Finding the Best Business for You

Owning a business and owning the right kind of business for you are, of course, two wildly different things.  Owning the wrong kind of business can make you absolutely miserable.  So if you are considering buying a business, it is prudent that you invest the time and effort into determining the best kind of business for your needs and your personality.  In a recent Forbes article, “What is the Right Type of Business for You to Buy?” author Richard Parker explores how buyers should go about finding the right business fit. Parker is definitely an expert when it comes to working with buyers as he has spoken with an estimated 100,000 buyers over his career.  In that time, Parker has concluded that it is critical that you don’t “learn on your own time.”  His key piece of advice concerning what type of business to buy is as follows.  “While there are many factors to be considered, the answer is simple: whatever it is you do … [Read more...]

Tackling Growth Delusions When Buying a Business

There is no doubt about it, it can be exciting to buy a new business.  However, in the process, it is very important that you don’t become unrealistic about future growth.  Keep in mind that in the vast majority of cases, if a business is poised to quickly grow substantially, the seller would be far less interested in selling.  Richard Parker’s recent article for Forbes entitled “Don’t Be Delusional About Growth When Buying a Business” seeks to instill a smart degree of caution into prospective buyers.  Parker notes that when evaluating a business and talking to the owner, many buyers come away with a sense that enormous growth is just “sitting there” waiting to be seized.  In particular, Parker cautions those buyers who are buying into an industry that they know nothing about; those individuals should be very careful.  When buying into an industry where one has no familiarity, there can be a range of problems.  The opportunities that you see may not have been tapped into by the … [Read more...]

A Closer Look at 3 Major Factors to Consider When You Buy a Business

The simple but undeniable fact is buying a business is one of the single greatest financial decisions a person can make.  Buying a business can lead to great financial success or great financial failure.  This fact helps to underscore why it is so important to work with an experienced broker who can help guide you through the often labyrinthian process of buying a business. In a July 2019 article from Smallbusiness.co.uk, author Kyle Carins explores three key factors that everyone should consider before they buy a business.  The first factor covered in Carins’ article, “3 Things to Consider When Buying a Business,” is appeal vs. viability.  Appeal Vs. Viability Not surprising, the most important variable for most prospective owners is that the business is indeed viable.  Not being able to differentiate between an appealing business and one that is viable can lead to financial disaster.  As Carins points out, “Do you want to make money or do you want to fulfill a dream?”  Sometimes … [Read more...]

Do You Know What Kind of Business Owner You Really Are?

Does your business have real, long-lasting longevity or is your business a temporary entity that will vanish the second you stop working on it?  In his insightful article in The Business Journals entitled, “Are You Living for Today as a Business Owner or Building Value?” author Kent Bernhard asks a very important question of readers, “Are you a lifestyle business owner or a value accelerator?”  Many business owners have never stopped to ask this very important, yet basic, question regarding their businesses.  So, let’s turn our attention to this key question that all business owners must stop and ask at some point. As Bernhard points out the core issue here is how a given business owner defines the idea of success for him or herself.  As Chuck Richards, the CEO of CoreValue Software notes, “At the end of the day, a lifestyle business is just a job.”  Richards goes on to note that this is fine for many people.  But if this is the case, it is a choice that one is making.  Therefore, … [Read more...]

Business Buyers Can Leverage SBA Lending

Finding the money to start your own small business can be a challenge.  Over the decades, countless people have turned to the Small Business Administration (SBA) for help.  A recent Inc. Magazine article, “Kickstart Your Business Dreams with SBA Lending,” by BizBuySell President, Bob House, explored how SBA lending can be used to the buyer’s advantage. The article covers the basics of an SBA loan and who should try to get one.  House notes that the SBA doesn’t provide loans itself, but instead facilitates lending and even micro-lending with a range of partners.  The loans are backed by the government, which means that lenders are more willing to offer a loan to an entrepreneur who might not typically qualify for one.  The fact is that the SBA will cover 75% of a lender’s loss if the loan goes into default.  Entrepreneurs can benefit tremendously from this program.  In some cases, an SBA loan even means skipping the need for collateral.  SBA loans can be used for those looking to open a … [Read more...]

How Employees Factor into the Success of Your Business

Quality employees are essential for the long-term success and growth of any business.  Many entrepreneurs learn this simple fact far too late.  Regardless of what kind of business you own, a handful of key employees can either make or break you.  Sadly, businesses have been destroyed by employees that don’t care, or even worse, are actually working to undermine the business that employs them.  In short, the more you evaluate your employees, the better off you and your business will be. Forbes’ article “Identifying Key Employees When Buying a Business”, from Richard Parker does a fine job in encouraging entrepreneurs to think more about how their employees impact their businesses and the importance of factoring in employees when considering the purchase of a business.  As Parker states, “One of the most important components when evaluating a business for sale is investigating its employees.”  This statement does not only apply to buyers.  Of course, with this fact in mind, sellers … [Read more...]

5 M&A Myths and How to Deal with Them

Where your money is concerned, myths can do damage.  A recent Divestopedia article from Tammie Miller entitled, Crazy M&A Myths You Need to Stop Believing Now, Miller explores 5 big M&A myths that can get you in trouble.  Miller points out that many of these myths are believed by CEOs, but that they have zero basis in reality. Myth 1 The first major myth Miller explores is the idea that the “negotiating is over once you sign the LOI.”  The letter of intention is, of course, important. However, this is by no means the end of the negotiations and it is potentially dangerous to think otherwise.  The negotiations are not concluded until there is a purchasing agreement in place. As Miller points out, there is a great deal that can go wrong during the due diligence process.  For this reason, it is important to not see the LOI as the “end of the road.” Myth 2 Another myth that Miller wants you to be aware of is that you don’t have to take a company’s debt as part of the purchase price.  Many … [Read more...]

What Should You Evaluate When Buying a Business?

Buying a business can be an exciting prospect.  For many prospective business owners, owning a business is the fulfillment of a decades long dream.  With all of that excitement comes considerable emotion.  For this reason, it is essential to step back and carefully evaluate several key factors to help you decide whether or not you are making the best financial and life decision for you.  In this article, we’ll examine five key factors you should consider before buying a business. What is Being Sold? If you hate the idea of owning a clothing store, then why buy one?  The bottom line is that you have to have a degree of enthusiasm about what you are buying otherwise you’ll experience burnout and lose interest in the business. How Good is the Business Plan? Before getting too excited about owning a business, you’ll want to take a look at the business plan.  You’ll want to know the current business owner’s goals and how they plan on going about achieving those goals.  If they’ve not been … [Read more...]

Interested in Buying a Business? Check Out These 3 Commonly Overlooked Areas

When it comes to buying a business, nothing is more important than the factor of due diligence.  For most people, this investment is the single largest financial decision that they will ever make.  And with this important fact in mind, you’ll want to leave absolutely no stone unturned. Let’s examine the three most commonly overlooked areas when it comes to buying a business: retirement plans, 1099’s and W-2’s, and legal documents. 1. Examine All Legal Documents While it may sound like a “pain” to investigate all the legal documents relating to a business that you are vetting for purchase, that is exactly what you have to do.  The very last thing you want is to buy a business only to have the corporate veil pierced.  Everything from trademarks and copyrights to other areas of intellectual property should be carefully examined.  You should be quite sure that you receive copies of everything from consulting agreements to documentation on intellectual property. 2. Retirement Plans Don’t … [Read more...]

Key Elements for Every Partnership Agreement

You should never forget that your partnership agreement is, in fact, one of the most important business documents you will ever sign.  Many people go into business with loved ones, relatives or lifelong friends only to discover (once it’s too late) that they should have had a partnership agreement.  A partnership agreement protects everyone involved and can help reduce problems that may arise.  Outlining what will happen during different potential situations and events in a legal framework can help your business keep running smoothly. What Should Be in a Partnership Agreement? Every business is, of course, different; however, with that stated, any partnership should outline, with as much clarity as possible, the rights and responsibilities of all involved.  A well written and carefully considered partnership agreement will keep small problems and disagreements from evolving into more elaborate and serious concerns. There are times to take a DIY approach and then there are times when … [Read more...]