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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Why Feedback Matters: Helping Your Business Broker Help You

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

Published October 4, 2021

 

Are you just beginning your business search? Your first step should be talking to an experienced and qualified business broker about what you are hoping to get out of business ownership.

 

What do you want your life to look like? How much money would you like to spend and how much do you need your new business to earn? Where do you want your business to be located? A good broker will take your answers to these first and basic questions and put together a list of listings for you to consider.

 

Here’s an important point in the process that some buyers miss:

 

Once you have those initial listings take a good, hard look at them and then decide not only if you like or dislike a business – but WHY.

 

Was it the location? The net/gross earning? The number of employees? By giving very specific feedback your broker can fine-tune the search, giving you better choices as the search process progresses. If you are vague with your feedback or give none at all, you will more than likely just continue getting businesses you don’t like – a counterproductive waste of time.

 

A good business broker can point you in the right direction and help you find the right listings, but they can only be effective in that capacity if you give them feedback. Lots of feedback.

 

Why can’t I just look at everything? Why do I have to keep giving feedback?

 

Giving very specific feedback on why you did or didn’t like a business will make your business search more efficient – weeding out listings that you wouldn’t have liked well before you have to take a deep dive. It also helps show your business broker that you are a serious buyer who is willing to put in the work required to get a deal done. No one wants to work with someone that isn’t going to participate – and buying a business is a complicated process best traversed by someone who is willing to do what’s needed to see it through.

 

Another note here. Negative feedback about why you disliked or hated something about a business is important, as you don’t want to end up with a business that will make you unhappy – but feedback about why you liked something is also pivotal to success. Did you really like that a particular business had X number of employees or did you love the type of area where a business was located? Don’t just give your broker the negative feedback. Telling them what you liked about businesses will be just as important as what you didn’t.

 

Are you beginning your business search and want to know more about how feedback can help streamline the listings you see? Would you like to know what businesses are currently available that would meet your goals for business ownership? 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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Buying A Business? Don’t Sign A Million NDAs (Do This Instead)

Posted in Become a Business Owner, Buyers Articles

Published September 27, 2021

If you’re excited about buying a business it might be tempting to spend your days scouring the internet for business listings and then requesting information on everything that even slightly matches what you’re looking for.

 

 

Don’t do that. Here’s why:

 

Businesses are bought and sold under a veil of confidentiality. That confidentiality exists to protect the business while it is being sold (you can read more about why here). What this means for you as a buyer is you can’t just look up a listing and immediately get all of the information on a business for sale. There’s a layer of legal protection that you need to get past before you can gain access to the information you need. That layer involves signing a non-disclosure agreement (NDA).

 

Signing the NDA means you can’t disclose the name of a business, the location of a business, any proprietary information you will now have access to – even the for-sale status of a business. You will have to sign a NDA for each business listing individually. If the business brokers involved are doing their job, you shouldn’t be able to sign the NDA until you’ve had a conversation about why this business fits with your goals for business ownership and if you actually have the funds necessary to make a sale happen. The importance of keeping the for-sale status of a business under wraps means a broker should only be allowing NDAs to be signed by potential buyers who could actually be buyers – not hundreds of random tire-kickers.

 

The necessity of confidentiality might initially seem frustrating as a buyer, but it’s not just the business itself this process helps. As a buyer, you don’t need to be wasting your time signing dozens and dozens of NDAs for businesses that would never have suited you in the first place. It’s a colossal waste of your own time and energy.

 

Here’s what you should do instead. Call a few business brokers. Have conversations with them about what you hope to get out of business ownership. Talk to them honestly about the amount of funds you have available for your new venture. See if you think you and a broker would work well together.

 

This initial conversation will help a good broker find listings that will actually check all of your boxes. Then you can efficiently sign NDAs for businesses that may work for you.

 

A very important note here. Once you have a broker you like – don’t go and sign NDAs on any listings without them. Once you’ve signed another broker’s NDA your broker can’t help you anymore. NDAs are tied to specific businesses, and are therefore tied to the listing and the listing broker. Your broker can request the NDA on your behalf for a listing that isn’t theirs and still maintain the buyer-broker relationship with you. If you go around your broker and sign a NDA they didn’t request they legally and ethically can’t even give you advice. The relationship has now shifted to whatever broker has the listing – a broker you don’t know and who doesn’t know you. 

 

The message here is although the process of searching for businesses has a few more steps than other big purchases like a house or car – those steps exist to make the process more efficient for everyone – including you. Find yourself a good broker, maintain that relationship by only having your broker request NDAs and be patient with the process.

 

Are you shopping for businesses and weren’t aware that signing NDAs tied you to listing brokers? Do you have questions about what businesses currently for sale you meet your goals for business ownership? Ask us! Leave any questions or comments and we would be happy to help you on your business search.

 

 

 

Michael Monnot

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

www.InfinityBusinessBrokers.com

 

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Ready To Take The Plunge? Buying An Existing Business

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

Published August 30, 2021

Have you always wanted to own your own business but aren’t sure how to take the plunge?

 

 

 

One path to entrepreneurship that many choose is to buy an existing business. This can be a good option for a number of reasons.

 

First and foremost, the business has already been set up for you, and the business model has been proven because the business is currently up and running. The location is equipped and a customer base has been established too.

 

What do you need to do to get started if this is the path for you?

 

The first step is deciding on a type of business to buy. More often than not, a budding entrepreneur will start the process by seeing what businesses are available. This is a mistake because it can cause you to fall in love with a business that wouldn’t meet the goals you have for business ownership.

 

When entering a new business venture, you should choose something where you have at least a bit of background or experience. The learning curve for a new business owner is a steep one, and that’s without having to learn an entirely new industry as well. Give yourself a great head start by deciding on an industry before you search, and be sure to pick an industry you know.

 

The second step is to begin your search. Now is a great time to employ the services of a business broker, as they will have access to more business listings than you will be able to find on your own, they will know about businesses that are not yet on the market, and they will be able to market you as a buyer to other business brokers and their sellers.

 

Talk to your broker about the goals you have as a business owner – like how many hours a week you want to work, what type of return you are looking for with your investment, where your experience will suit you best and how much capital you have to invest. Identifying your goals, experience and available capital are critical to finding you a business where you can be successful. If the broker you are working with hasn’t had this conversation with you, perhaps it is time to find someone else to work with.

 

Once you have your goals ironed out and know what industries would set you up for success, you can do a cursory search for businesses by visiting our Business Search page.

 

Once you find a business that fits your goals, you will likely decide to make an offer. This step is then followed by a period called due diligence where you will get a chance to review things like finances and contracts in depth. After this review you will decide if you would like to proceed with the sale or not.

 

Are you ready to take the entrepreneurial plunge? Do you have questions about the search process or are you unhappy with the help you are getting from your current broker? Leave us a comment or question; we look forward to assisting you with your business search!

 

 

 

Michael Monnot

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

www.InfinityBusinessBrokers.com

 

 

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Have A Favorite Real Estate Agent? Why You Shouldn’t Use Them For Your Business Deal

Posted in Buyers Articles, Sellers Articles

Published April 26, 2021

 

This one happens all the time. We get a call from a real estate agent who is inquiring about one of the businesses we have listed on behalf of a buyer, or is looking for potential buyers for a business one of their clients wants to sell. Perhaps they are a trusted agent for a client, and the client asked that they inquire on their behalf. We even have potential buyers and sellers call and request that we use their real estate agent for their part of the transaction. 

 

We tell them how business transactions work. A real estate agent who refers a client to us will get a referral fee when the deal closes, all they have to do is get us the client’s contact info.

 

Sometimes an agent refuses to divulge their client’s information, demanding instead that we work with them on the deal. We refuse, so the agent moves on to a different broker to see if they can talk someone into working with them. Their clients don’t get access to business information or potential buyers, and are likely unaware that any of this is going on.

 

Why won’t business brokers work with real estate agents? Why do they require a referral of the clients instead?

 

It’s very simple. Real estate agents are very good at what they do – they sell property and homes. What they are not good at and likely know little to nothing about is selling businesses. You can liken the difference between a business broker and a real estate agent to the difference between a plastic surgeon and your general family physician. You would probably be very uncomfortable having your family doctor do reconstructive facial surgery – along the same lines a business broker specializes in the buying and selling of businesses. We would never try to help someone buy a house, it’s just not what we do.

 

What can happen if a real estate agent tries to help you buy or sell a business? Since they don’t know the ins and outs of the business transaction process, there is a good chance you will never see a closing table.

 

If you are a seller, a real estate agent will likely treat your business listing like a listing for a house. They will take pictures, gather some cursory financial information and then post this information on the MLS listing system. This is a complete disaster in the making. The most important part of selling an existing business is maintaining confidentiality. Without confidentiality, you stand to lose customers, employees, vendors and money. The only people who should know that your business is for sale are those who have signed the appropriate non-disclosure documents – not anyone with an internet connection who can search the MLS. A business broker knows how to confidentiality market your business, and they are also well-versed in negotiating leases, licensing and permitting concerns and will have relationships with other brokers and buyers who are currently in the market looking for a business like yours.

 

If you are a buyer, a real estate agent isn’t going to have access to any business listing information without talking a broker into letting them have it (which isn’t likely to happen). Many real estate agents also try to fill out the non-disclosure forms themselves, pretending to be the buyer, but all this does is garner mistrust with any sellers who will then feel like they’ve been duped when the truth is later revealed.

 

We understand your loyalty to your real estate agent – we have many friends in the real estate industry and we have used their expertise for not only our home purchases but also the sales and purchases for our family members. You shouldn’t feel like your real estate agent gets the short end of the deal if they refer you to a business broker – they get paid for handing over information and doing nothing more. They are doing you and your future business transaction a great service by putting you in more capable hands.

 

If you are looking to buy or sell a business, feel free to ask your real estate agent if they have a business broker they would recommend. Just be wary if your agent tries to talk you into letting them take the reins.

 

Have you tried to buy or sell a business using a real estate agent and have a story to share? Do you have more questions about the referral process? Ask us! Please feel free to leave any comments or questions.

 

 

 

Michael Monnot

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

www.InfinityBusinessBrokers.com

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Picking A Broker? Red Flags: What To Watch Out For

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

Published April 22, 2021

Whether you’re in the market to buy a business or have a business that you’re ready to sell – your best bet for success and reaching a closing table is hiring the right help. In the business transaction world that help is a business broker. 

 

What do business brokers do? They help sellers list their business for sale. They put together marketing packages and business listings and then add those businesses on listing platforms. They keep the confidentiality of the for-sale status of a business in place by vetting buyers and having qualified buyers sign the appropriate non-disclosure agreements. They coordinate conference calls and meetings between buyers and sellers and act as an incredibly important buffer in the negotiation process. They help put together offers and help solidify purchase contracts. They give advice throughout the process, as their experience with business transactions can be invaluable for avoiding common pitfalls that can cause deals to fall apart. They help sort out commercial leases with landlords and property managers. They assist with permitting and licensing requirements. They assist with obtaining financing options. They coordinate with immigration attorneys to obtain Visas for international clients. 

 

It’s a long list. A list you probably don’t want to tackle with someone who is terrible at their job. 

 

How can you tell if a broker is a good broker? You can watch out for red flags.

 

 

Does this business broker have no online presence at all, or a website where the last post was 7 years ago? 

 

The business transaction process, like most things, has gone digital in recent years – from electronic signatures to virtual walkthroughs and the like. If a broker can’t even maintain a basic digital presence, then they probably aren’t up to speed on other aspects of their job either. 

 

Do the listings for a particular broker have a ton of spelling errors or always seem to be incomplete/incorrect? 

 

The business transaction process requires a great deal of attention to detail. If a broker is willing to leave mistakes all over their listings, how careful are they with everything else? A listing and a marketing package are an important first impression of a business for buyers. If all you’re getting is some over-copied tax returns and 15 spelling errors, it might be time to find someone else. 

 

When you contact a broker, does it take them an enormous amount of time to respond?

 

You can’t expect a broker to always pick up your call or immediately respond (they should have other clients and a life outside of work) but you should be able to get in touch with them in a reasonable amount of time. If you have to wait a week for a response, you might need to find another broker. 

 

Does a broker claim to have proprietary formulas or methods that no one else in the business has? 

 

Well, there’s probably a reason for that. Occasionally brokers will claim to have some magic metric (for example – for pricing businesses) that no one else in the industry uses. Every business is unique, so a big part of becoming a successful business broker is understanding that every transaction will be different and each business will require a different approach. There isn’t a better mousetrap – there’s only those who can adapt the process to get a transaction done and those who can’t. 

 

The message here is you want qualified and experienced help – and you aren’t going to get that from someone who is careless with the most important parts of their job. Keep an eye out for red flags as you begin the business transaction process. 

 

Another good metric? Ask any potential broker how much of their business comes from referrals. Someone who does a good job is going to get a great deal of their future clients from the referrals of past happy ones. 

 

Are you looking for businesses to buy and want to know more about how a business broker can help you? Have you considered selling your business and want to know what our marketing packages look like in comparison to others in the industry? 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

www.InfinityBusinessBrokers.com

No Comments »



Do I Have Enough Money To Buy A Business? The Answer Might Surprise You

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

Published March 8, 2021

 

Do you have enough? When you’re considering buying your first business, this is probably the first question you will ask yourself. Why? There’s an unhelpful preconceived notion that you need millions and millions to buy a successful business. Guess what? You don’t.

 

Business prices can vary greatly, even within the same industry. If you are interested in buying a restaurant, for instance, you could get a small neighborhood sandwich shop for $50,000 – or you could shoot for a large waterfront steakhouse that could run you $500,000.

 

How are businesses priced?

Businesses are priced based on a few factors – namely how much money they earn (cash flow), the value of things like vehicles/equipment/furnishings and the value of the current inventory. There are other factors that also play into pricing, like how much comparable businesses have recently sold for, how many years the business has been open – the list goes on. When you first enter the business market it is a great idea to use the advice of an experienced and qualified business broker because they will be able to both explain how a particular business has been priced and also advise you on whether the business is potentially worth what the sellers are asking.

 

How do I actually buy a business?

In the business world cash is king. Most first-time buyers, however, are not coming to the market with large amounts of cash to spend. If you don’t have a ton of cash available then a very large manufacturing business that lists in the millions is probably not for you. There are, however, smaller businesses that can run under $30,000. What you end up spending will depend on what type and size of business would fit with your goals and also what you can afford.

 

What if I have almost no cash available, can’t I just get financing? Yes and no. Buying a business is nothing like buying a car. You can’t walk in with no money down and walk out with the keys. There are a few financing options available to business buyers, but it is important to understand from the start that you will need a fair down payment for any business with any financing option. No one is going to finance 100% of a business purchase.

 

There are a few traditional lending options – like bank loans – but for the most part you will have an incredibly hard time getting any bank to finance a small business purchase. 

 

The Small Business Administration (SBA) has some funding available, but much like traditional lending these loans are often hard to get. A business must meet a rather stringent set of criteria and then the buyer themselves will also have to meet SBA’s buyer criteria.

 

The last and most common financing option is something called seller financing. In this scenario the seller finances a portion of the purchase price to be paid back by the buyer over time. If you are looking to this option then you as a buyer will have to bring some capital to the table in the form of a down payment. For a seller a large down payment shows good faith that a buyer is serious about getting to a closing table. For buyers, a seller who is willing to hold a note like this is a good sign. It means the seller has confidence in the future of the business.

 

No matter how you end up buying a business – be it cash or financing – the most important point is to have realistic expectations and seek some sound advice.

 

When you first talk to your business broker, be honest about the amount of capital you will actually be able to bring to the table. Dishonesty here will eventually come out as you will be asked to prove how much capital you have as a deal progresses. Also be honest with your broker about what you are looking to get out of buying a business – if you just want to be your own boss, if you want a flexible schedule or if you want to follow a passion you’ve always had. With the amount of money you have and the goals you have in mind an experienced broker should be able to find you businesses that will meet with both what you have and what you need.

 

Are you a first-time buyer who has more questions about how businesses are priced? Would you like to know how much of a down payment you would need? Please ask us! Leave a question 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

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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