Want To Be An Entrepreneur? How You Should (And Shouldn’t) Start

Posted in Become a Business Owner, Buyers Articles

Published May 30, 2022

Ready to become an entrepreneur and work for yourself? How do you start the process of buying a business and decide what business would be right for you?

 

 

First, let’s look at how you SHOULDN’T start.

 

The majority of would-be entrepreneurs start their business search by perusing various online business listing sites for that dream businesses they’ve always seen themselves owning. While it may seem counter-intuitive at first, this is absolutely the wrong way to start.

 

How SHOULD you start?

 

Do some soul searching and talk to the people who care about you first.  Trust us when we say that owning your own business is a life-encompassing affair. Those dream-state visions of running a business from the beach with a cold drink in your hand are extremely far-fetched. When you work for yourself, you work all the time. Nights, weekends, early mornings, few if any vacations – and you need to be ready to make that kind of commitment. If you think that type of life is the one for you because it allows you to fulfill your own destiny and make all of your blood, sweat and tears work for you instead of for someone else, that’s great. Now you need to clear this semi-extreme lifestyle with your spouse, your kids – anyone who you have a commitment with. If you are becoming a one-man shop and you used to work 9 to 5, it can be hard to balance your longer hours with your loved ones – especially if they are used to having you home for dinner and used to having you coach their little league team every spring.

 

Once you have the support of those you are closest to, you need to figure out what your goals for entrepreneurship are. Do you just want to make as much money as possible? Do you want to work in a specific industry that’s always been your dream and passion? Do you want a flexible schedule? Do you want to be home for dinner every night? Is it important to have weekends off? What financial goals do you have to meet in order to support yourself and your family? These questions will be pivotal in choosing what business will be right, both for your entrepreneurial goals and for your life.

 

Now that you have these basic questions answered, you need to get some professional help. Find and talk to a good business broker. A good broker will immediately ask you many of the same questions we just outlined above, and then they will use that information to help guide you to businesses that will meet those goals. Notice that we didn’t say a good broker will just ask you what type of business you are interested in and show you only that. As brokers who care about the success of our clients, it is in our best interest (and yours) if you succeed, as a healthy local small business market is our bread and butter. We will use the classic bar example. If a new buyer comes to us and says “I want to buy a bar“, we should be asking questions instead of just emailing every bar listing in the area. Has this new buyer ever worked in the restaurant industry? If not, then buying a bar will likely be a huge mistake. Starting off as a new business owner and trying to learn an entirely new industry at the same time is setting yourself up for an epic failure. Does this buyer have a family that wants or needs them home in the evenings? If so, then working every afternoon and into the night is going to cause more family upheaval then it’s worth.

 

Deciding on a small business is a very big decision, and will need to take into account a variety of factors. The best way to weed through the choices that are currently on the market is to first do some soul searching and then figure out what your business ownership goals are. You will also need to use the assistance of a business broker. A good broker will not only help you find businesses that would be right for you, they can help you narrow the field to those businesses that will help you fulfill your goals.

 

Have you always had a dream business in mind but aren’t sure it would fit your goals for business ownership? Would you like to know what businesses are available that would work with your family schedule? Ask us! Leave questions or comments here and we would be happy to help.

 

 

 

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

 

 

 

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Buying A Business? Why Research & Questions Should Be Your Top Priority

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

Published April 25, 2022

We get it. Once you’ve decided that you are ready to make the leap and buy a business it can be hard to keep from going directly to the shopping phase. It’s fun to look at business listings and envision yourself as the owner. Guess what? Shopping for businesses in this way is unproductive and ultimately won’t get you what you’re hoping for from business ownership.

 

Why?

 

Any business, large or small, can be condensed down to one major thing. A business is cash flow. You are providing goods or services that you pay for and then your customers pay you. It’s the money in and money out that makes a business successful, and hopefully you’re making more than you’re spending.

 

If a business is essentially just cash flow it really doesn’t matter what color the walls are. Looking at pictures of businesses on the internet isn’t telling you much of the story. Neither is perusing vague P&L statements.

 

What you really need to know about a business is does it generate (or have the potential to generate) the amount of cash flow I need to live day to day as the owner – and is it possible for me to be successful in this industry.

 

How do you figure that out? Research and questions.

 

 

Research the areas where you’d like your business to be. Can you afford to live there? How much would you need to make to have that be possible? Will the area work for you and your family? If you’d love to live on the beach, but your target area has zero schools for your kids you might need to redirect your target area.

 

Research the different industry sectors possible in that area. Do you have any practical experience or education that would make a particular industry better for you than another? Will the industries available in your target area match with your skills? If you’ve always wanted to own a big restaurant but have never spent a single day in the restaurant industry, then looking at food service industry business is likely a mistake.

 

Once you’ve done some research, start asking questions. Have a conversation with an experienced and qualified business broker about the areas you’re considering, your practical experience and education, your goals for business ownership and the amount of capital you have to invest. Ask lots of questions – about the area, about the industries that do well in that area, about what types of businesses would both fit with your experience and with what you hope to get out of owning your own business.

 

Notice something? So far we haven’t said “look at listings” because it isn’t helpful until you know where you want to be and what you need to be successful.

 

Don’t waste a ton of time scouring the internet for your future business. Do some research and then get in touch with a business broker.

 

Do you have questions about the process to buy a business? Would you like to know what types of businesses would match your practical experience? Ask us! Leave any questions or comments and we would be happy to help.

 

 

 

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

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Why Sellers Need To Work On Confidentiality Too

Posted in Sellers Articles

Published April 18, 2022

 

If you are selling your business you probably know how damaging it can be if your staff, customers or frankly anyone finds out that the business is on the market.

 

Employees can panic and quit en masse, taking their regulars with them. Customers can stop coming in, worried about how much the business might change under new ownership. The community at large might think you’re selling to get yourself clear of a sinking ship (as the misconception that a business for sale is a business on the brink is both pervasive and in the vast majority of cases – false).

 

While your business is for sale maintaining confidentiality is paramount, but not just in terms of the for-sale status. There are parts of your business that a buyer will need to see – your tax returns, your employee records, your vendor contracts, your client contracts and the like that are also critically important. Your business records and proprietary information need to stay confidential too. 

 

That’s why it’s a good idea to hire the right help – a business broker. Business brokers are able to safely and confidentially market your business to buyers, at first through a purposefully vague listing and then only disclosing any identifying information after a prospective buyer has signed the appropriate non-disclosure agreement (NDA). The NDA also protects the records and information a buyer will have access to from disclosure so you don’t need to worry about confidential information ending up in the wrong hands.

 

While your business broker and buyers who have signed the NDA do their part to keep the confidentiality of your business transaction in place, you as a seller also need to be careful so you don’t burst your own confidentiality bubble. It happens more than it should, and often it’s the product of an seemingly innocent conversation.

 

Here’s an example. A business seller flies to see their parents on vacation, and while on the plane headed out of state they strike up a conversation with the person sitting next to them. The conversation turns, as it often does, to what you do for a living. The seller tells this stranger that he owns a waterfront restaurant that he’s currently selling. Later in the conversation he lets slip that this restaurant is in a specific community, one where there’s only one waterfront restaurant. Unbeknownst to the seller, this casual stranger not only lives in this community, they’re very involved in the community’s social scene and have many friends who frequent his restaurant. As soon as the plane lands, the gossip begins, as phone calls to friends include “did you hear the restaurant is for sale?” By the time the seller is on his return flight the damage is done and the entire community knows about his for-sale status. 

 

The point here is you wouldn’t carry around a copy of your business tax returns to show every stranger you meet, so you need to work just as hard as your broker and the buyers who sign the NDA to keep your for-sale status under wraps. Don’t tell strangers, don’t tell your friends, don’t tell your neighbors – you get the idea.

 

Are you considering selling your business and hadn’t thought about how important confidentiality is? Would you like to know more about how we market your business while maintaining confidentiality? Ask us! Leave any questions or comments and we would be happy to help.

 

 

 

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

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Planning Your Trip: 3 Tips For Relocating Business Buyers

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

Published March 28, 2022

 

Maybe it was the lockdowns of the pandemic. Maybe it’s just that you’re burned out. Whatever the reason, you’ve been daydreaming about moving somewhere else and buying a business. Guess what? There’s no better time than now to make the leap.

 

Want some tips on how to start? Here’s 3:

 

Do lots of research:

 

This one might sound obvious, but most people would be shocked at how little research most buyers do before taking a huge leap like this. Take a deep dive into the locations that interest you. If it’s somewhere you’ve only ever visited on vacation, research what it’s like to live there year-round. Is it a seasonal economy that you’ll need to account for when choosing the type of business to buy? Can you afford to buy or rent a home close enough to your business to make your commute make sense? If you have kids – what are the schools like and where do you need to live in order to get your kids into a school where they’ll be successful? What are the property taxes like? Are crazy weather events like hurricanes something you need to think about? The point here is you need to have a good handle on where you both want to and realistically can be long before you start a serious search for businesses to buy.

 

Find the right help:

 

If you’re serious about buying a business in a new area, a local business broker is going to be an immense help. They know the area, the local small business economy, the local licensing/permitting requirements, the major players in terms of commercial property managers – the list goes on and on. Having someone with local experience as your guide will make both finding the right business and navigating the buying process much easier than going it alone or using someone who doesn’t know the area.

 

Have the site visits planned way before you leave for your trip:

 

Seeing a business you are considering is an important step, but what many buyers don’t understand is this step never comes first. Businesses are bought and sold under the protection of confidentiality (see why here), so you can’t just fly into town and waltz into whatever business you please. The steps that are required before you set foot in a physical location go like this:

 

You talk to a local business broker about your goals for business ownership, the industries you’re interested in and the amount of capital you have to invest. They find you business listings that would match your goals and means. If any of those listings look promising you can request more information by signing a non-disclosure agreement for each business you’re still considering. After looking over the information a conference call with the sellers is next, so you can ask questions about the business and see if it’s still a good fit. If after your calls you’d like to see the physical location this can be arranged. It usually requires seeing the business before or after hours when no staff or customers are around and will need to be coordinated between the schedules of the seller, the buyer and the brokers involved. It should be obvious that this process can’t be completed once you’ve landed on your scouting trip and have called a local broker for the very first time. You need to plan your site visits when you are doing your initial trip planning – like before you’ve even bought your plane tickets. It is a colossal waste of your own time to fly in and see businesses you haven’t already vetted, so plan your trip with that in mind. 

 

If you’re considering a big move – now is the time. Contact a local business broker and get the process moving!

 

Have you always wanted to move somewhere else and own your own business? Do you have more questions about the steps of the business buying process? Ask us! Leave any questions or comments and we would be happy to help!

 

 

 

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

 

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Buying/Selling? Why You Really Need A Broker

Posted in Buyers Articles, Sellers Articles

Published March 7, 2022

 

Buying or selling a business? Are you ready to negotiate? 

 

No one has ever bought or sold a business without a great deal of back and forth between the parties involved – and many, many deals have died over the negotiating table. Nothing is more frustrating for buyers and sellers than the death of a perfectly good deal. If you are thinking about buying or selling a business, how do you keep your deal alive?

 

Use an experienced and qualified business broker. A good business broker is essential for success.

 

Of course you would say that – you’re business brokers. Yes, you have us there – but we would advise you to use the services of a business broker whether that’s what we did for a living or not.

 

Why? The business selling process and the businesses themselves are both complicated, messy animals.  No where does that inherent messiness come out more boldly than during negotiations.

 

 

What needs to be negotiated? Essentially everything. The purchase price, the length of the due diligence phase, seller financing agreements, a non-compete clause, a new lease, the value of the inventory, the length of the training period, the value of the equipment and furnishings, the continued employment of certain staff, the closing date – the list goes on and on.

 

With such a monumental list of things that need to be agreed upon by two parties with vastly different goals it’s no wonder that many deals fall apart. A seller is dealing with handing over a business with which they have strong emotional ties as it has been a very big part of their life. Sellers are also nervous about selling themselves out of a job, essentially becoming unemployed the moment the deal is signed. They want to get as much as they can out of the sale of their business. Buyers, on the other hand, are dealing with writing a huge check to a complete stranger for a risky new entrepreneurial adventure. They want to spend as little as possible so they can keep working capital available. 

 

How do you meet in the middle of such vastly different goals? An intermediary like a business broker.

 

A broker’s responsibility is to keep the deal together and help it get to the closing table. Your broker acts not only as an experienced advisor who ensures everything that needs to be done gets done, they also act as an all-important buffer between the two parties. Business sellers and business buyers are entrepreneurs at heart – and to be a successful entrepreneur you need a strong and driven personality. If you’ve ever tried to argue with someone who has this personality type – you should understand why a buffer is needed. Too many perfectly good deals have fallen apart because someone asked the wrong question, made the wrong request – and the other side was offended to the point of no return.

 

Don’t try to go-it alone. If you are serious about selling or buying a business, you need a business broker to help you negotiate your way to closing table success.

 

Are you thinking about selling your business and want to know more about how a business broker can help you? Do you want to buy a business and want to know more about the negotiation process? Ask us! Please feel free to leave any questions or comments and we would be happy to help.

 

 

 

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

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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

941.518.7138
Mike@InfinityBusinessBrokers.com

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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

941.518.7138
Mike@InfinityBusinessBrokers.com

 

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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

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The One Broker Approach: Why Having Your Own Broker Is Key To A Successful Business Purchase

Posted in Business Broker Why & How, Buyers Articles

Published November 15, 2021

 

We’ll start this one by saying as a caveat that if you end up with a dreadful broker who never returns your phone calls, doesn’t show up to scheduled meetings on a regular basis and is all around just bad – by all means, find a new broker.

 

Caveat aside, many business buyers come to the business-for-sale marketplace and try to play the field, and this never ends up working in their favor.

 

What do we mean by playing the field? If you’ve emailed 30 brokers in a small local area to request information on potential businesses, then you are doing yourself and your prospects for business ownership a big disservice.

 

Why?

 

Your business search needs to be focused in order to be successful, and in order to have a focused business search you need to have a relationship with a good broker.

 

This relationship should start with a conversation about several very important things – things that won’t come across if all you are doing is shooting email requests to everyone in the area.

 

Your initial conversation with a broker might start out as an inquiry into one specific business, but it shouldn’t stay that way for long. A good broker is going to ask you questions that will let them know what direction you want business ownership to take and then help narrow your focus to just those businesses that would fit with your goals.

 

What should a broker be asking you?

 

They should ask about what your goals for business ownership are. If what you are hoping to achieve is a very flexible schedule so you can spend more time with your kids, then some businesses are definitely out of the question. If schedule isn’t a priority, but making as much money as possible is – then a very different business would be for you.

 

They should be asking what your passions are. Entrepreneurship is no picnic. It can be an enormous amount of work, so you need to be doing something that you can be driven and passionate about or you will end up miserable.

 

They should ask about your experience. If you’ve never worked so much as a single shift in the restaurant industry, then it would be a terrible idea to buy a bar or restaurant. Business ownership is tough, especially if you are brand new to entrepreneurship. You don’t want to add learning an entirely new industry on top of it – you will be setting yourself up for failure.

 

They should be asking about your finances. You might think you have enough money to buy a particular business, but the reality of buying is that you need far more money than just enough to cover the listing price. You need enough to write the closing check, enough for the deposits for your utilities and lease, enough to buy new inventory, enough for licensing fees, enough for the first few rounds of payroll – the list goes on. A good broker doesn’t want to set you up for failure, so knowing your financial situation will allow them to find you businesses you can actually afford.

 

The point here is only by having a relationship with a single broker (who knows these very key things about you and about your business ownership goals) can you have any hope of finding the right business.

 

Approach you search for businesses by searching for a good broker first – then you can count on that relationship to bring you the businesses you should see.

 

Have you sent a ton of email requests but haven’t actually had a conversation with a broker yet? Do you want to know more about why a relationship with a good broker is so important for your success in purchasing a business? Ask us! Please feel free to 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

www.InfinityBusinessBrokers.com

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Selling? The Questions Your Broker Should Be Asking Buyers

Posted in Business Broker Why & How, Sellers Articles

Published October 21, 2021

If you are ready to sell your business, then you might already know the importance of confidentiality during a business sale (if you don’t, read this now).

 

Keeping the for-sale status of your business as need-to-know-only information will be pivotal to a successful sale, and the best person to help you maintain confidentiality is an experienced and qualified business broker.

 

Notice that we said experienced and qualified. Like any industry there are brokers who know what they’re doing and those who could care less. You don’t want the latter on your team. You don’t want a broker who responds to every form or email inquiry about your business with an automatic nondisclosure agreement (NDA) – without any idea of who the person is that’s signing it. Allowing dozens and dozens of NDAs on your business opens you up to a myriad of problems.

 

 

A prospective buyer should be answering some very important questions before they’re just handed the NDA. If anyone who tries can get access to your business information, the likelihood of maintaining confidentiality (as well as the likelihood of finding the right buyer) will probably be small.

 

The initial vetting of prospective buyers is critically important, and if your broker knows what they’re doing they will be asking questions like these:

 

Do they have any practical experience with a business like yours?

You’ve worked hard to make your business what it is today, so you aren’t likely to hand the keys to someone who is destined to immediately drive your business into the ground. Potential buyers need to have some sort of practical experience, training or education in your industry so they don’t have to add learning an entirely new industry to the already steep learning curve of taking over an existing business. This is also very important if you lease your business location, as a commercial landlord is unlikely to transfer a lease to someone who would have no idea what they’re doing. It’s a safer bet for the landlord to have you stay on as the owner and keep paying the rent.

 

Do they have the financial means to actually buy your business?

The business market is full of buyers who think they can afford businesses they definitely can’t – incorrectly assuming they will be able to finance 80-90% of a sale. In most business deals where financing is involved – be it SBA loans, seller financing or a more traditional loan – a buyer will need to come to the table with a sizeable down payment. A good broker will have a very serious discussion with a prospective buyer about how much cash they actually have available to buy a business, how much financing they would actually be able to get and then only disclose to that buyer businesses they can afford.

 

Is this buyer who they say they are?

One of the ways confidentiality can be breached is by letting the wrong person sign the NDA for your business. Think a current or former employee who is looking to confirm a rumor or a competitor looking to move in on your niche. Your broker should ask you to come up with a list of people who can’t know the business is for sale, and then verify someone’s identity before handing them the NDA to sign. Good brokers ask a lot of questions, require some personally identifying information and then wait to verify that information before disclosing your business.

 

The point here is in order to reach a closing table successfully, you need to make sure you have the right help. Ask your broker what they do to vet potential buyers. Are they asking questions? Or do they disclose to anyone who asks?

 

Are you getting ready to sell your business and want to know more about why confidentiality is important? Would you like to know more about our process to vet buyers? Ask us! Please feel free to 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

www.InfinityBusinessBrokers.com

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Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

9040 Town Center Parkway
Lakewood Ranch, FL 34202



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