Selling Your Business? Focus On How Buyers Buy

Posted in Sellers Articles

Published September 3, 2018

If you own a business, you know how to sell.

 

You’ve been getting your products and services to clients for years. You know how to focus on the customer experience to better understand what your customer base wants. When the time comes to sell, however, many business owners think they can get to a closing table by merely supplying a recent P&L and some old tax returns. Would you buy a business with nothing more than that? Probably not.

 

If you are selling your business, you need to do what you’ve done all along – focus on the customer experience, only now your customer is a buyer. You need to think about what motivates a buyer to choose one business over another.

 

 

Here’s how:

 

Get with the times.

 

Buyers are typically younger and more tech-savvy than their business seller counterparts, so your business needs to speak to buyers who are looking for technology as an answer to operational needs. Make sure your business has a well-designed and properly attended website and social media presence. Upgrade your POS systems. Use digital marketing avenues to generate new clientele. Using technology to upgrade your business tells buyers you’re focused on the future. 

 

Be organized.

 

You have to have your books in order. Buyers want to see proof of the numbers you’re claiming and they want that proof now. Legible financials will always beat out a box of crumpled receipts, so streamline and keep up with your paperwork. Streamlined books speak volumes about how you handle the business as whole – an organized business owner is much more appealing than a disorganized mess. 

 

Fix what needs it.

 

You know that freezer with the broken handle you’ve been putting up with for years? Fix it. Leaving even minor, but obvious, aesthetic issues shows a lack of attention to detail – and you’d better believe that there are other businesses like yours that run a tighter ship. A buyer will obviously choose a business in better physical shape than one that isn’t – so get fixing.

 

Don’t procrastinate.

 

We know it can be overwhelming when your business is on the market, but you can’t let requests from buyers languish – otherwise those buyers will move on. You need to stay on top of buyer requests, even if you feel like they don’t need what they’ve asked for. Procrastination tells them you aren’t that serious about selling, so they’ll move on.

 

Buyers have a litany of choices in today’s market, so the competition for business sellers is tough. You need to put a plan in place that will help your business stand out from the crowd. By focusing on the buyer experience your business will be more appealing to buyers in the market, so start making these changes today.

 

Have you thought about selling your business but hadn’t considered the buyer experince? Do you have more questions about how buyers choose between businesses? Ask us! Please leave any questions or comments here and we would be happy to help.

 

 

 

Michael Monnot

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

www.InfinityBusinessBrokers.com

 

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Selling On Your Own? Prepare For Disaster

Posted in Business Broker Why & How, Sellers Articles

Published August 30, 2018

You are an accomplished business owner, it’s just that the time has come to move on to the next chapter of your life – so you’ve decided to sell.

 

Why pay a business broker a commission to do something as simple as sell your business, right?

 

Well, you can try – but it’s probably going to end as an unmitigated disaster. A disaster that could spell the death of your business, forcing you to lock the doors and walk away with nothing. Here’s why:

 

 

In order to sell your business, you need to find a buyer. In order to find that buyer, you need to get the word out that you’d like to sell. So you snap a few pictures of the front of your store, clearly showing the address and post the listing for your business online. You might even go as far as to put a “for sale” sign up. The consequences of this marketing campaign? Your staff immediately knows you are looking to sell, and mistakenly assumes that it means the business is in deep financial trouble. Your entire staff quits, en masse, looking for more stable work – taking all of their regular customers with them. Your customers see your “for sale” sign and make the same assumption that your staff did – that you’re in trouble. They see the demise of your business as inevitable and so they take their business somewhere with a future.

 

If you manage to find a buyer without your staff and customers finding out – say a word-of-mouth, friend-of-a-friend kind of thing, you might think you’re out of the woods. This buyer seems great, so you start divulging all kinds of proprietary information because you believe they will be taking the helm in the near future. It turns out, however, that this buyer doesn’t have the cash they initially led you to believe they had, and they want you to seller finance an enormous part of the purchase price. Worse yet, you find out they are the brother-in-law of your biggest competitor, and because you never realized you should have asked them to sign non-disclosure agreements you have no legal recourse when they take your “secret sauce” to your competition.

 

Ok, so you’ve managed to avoid the blunders we’ve discussed so far. You have a buyer who doesn’t work for your competition and your staff is still in the dark. You’ve never written up a contract for a business sale, but you’ve written up contracts for other things so it should be easy, right? Your plan post-sale was to set up another shop that sells something different – but in the same area because this is where you and your family live. Unbeknownst to you, you misunderstood a non-compete clause and just signed a purchase contract that means you can’t open your new shop within 100 miles of where you currently live.

 

Selling your business doesn’t have to be a disaster or a nightmare. You may not want to pay someone for their help, but you have to think about the cost of a commission this way. Even if you don’t end up in one of the horrible situations we’ve discussed here, selling a business is a full time job. That’s why an entire industry of professional business brokers exists. You need to be paying attention to your business in the very critical time when your current numbers mean getting the most from the sale. You don’t want your business to be suffering when buyers are looking – the amount of money you stand to lose could be enormous. Get the right help.

 

A qualified and experienced business broker knows how to confidentially market your business so your staff and customers stay in the dark. They know how to spot unqualified buyers and make everyone signs the appropriate non-disclosure forms so you and your business are protected. They’ve helped write hundreds of purchase contracts, and they know when something isn’t right. They’re your buffer during negotiations and your sounding board to help with the decisions you need to make. And if you’ve ever tried to sell a business without one, you know they’re worth their weight in gold.

 

Get the most from your business sale without your business or your sanity falling apart. Hire the right help.

 

Are you thinking about selling your business and now think it might not be a good idea to go it alone? Do you have more questions about what business brokers bring to the table? 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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Helping Your Sale By Selling Your Business – And You

Posted in Sellers Articles

Published August 23, 2018

You’ve completed all of the steps. You found a good business broker, prepared your last few years of tax returns and recent P&L statements. Now what? Sit back and watch the magic happen?

 

Well, sort of. Your business broker is going to find buyers who will initially be interested based on the preliminary documents you’ve provided – but what many business sellers fail to consider is buyers will be looking at the current owner of the business as a bellwether of their future at the helm.

 

That buyer sitting across the negotiating table from you is considering buying your life, so it is critically important that you get a positive message across.

 

What do we mean by that?

 

 

Remember that first impressions really matter. If you show up for your first meeting with a potential buyer 20 minutes late and with a disorganized stack of papers jammed in a briefcase – thought number one on their minds will be how big of a disaster the rest of the business is if this is the first impression you are willing to make. You need to act as though this was a first date, of sorts. You need to be on time because it speaks volumes about how you respect other people’s time. You need to be organized because that shows you are organized in all aspects of your business.

 

Remember that a bad attitude can absolutely sink a perfectly good sale. Even if you have solid numbers, you behaving like a jerk will only tell buyers that you don’t care enough about your business to put personal issues aside. A seller with a terrible attitude or a seller who acts like time spent with a buyer is a waste of their energy will be hard pressed to get to a closing table. You don’t have to like a buyer, but you do need to keep your attitude in check to show you are business-minded enough to keep personal feelings out of your professional life.

 

Remember that great, prompt answers to questions are important. A buyer is about to write you an enormous check that is going to completely change their life. You would have a lot of questions too. Sellers who are slow or unwilling to answer buyer questions give the appearance that they’ve got something to hide or that they just don’t care. Don’t be apathetic with questions. Instead, show the buyer that they’ve got nothing to worry about by being forthcoming with the information they need.

 

Selling your business is a stressful endeavor. Don’t allow that stress to get the better of you – it can hurt a buyer’s impression of you and can kill any chance of a sale. Keep in mind that you are not only selling your business – you are selling you.

 

Are you considering selling your business and want to know more about how to make a good impression for buyers? Do you want to know what businesses like yours have recently sold for? Please feel free to leave any questions or comments and we would be happy to help.

 

 

 

Michael Monnot

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

www.InfinityBusinessBrokers.com

 

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How To Turn The Disadvantages Of A Startup Into Entrepreneurial Success

Posted in Become a Business Owner, Buyers Articles

Published August 20, 2018

We all want to start the next Apple, right? Anyone with entrepreneurial dreams envisions the startup in the garage that grows to epic success – but where these daydreams fail is where they break with reality.

 

Startups are really, really tough. You are fighting against highly stacked odds, jumping into a market with an unproven concept that will take far more money to get to the black than you think. You won’t have a customer base, you will be starting from ground zero with an unproven marketing plan, you will have to vet and train a brand new staff and you will be doing all of this without any cash flow.

 

You can, however, approach business ownership in a slightly different way, while still meeting your goals for entrepreneurship. How? Buy an existing business.

 

 

Why? Existing businesses can take some of the disadvantages of a startup off the table. Here’s how:

 

Existing businesses come with a customer base.

When you buy a functioning business you get the clientele as well. Contracts with customers, the regulars at the bar – they typically come with the deal. The best way to keep those customers is to avoid making any changes until you understand why those customers are there. Rate hikes on contracts and getting rid of karaoke night might seem like good ideas on paper – but they will push out the all-important customer base you inherited.

 

Existing businesses typically come with a marketing plan and name recognition.

One of the major challenges of starting a new business is getting the word out about who you are and what you do. An already existing business has jumped that hurdle – your job now is to push for more growth by constantly developing and improving your marketing plan.

 

Existing businesses have a staff in place.

A brand new business can be extraordinarily tough because there isn’t a veteran staff to show everyone the ropes. With an existing business a fully-trained staff is already in place. A caveat here – just like the advice for your customer base, major staffing changes right out of the gate will likely hurt more than they help. Take some time to understand what everyone does and how their presence helps the business before cleaning house.

 

Existing businesses have cash flow.

It can take months before a startup gets to a point where the cash flow is enough to cover expenses. An existing business exists because this need for cash flow has already been met. Be careful, however, not to overextend your expenses with too many changes or improvements before you fully understand where that cash flow is coming from.

 

The message here is while your garage-business daydream might be fun, an existing business can get you there without having to contend with the pitfalls of startup-hood.

 

Have you always wanted to own your own business but didn’t know you could buy one? Do you have questions about the differences in risk between startups and existing businesses? 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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Keeping Your Cool – A Business Seller’s Guide To Letting Go

Posted in Sellers Articles

Published August 16, 2018

Yes, we know. Your business is your baby, your all-encompassing life. But you are ready for the next step – retirement, moving to another industry or selling to focus on something else.

 

In order to move on you have to give someone else the reins. You have to let go of the control you’ve had as the owner of your business – and let’s face it, that’s incredibly tough.

 

Why?

 

You have to be a bit of a control freak to be a successful business owner. It’s the kind of mindset that keeps you driven and keeps your business from falling apart. It’s what gets you out of bed in the morning and working late into the night.

 

When the time comes to walk away, however, that strength of personality becomes a problem. You see, the person who is buying your business has the same entrepreneurial personality you do. They’ll be driven and determined, and you probably aren’t going to like them very much.

 

 

The phrase “too many cooks in the kitchen” comes to mind, right?

 

This clashing of personalities can, and has, derailed perfectly good deals.

 

As a seller you are going to have to get along with along with your replacement from the first conference call all the way through to the end of a probably weeks-long training period. That length of time can be agonizing if you aren’t particularly fond of the buyer – so how do you survive?

 

Keep your eye on the prize.

 

You aren’t selling your business on a whim. You need the money to fund your long-awaited retirement, to fund your next business venture, to help the family member you’re leaving entrepreneurship to care for. It can be tough to keep your emotions in check, but you need to stay focused on the fact that the selling of your business is a purely financial transaction.

 

Remember it’s not your business anymore.

 

A new owner is absolutely going to make changes – it’s inevitable. The sooner you come to grips with that fact the better, because they might start making those changes right in front of you before the training period is even complete. Just remember that you wouldn’t want someone telling you how to run your business, so don’t be the person who does that to the buyer.

 

Remember that just because you don’t like them doesn’t mean they won’t be a good business owner.

 

No two successful entrepreneurs are exactly the same – so the style, values and qualities of the new owner are probably going to be vastly different than your own. Your general dislike of a buyer because they were a complete pain during negotiations or because you hate the way they present themselves doesn’t mean they aren’t going to be able to continue the legacy of the business you built.

 

Don’t derail your deal. If you aren’t fond of the person who is buying your business, it’s perfectly acceptable for you to feel that way. You only need to interact with them until the training period is complete – then it’s on to the next phase of your life with the proceeds of your sale. Take a deep breath, you can get there.

 

Are you thinking about selling your business but are worried about having to hand over the keys? Have you had a horrible buyer experience you’d like to share? Please leave any comments or questions, we’d 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 Or Selling A Business? The Right Help Makes All The Difference

Posted in Business Broker Why & How, Buyers Articles, Sellers Articles

Published August 13, 2018

Looking for a business to buy or thinking about selling the business you currently own? Either side of a business transaction is a tough and complicated road – and definitely one you shouldn’t travel alone.

 

 

So, who can help me with business transactions? Business brokers can.

 

A business broker is a professional who helps people buy and sell businesses. They are well versed in the transaction process, and know all of the potential pitfalls so you can avoid them.

 

Few people outside of the business transaction world truly understand what business brokers are and what they do – so here are the answers to some common questions about our industry:

 

What do business brokers do?

If you are a buyer a broker can help you search for businesses to buy, help you narrow down your choices, help you put together an offer, help you negotiate a purchase contract, help you with any necessary licensing and permitting and help you work with the seller as they show you the ropes.

 

If you are a seller a broker can help you prepare your business for sale, help you come up with an appropriate listing price, confidentially market your business, vet potential buyers and get non-disclosure agreements signed, show your business to potential buyers, help with negotiating a purchase contract, help you with the closing process and help you find your next business venture after you sell.

 

How are business brokers licensed?

Business brokers are typically licensed by their state’s real estate division, but what they do isn’t real estate. To put it simply state licensing divisions can’t possibly have a separate license for every applicable industry, so in some cases a profession is lumped in with an industry that is similar. That is the case with business brokers. They typically hold a real estate license or a real estate broker’s license.

 

Who is, and isn’t, a business broker?

The buying a selling of businesses and the buying and selling of property or homes are two completely different animals. Property and homes are sold by broadcasting the availability of the property/home to everyone, everywhere. Businesses, on the other hand, need to be sold confidentially – so the approach is completely different. Listings for businesses are extremely vague, and only after the signing of non-disclosure agreements will the name and location of a business for sale be divulged. It is this vastly different approach of sales techniques that makes it critical for business buyers and sellers to work with experienced and qualified business brokers and not real estate agents trying their hand at selling businesses.

 

Many professionals outside of the business transaction industry make ill-fated attempts to dabble in the buying and selling of businesses on the side. While unqualified real estate agents are the typical offenders – we’ve seen dentists, lawyers, accountants and the like they their hand and fail. The business transaction process is complicated, and to be successful you need to know what you are doing. Part-time business brokers aren’t business brokers, so avoid them. If your good friend or brother-in-law is a real estate agent who thinks they can successfully help you buy or sell a business, they can – by referring you to the appropriate professional. All your real estate agent needs to do is refer you to a qualified business broker, and when your transaction closes your real estate agent gets a referral fee for doing nothing more than making a phone call – and you get the right help.

 

Who does a business broker represent?

While your business broker is your advocate during the transaction process, they don’t technically represent one side or the other. They are transaction brokers, and therefore represent the transaction itself. For this reason it is possible in many states for a business broker to work for both the buyer and seller’s side.

 

How does a business broker get paid?

Business brokers make their money by earning a commission when a transaction closes, paid for by the seller’s proceeds of a sale. This is why buyers who spend years searching for businesses without ever taking any serious steps toward buying one (like making an offer) might have trouble getting an experienced broker’s attention. Serious buyers and serious sellers are easily distinguished from those who are just kicking tires.

 

How can I find a good business broker?

Finding a good broker can be a bit of a challenge, but there are some obvious signs that can distinguish the good from the bad. Great brokers get the vast majority of their business from referrals – from past buyers and sellers who were impressed with their work, from colleagues in other industries who’ve referred friends and family to great success – so ask a potential broker how much of their business comes from this good-review-based source. Good brokers also respond to calls and emails in a realistically timely fashion, have lots of connections within the industry and have some practical experience under their belt.

 

The message here is the road to buying or selling a business is best traveled with the right help – so finding an experienced and qualified business broker should be your first step!

 

Are you thinking about buying or selling a business and want to know more about what business brokers do? Do you have more questions about the transaction process? Ask us! Feel free to leave 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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Great Questions: What Business Buyers Should Be Asking

Posted in Become a Business Owner, Buyers Articles

Published August 6, 2018

If you are beginning the process of buying a business, then conversations with business sellers will definitely be in your future.

 

You can find lists of questions to ask in many places, and although these traditional questions like “how much is the lease?” or “why are you selling?” are very important, there are some less-traditional questions that can be equally important to ask.

 

Why ask questions of the seller at all? Couldn’t they just be telling me what I want to hear? Isn’t it a better idea to let the numbers speak for themselves?

 

Yes and no. The hard facts, like the numbers in the books, like the contracts and client agreements – these can tell you much of what you need to know about a business and can bring forth facts that will be instrumental in your decision to buy or not to buy.

 

Buyers who don’t ask questions of sellers, however, are missing out on very important information. The person who is selling has lived and breathed this business for some time, and their experience, the reasons they’ve made the decisions they’ve made – this information can speak volumes to a buyer.

 

Why? It gives you a unique behind-the-scenes perspective you can’t see in black-and-white numbers on paper.

 

What kinds of non-traditional questions should you ask? Here’s three:

 

What parts of the business keep you up at night?

 

This one is important because the answer gives two very important insights. One, it shows any problems that might not be readily apparent in the books and two, it will give a buyer a chance to see what might need to be addressed early on in their ownership. 

 

If you could start over from scratch, what would you do differently?

 

This question also gives two insights. First, like the previous question this one will highlight any issues with the business. The seller will probably express that they would make changes to avoid the problems they currently face. Second, it will give a buyer fantastic advice as to the changes they could make right out of the gate to help the business grow in the future.

 

What are you going to do if the business doesn’t sell?

 

If a seller answers “close the doors and walk away”, then a buyer needs to take a closer look at why the current owners would be willing to give the business up. Is it because of a personal issue that they must attend to like moving to another state to care for family? Is it because of a health issue that would preclude the seller from performing their daily duties? Is it because the business is teetering on bankruptcy?

 

On the other hand, a more positive answer to the “what if it doesn’t sell?” question like “keep the business running and growing until I find the right buyer” says a lot about the health of the business and the current owner’s faith in the future of the business.

 

Asking these non-traditional questions and even coming up with a few of your own will be very helpful in determining whether or not a business you are considering is right for you.They also make it possible to see past the black and white numbers to see what life has been like for the seller (and what life will be like for you should you buy). Ask great questions and you will have a far better chance of finding the right business for you!

 

Have you started looking at businesses and have more questions about the kinds of things you should ask? Do you need help figuring out what questions to ask for a particular business? Ask us! Please feel free to leave 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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Weighing Advice: How Business Buyers Should Deal With “Help”

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

Published July 23, 2018

Everyone is an expert, right?

 

We all have that person in our life who talks confidently about every subject while knowing little to nothing about the things they speak of. They string together urban legend, conjecture and memes from the internet into what sounds like a coherent piece of genuine information when, in fact, it is nothing of the sort.

 

If you are thinking about buying a business and you’ve told the people in your life about this new pursuit, then these fact-free advice givers will come out of the woodwork. Everyone, at one time or another has considered what life would be like as a business owner – and as such almost everyone feels qualified to offer their entrepreneurial advice. You will get unsolicited advice from seemingly everyone: your brother-in-law, the mailman, your dentist, your neighbors. While everyone’s intentions are good – to help you – the information you are given should be taken cautiously. Even the opinions of those you trust, like a very close friend, should be taken within the context of whether or not they actually know anything about buying or running a business.

 

Take, for example, the rent payments on a waterfront restaurant. If you are considering buying a large waterfront restaurant, especially one in a desirable location, then you should expect the rent to be high. That high rent, however, when compared to comparable businesses in the same area will probably be right in line with what you should expect to pay. Also, a desirable location means more customers in the door – meaning you will be perfectly capable of paying that high rent so long as you don’t run the business into the ground.

 

What unfortunately happens to many new buyers is they mention this high rent rate to someone who knows little to nothing about either the restaurant industry or the area in question and they balk at the number, exclaiming “That’s ridiculous!!! Don’t buy that business!” when the opposite is true. It’s a great business and falls right in line with both the buyer’s budget and their goals for business ownership.

 

There are many, many examples of instances where bad advice has driven a buyer from a perfectly good business – particularly when discussing matters of price. We’re not telling you that you shouldn’t listen to the opinions of those you trust, we’re just saying that you should consider their expertise in the matter before you take their advice as doctrine.

 

Who should you listen to? Your business broker is a good source of information because they eat, sleep and breathe business transactions and a good broker will know their local industry inside and out. Your business broker is also a reliable source of information because it is in their best interest if you succeed in your new business. You may refer them the business owners or business buyers you meet if you are happy in your business decision, and when the time comes to sell they hope you will use them again. A great business broker gets a great deal if their business from referrals and repeat clients.

 

You should also listen to the advice of your business transaction attorney and your business transaction CPA (if you end up using one) as they too know the industry well.

 

Notice we said “business transaction” attorney and CPA, not any attorney or CPA. Your friend who practices labor law and your uncle who does accounting for a rental car company aren’t going to be able to give you good advice about buying a restaurant because that’s not what they do. It would be similar to asking your car mechanic his advice about whether or not you should undergo back surgery – it’s not his area of expertise.

 

The most important person you should listen to? Your own common sense. Take the information you gather from all of your sources, weigh the validity of their opinions based on their real expertise in the matter – and then decide for yourself. You are the one buying the business, not the peanut gallery, so if the decision makes sense to you then that’s all that really counts.

 

Are you looking at businesses to buy and getting all kinds of advice at the same time? Do you have questions about some of the advice you’ve already been given? Please feel free to leave your questions and comments 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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Buying Or Selling A Business? Don’t Underestimate Training

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

Published July 2, 2018

Have you thought about what happens after the keys change hands and the buyer and seller walk away from the closing table?

 

The transaction process isn’t over yet – now the training period begins.

 

When a business is sold, part of the purchase contract will typically cover a training period of some sort where the seller will stay on with the business until the buyer can be sufficiently trained to take over the helm. This is an all-to-important part of the business transaction process, so it is in everyone’s best interest to keep the training period productive and amicable.

 

The best way to start the training period off right is to keep the negotiations during the sale process as friendly as possible. Both parties can do this by always using the business brokers involved as intermediaries. It might seem inefficient to always send questions or comments through a third party, but what starts as an innocent phone call to the other side can quickly devolve into a deal-killing fight. Keeping things friendly for the time period before your are stuck working together will make the start of training much easier.

 

If you are the buyer in the situation, it may be tempting to walk in on day one and completely change everything to your liking. This is a huge mistake for two reasons.

 

One, you shouldn’t make any changes to a functioning and profitable business until you know everything there is to know about the business. Then, and only then, will you know what parts of the business are making it profitable and successful and what aspects can be changed without causing any unforeseen damage down the line.

 

The second reason your should hold off on any changes is for the seller’s sake. The seller has a wealth of practical knowledge about the business you just bought, and it is absolutely in your best interest to get absolutely all of that knowledge before the training period is over. By coming in and changing everything, you are essentially telling the seller you don’t think anything they’ve done is worth learning about – a move so insulting that you will probably have an incredibly hard time getting any of that precious practical knowledge. Try to remember that this business was a huge part of the seller’s life, so treat them with a bit of compassion and wait until they are officially gone before you implement any big changes.

 

If you are the seller in the transaction, the training period can be difficult for a number of reasons. First, once you’ve left the closing table and the keys have changed hands, it can be very tempting to mentally check-out. This is a very bad idea, especially if your deal has seller financing involved (which many deals do). If you check-out and can’t properly train the new owner, the their chances of success (and you seeing the rest of your money) are probably not very good.

 

Another training pitfall for sellers is getting offended when the new owner wants to make changes. It can be extremely difficult to keep your emotions in check, but you must remember that this business no longer belongs to you, so the new owner can do what they please. Do your best to complete the training period amicably so that your business can carry on successfully without you.

 

Whether you are the buyer or the seller, it is critically important for the survival of the business in the long term that the training period happens – so do your best to work together.

 

Have you bought a business and the training period wasn’t what it needed to be for you to successfully take over? Are you selling your business and you have questions about what the typical training period will be like? Please feel free to share your experiences or leave us questions here.

 

 

 

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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A Lesson From Shark Tank: You’d Better Know Your Numbers

Posted in Sellers Articles

Published May 31, 2018

If you’ve seen the show Shark Tank, then you know the typical drill. An entrepreneur knows their concept inside and out, but can’t get an investment from the Sharks because they can’t answer basic financial questions. Guess what? This happens in the small business market too.

 

If you take a step out of your business seller’s mindset and take a look at what buyers see in the market, you might be shocked.

 

Most listings for businesses for sale contain sketchy financial information at best, and if they contain any semblance of numbers at all they typically don’t make sense and don’t jive with the price the sellers are asking.

 

 

Where do these discrepancies come from?

While in a few cases the discrepancies come from good old fashioned dishonesty, for the most part the lack of consensus in numbers occurs because the seller simply doesn’t know. Small business owners are great at what they do, but in some cases they are not great at accounting or organizing their financial information.

We come across business owners more often than we should who can’t answer questions like “which product or service is the most profitable?” or “what is the cost to acquire a new client?”. If you are considering selling at any time in the near future, then you need to make the effort to get a handle on your financials long before you are being asked to justify a price.

What things should I be looking at?

Profitability of Products or Services

Many business owners who haven’t broken down the numbers may just assume that the most expensive item or service that they offer is the most profitable – but this is probably not the case. By tracking your products and services individually and then comparing them to the breakdown of what it costs you to provide that product or service, you may discover that your bread and butter comes from a low price item or service that you sell more than anything else. If not just for selling your business, this breakdown will also be immensely helpful when deciding where to put your marketing efforts.

Expenses

Small business owners are famous for paying for expenses out of pocket and never writing it down, or for jamming receipts for expenses in a box under the desk and never looking at them again. When selling your business, you may even think that disguising some of your expenses will make the business look more appealing and more profitable to buyers. This isn’t the case. First of all, there are a few expenses that will get added back before you set a listing price. Second, a business with very low expenses will look suspect to a discerning buyer. Really nailing down your expenses will not only help with selling your business, it will likely allow you to see where your money is going and give you an opportunity to streamline those expenses.





Don’t be a Shark Tank cautionary tale. If you are looking to sell, you need to get your financial ducks in a row, if not for buyers but for your own use to strengthen your numbers, focus your marketing efforts and streamline your expenses. Having a good handle on where your business is and where it needs to be will be instrumental in the negotiation process of your business sale. Strong and organized documentation of all of your financial information will also be very helpful in attracting buyers who are accustomed to the sketchy financials that are typical in the business scene.

 

Are you thinking about selling but are guilty of shoving receipts in a box? Do you have absolutely no clue what it costs you to aquire a new client and want help getting your ducks in a row before listing your business? Please feel free to leave questions or comments here!

 

 

 

Michael Monnot

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

 

 

 

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Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

9040 Town Center Parkway
Lakewood Ranch, FL 34202



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