business but don’t know where to start? Do you have more questions about the business buying process? Ask us! Leave any questions or comments here and we would be happy to help.

Michael Monnot

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

Why You Definitely Don’t Need A Degree To Own Your Own Business

Published May 17, 2021

How much education do you need to own your own business?

Ask a college recruiter that question and you’ll likely end up with a MBA degree. Ask a successful business owner and they’ll tell you that nothing trumps practical experience and hard work. So who’s right?

The entrepreneur. Some of the most successful business owners out there, like Richard Branson of the Virgin Group, don’t have a formal education. They had a vision that they fought for and built into a success.

Our society places a high value on higher education – as it probably should – but this has another, perhaps unintended consequence of convincing everyone that without a degree you can’t be successful. That’s just not true, especially in the small business world. You definitely don’t need a degree to own a business.

Small business ownership does require a few things. Grit and determination. Passion. The ability to hustle and never give up. The insight to see failures as lessons that can be learned from.

None of these things require a college degree because entrepreneurship is a mindset – not a major.

Should business schools even exist? Sure, but attending and graduation from a business program is not a prerequisite for business ownership.

You know what else isn’t required to be an entrepreneur? Starting from scratch. You don’t need a garage and a brilliant idea, you just need a little capital and the desire to own your own business. There are always existing businesses on the market, from a litany of industries. Industries where you have practical experience that you can translate into business ownership success. Buying an existing business also removes a lot of the guesswork. You know that the idea, the location, the operating procedures, the products and services – they all work because the business is open and turning good numbers.

If you are apprehensive about buying or starting a business because you feel like you are unqualified – don’t. Talk to a business broker today about your goals for business ownership, about what industries might fit those goals and what businesses are currently on the market. You might be pleasantly surprised that your years of practical experience can turn you into a business owner today.

Have you always wanted to own your own business but don’t think you’re qualified? Would you like to know what industries would fit with your career goals? Please leave any questions or comments and we would be happy to help.

Michael Monnot

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

Patience With The Deal And Patience With Yourself – The Successful Business Seller

Posted in Sellers Articles

Published May 13, 2021

Selling your business is a monumental decision, one that carries with it some very big (and often very unexpected) emotions. While these emotions are completely normal, they can (if allowed to do so) completely derail a great business sale – so here’s how to keep that from happening:

Be patient with the deal.

It can take months and months to find the right buyer, and then once you do the transaction itself takes time. Lots and lots of time. It can be easy to get lost in your post-sale-life daydreams and want to push the deal to go faster – but that isn’t a good idea. Your buyer is about to write a very big check, and they will absolutely be nervous. That nervous buyer is going to want to go over your books multiple times, rework the contract, renegotiate with the commercial landlord, have their attorney and CPA look at everything, rework the contract again – it’s a process that can be frustratingly long for a seller. Here’s the thing. You can’t force this process to move at the speed you’re ready for. It needs to go at the buyer’s pace because you don’t want their nerves to be coupled with feeling rushed – causing a perfectly good deal to fall apart. Patience with the process and patience with your buyer will serve you far better than trying to ram the deal through.

Be patient with yourself.

Your business, even if you’re burned out and can’t wait to sell, is your baby. There’s a lot of blood, sweat and tears invested. You’re excited for the post-sale future, but it can be surprisingly hard to hand over those keys when the time comes. Be ready for this. Buyers are going to comb through all of the work you’ve ever done and look for problems, then they will try to leverage those problems for a better price. While a completely normal part of the business transaction process, it can be very difficult for a seller to keep from feeling personally insulted. Remember that you absolutely must stay objective, no matter how hard it is. If you were the buyer in this situation, you would be doing the same things. Mentally preparing to have both things happen – your work criticized and then giving your business to a stranger – will help you step back from the brink of killing your own deal when those big emotions show up.

Get ready for dealing with the emotions that go hand in hand with such a huge life change. Take a breath, be patient with the transaction process and give yourself some grace. There are more exciting things ahead!

Have you considered selling your business, but aren’t sure you could walk away? Do you have questions about how long the transaction process takes for a business like yours? Ask us! Leave any questions or comments and we would be happy to help.

Michael Monnot

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