3 Reasons Why Buyers Should Use a Business Broker

Many have felt the desire to do something entrepreneurial. There are 2 distinctly different paths to follow – start a business from scratch or buy an existing business.

Fortunately for business brokers many of these individuals are aware of the national statistics that are stacked against the likelihood of developing a successful start-up.

By purchasing an existing business, a buyer can dramatically minimize the risks associated with starting a brand new business. And, a professional business broker can be helpful in many ways including finding and executing on a successful transaction.

Serious Sellers:

Sellers who have listed their business with a broker are serious about selling. This eliminates wasted time dealing with owners who are not motivated to sell. Many business owners started their business to someday sell it, so they may be open to the inquiry. Flushing out the truly motived seller is a process a broker spends a great deal of time perfecting.

Variety of Inventory:

A professional broker will have many different types of businesses for sale, many of which you may not be aware of. Many prospective buyers don’t know what they want, but absolutely know what they don’t want. By working with a broker with an inventory of available business buyers are able to shop the market to determine what is the best fit for your skills and interests.

Valuable Information:

Brokers know the information you need to make an informed decision. Brokers maintain up-to-date information, signed and dated by the seller. They organize their files to be able to address just about every question imaginable, they store facts and data directly from the seller and they are quickly able to work through a business’s profile. Brokers and buyers equally value their time and will put information in play to make sure you hone in on the business that is ideal for you.

For many buyers, the process of purchasing a business is not a familiar process. A broker will be able to help guide you through all the steps and intricate procedures associated with buying a business. This will allow you to concentrate on getting ready to successfully operate your new business.

Plus, they will also have checkpoints along the way where you may bring in other advisors to help you analyze contracts and financial data.

An informed buyer is much more likely to successfully buy a business. Professional business brokers employ numerous procedures that eliminate many of the risks involved in buying a business.

Do you have a small business question you would like answered about this article or others?

Bill Sivell is a salesperson with VR Windsor Inc. [www.vrwindsor.com] 519-903-7807, which sells businesses to buyers across Canada and around the world. His 14-year career includes diverse senior management positions in marketing, advertising, sales management and operations management. His blog appears every Tuesday.

 

Favourite Business Quotes

On the heels of another wonderful holiday long weekend I thought it would be appropriate to share some of my favourite quotes.  The truth is these long weekends often times are more tiring than relaxing and lightening up the weekly blog seems to be the appropriate thing to do. 

Enjoy, and I would love to hear some of your favourites…

·         “The golden rule for every business man is this: Put yourself in your customer’s place”. – Orison Swett Marden

·         “The winners in life think constantly in terms of I can, I will, and I am. Losers, on the other hand, concentrate their waking thoughts on what they should have or would have done, or what they can’t do.” – Dennis Waitley

·         “A man should never neglect his family for business.” – Walt Disney

·         “When I asked my accountant if anything could get me out of this mess I am in with my business, he thought for a long time and said, ‘Yes, death would help’” – Robert Morley

·         “Nobody talks about entrepreneurship as survival, but that’s exactly what it is and what nurtures creative thinking. Running that first shop taught me business is not financial science; it’s about trading: buying and selling.” – Anita Roddick

·         “The competitor to be feared is one who never bothers about you at all, but goes on making his own business better all the time.” – Henry Ford

·         “You’ve got to say, I think that if I keep working at this and want it badly enough I can have it. It’s called perseverance.” – Lee Iacocca

·         “Yesterday’s home runs don’t win today’s games.” – Babe Ruth

And my current favourite…

“The entrepreneur always searches for change, responds to it, and exploits it as an opportunity.” – Peter F. Drucker

Do you have a small business question you would like answered about this article or others?

Bill Sivell is a salesperson with VR Windsor Inc. [www.vrwindsor.com] 519-903-7807, which sells businesses to buyers across Canada and around the world. His 14-year career includes diverse senior management positions in marketing, advertising, sales management and operations management. His blog appears every Tuesday.

 

Disspelling myths for aspiring entrepreneurs

Buying or selling a business can be very time consuming and often times stressful. 

It doesn’t help matters that most business owners have never sold a business before, and very often, business buyers are on the market for the very first time.   

Therefore, it’s important to dispel some of the common myths about buying a business.

The first myth is that a buyer is going to find the perfect business.   Unfortunately, there are no perfect businesses.  Buyers need to accept the fact that every business has faults.

The key is to find the right opportunity for you as a Buyer, and make it your perfect business.  Once a buyer has decided to do this, the question then becomes “What business is the perfect opportunity for me?”

A second myth is that somehow delaying the buying process will yield a better result.  Like any big decision the investigation and analysis stage takes time, as does the negotiations and eventual closing.  However, delaying the process purposely may give another buyer the opportunity to swoop in and purchase the business right from under you.

The key to analyzing and negotiating is to make it a priority.  Understand what risks you are comfortable with and what risks you are not.  Then decide on the deal points that are most important.  Negotiate hard for an agreement that you are happy with.  Delaying with the motivation of tilting the table will likely only frustrate both sides and leave you unhappy with the result.

Another myth often believed by buyers is to look at businesses beyond what they can afford.  It is common and advisable to sellers to offer financing to buyers to buy their business.  It can mean that buyer with $100,000 can actually afford a business worth $250,000.  It does not mean they can buy a $1,000,000 business.  A buyer who overextends himself will almost guarantee failure when some unexpected problem arises.

The key is to get a solid understanding of your financial situation.  While financing may be available, it is imperative that all aspiring entrepreneurs know how much money they are prepared to invest.  Plus, and perhaps more importantly, how much they expect to make. 

A business broker is a professional that buyers should turn to for assistance when deciding to buy.  They can show the buyer a variety of businesses that are legitimately interested in selling and help them through the purchase process.  With plenty of businesses to choose from in today’s market, it is more important than ever for buyers to make sure that their efforts remain focused on choosing the right business for them.

Do you have small business questions you would like answered about this article or others?  Please visit www.VRWindsor.com or call 519-903-7807. 

William Sivell is a sales representative of VR Windsor Inc., Business Brokerage; his blog appears every Tuesday.

Consider using the services of a business broker

There are always details to every transaction that are best handled by somebody who knows just what to do.

The allure of being a business owner, the opportunity to be the master of your own destiny and your investments can be very attractive.

The risks of owning your own business should not be understated.  Business opportunities by their very nature carry risk including obsolescence or reduced demand for service or product, regulatory laws, ineffective management, changes in the local or national economic condition, and many others. 

By purchasing an existing business instead of trying to start one from scratch, a buyer can dramatically minimize the risks associated with starting a brand new business.

When entrepreneurs decide to buy a business they should consider using the services of an expert.  A professional business broker can help by showing a buyer a variety of businesses that are legitimately interested in selling and help through the purchasing process.

They will be able to explain the owners’ motivations for selling and be able to provide pertinent information regarding the financial performance, equipment, inventory, product lines, customer base, etc. 

A professional business broker will be able to draft a letter of intention that covers all pertinent issues (i.e. non-compete agreements, trade name rights, leases, due diligence), plus any unique contingencies that are relevant to the transaction.

When making the decision to buy your own business, using a professional business broker will allow you to concentrate on the important matters associated with operating the business.

Do you have small business questions you would like answered about this article or others?  Please visit www.VRWindsor.com or call 519-903-7807. 

William Sivell is a sales representative of VR Windsor Inc., Business Brokerage; his blog appears every Tuesday.

Owners must make bold decisions

In tough times business owners must be pro-active to reverse any downward trends and they must initiate a plan immediately!

They cannot be complacent and just hope for the best.  They must consider bold or even painful moves such as drastically cutting expenses and staff, adding new product lines or services, hiring a marketing consultant or even acquiring another company.  But sitting back and not taking immediate action is not an option!

We all know of the tough economic times the world has faced, and more specifically Southwestern Ontario.  Image the struggles business owners face, seeing top-line sales shrink, and watching bottom-line profit almost vanish. They are responsible for the well-being of the families that work for them.

And while they share in similar challenges, the way they are able to survive and flourish are often times very similar.  Business owners who are doing well are…

1.    Finding new revenue streams.  They didn’t change their strengths, they found new customers and clients, and they are growing they’re customer base. 

2.    Marketing and advertising.  Perhaps more critically important during tough times than boom times.  They see this as an opportunity to get a step ahead of the competition.

3.    Staying diversified.  Businesses are finding ways to broaden the scope of suppliers, distributors, and customers. They are turning over new rocks.

4.    Rewarding their key employees.  Making a business less about the owner and more about the key employees ensures a highly motivated and successful team.

5.    Planning.  Not only for the next month, but the next year and the next 5 years.  They are a couple of moves ahead of the competition.

Do you have small business questions you would like answered about this article or others?  Please visit www.VRWindsor.com or call 519-903-7807. 

William Sivell is a sales representative of VR Windsor Inc., Business Brokerage; his blog appears every Tuesday.

7 Easy Steps to buying a business

Many have felt the desire to do something entrepreneurial. The allure of being one’s own boss can be very rewarding.

By purchasing an existing business you can dramatically increase the probabilities of success.   Existing businesses have a proven track record of profits, they may have a well-known brand, name, location, product mix, etc., and an established customer base for immediate cash flow. 

If you are considering a decision is to buy a business, I can suggest a few things that will help to ensure that you will be happy with your decision.

1.    Take an honest inventory of your skills, knowledge and interests.  Things such as, do you enjoy interacting with people or more comfortable behind a desk?  Do you like being the leader, making decisions and managing people?  Do you have some technical expertise or talents that you can leverage?

2.    Get a solid understanding of your financial situation.  While financing may be available, it is imperative that all aspiring entrepreneurs know how much money they are prepared to invest and how much they expect to make.  Typically, these two amounts are directly related to one another.

3.    Start your search to find the availability of businesses that match your profile.  Scheduling an appointment with a business broker will give buyers a good sense of what is available.

4.    Make an offer.  Once you are focused on a particular business a well written offer will contain all the language necessary to successfully transfer a business while offering a number of conditions that will give the buyer (and the seller) the required safeguards. 

5.    Focus on the issues. When it comes to negotiating, buyers (and sellers) must make sure they focus on the issues that are important to them rather than details that are not critical. 

6.    Do your due diligence.   There is no point in beginning this until the buyer and the seller reach an agreement on price, down payment and terms.  This is the point in time where a buyer’s accountant comes in and verifies the seller’s cash flow. 

7.    Formalize the ownership transfer. The last step in the process is to bring in a lawyer to complete the necessary paperwork to ensure a smooth transition.  This includes lien and title searches, promissory notes, bills of sale, etc. enabling the ownership of the business to change hands. 

With plenty of businesses to choose from in today’s market, it is more important than ever for buyers to make sure that their efforts remain focused on choosing the right business for them.

Do you have small business questions you would like answered about this article or others?  Please visit www.VRWindsor.com or call 519-903-7807. 
William Sivell is a sales representative of VR Windsor Inc., Business Brokerage; his blog appears every Tuesday.

Tip for sellers with special relationships with customers

Special relationships that business owners have developed with customers can be a real issue when selling the business.  A new owner may have a problem continuing that relationship and this could jeopardize the sale of the business,  It is recommended that business owners begin delegating any special relationships with customers to other company employees as soon as possible.

Do you have small business questions you would like answered about this article or others?  Please visit www.VRWindsor.com or call 519-903-7807. 

William Sivell is a sales representative of VR Windsor Inc., Business Brokerage; his blog appears every Tuesday.

Things to consider when deciding to buy a small business

When deciding to buy a business, prospective buyers sometimes are faced with the following dilemma:  Do I buy an existing business or do I buy a new franchise? 

Some of the advantages of an existing good independent business include a proven track record of sales and profits, a well-known name and location, a strong mix of products and services, a group of knowledgeable employees and good customer base.

Buyers will be able to use the business’ established customers for immediate cash flow and as the base for future business growth.   This will help eliminate what can often be an extensive and challenging start-up period for owners. 

Because of seller financing, the new buyer of an existing business is able to leverage their buying potential into a larger business with bigger cash flow.  Also, due to the seller financing the transaction, the seller will want to ensure that there is a smooth transition to ensure the buyer’s success.

Finally, buyers of existing businesses will have full control of the company’s strategic direction without having to share their profits with anyone else. 

There are benefits with buying a franchise too.

Buyers are able to purchase an established business plan with step by step guidelines.  Most franchisors offer training and operational support due to their incentive of the royalty fees that they will earn from the franchisee.  Usually, the franchisee will also have access to other owners for help, ideas and moral support.

Regardless of which path a buyer chooses to follow, they need to exercise a considerable amount of due diligence.  In fact, in many ways, a buyer has to ask more questions and do more research when considering purchasing a franchise.

For instance, they will not only need to thoroughly understand the business and the current economic landscape; they will also need to comprehend all the issues associated with the franchisor. 

Franchise buyers will need to understand the immediate out of pocket expenses they will incur upon their purchase.  They will need to research what other fees they will be responsible for paying.

Buyers will likely have to pay the franchisor a royalty as a percentage of their sales, and they may also be required to lease equipment, purchase supplies or services directly from the franchisor.

Buyers will need to explore the level of regional protection they will have.  What are the franchisor’s guarantees that they will not sell other franchises in the area – and for how long? 

What kind of empire building opportunities will the buyer have?  Some of the more successful franchise owners are those who own multiple outlets in the same area, and are able to utilize their economies of scale.  Buyers should also find out if they will have first right of refusal for new franchises.

Unpleasant as it may seem buyers need to know what percentage of the franchises they are considering purchasing fail each year and how many close with the first two years.  Understanding the turnover rate of franchise ownership will also help paint a picture of attractiveness. 

As with purchasing any business, a buyer not only needs to have a plan going into the business, they should have an exit strategy as well.  Franchise buyers need to identify what kinds of restrictions they will be under when they decide to sell.  Will they be able to sell it to anyone or only to the franchisor?  They should also research the comparable sales prices of franchises that have recently sold. 

Although it is difficult to make blanket statements about which franchise models are better than others, buyers need to understand where their franchisor’s interests lay before they purchase.

Do you have small business questions you would like answered about this article or others?  Please visit www.VRWindsor.com or call 519-903-7807. 

William Sivell is a sales representative of VR Windsor Inc., Business Brokerage; his blog appears every Tuesday.

Bereavement is a Symptom

With the growing number of owners of established businesses reaching the retirement age of 50 years old or older, it is likely that many will be ready to leave their business within the next decade or so.  What have you done to plan for that day?

Planning for what is typically the biggest financial event of your life is worth your time and effort.  It should not wait till the day you hand-over the keys.

Exit planning is not mysterious, time-consuming, nor just a clever way to sell you another product.  It is, however, a way to help you achieve your financial and lifestyle objectives.

One of your first steps in your plan should be to take a hard look at yourself!

Building a business is an emotional commitment.  Your whole life is wrapped up with your business.  Your partners, suppliers, customers and staff become part of your extended family.  Many business owners mourn the loss of status and purpose that running a company can bring.  Most imagine that financial security is what they wanted, but find out establishing, building and meeting the challenges along the way mattered most.

Business owners who successfully and happily make the transition typically have plenty of friends, hobbies and outside interests.  They devote more time once they have left their company to these efforts.  They donate their money and more importantly their knowledge to good causes.  They spend time with their family and devise a worthwhile second chapter rather than a desolate retirement.

If you do not prepare yourself for life after your business transfer, you will not truly enjoy the fruits of your labour. 

Take the first step in your plan and image what your days and weeks will be like without being first to the shop…. How will you feel?  What hobbies would you spend more time at?  Are their charitable causes you could devote a regular part of your week or month too?  Have you discussed your plans with your family?

Finally, secure the services of a good business broker/exit planner to help you navigate through your exit plan; it can be good preventative medicine.  Although there are no guarantees, sound guidance when it comes to goal setting, strategic planning, and the step-by-step execution of your plan can go a long way to maximize your financial payout and minimize the likelihood of seller’s remorse, after you transition out of your business. 

Do you have small business questions you would like answered about this article or others?  Please visit www.VRWindsor.com or call 519-903-7807. 

William Sivell is a sales representative of VR Windsor Inc., Business Brokerage; his blog appears every Tuesday.

Buyer’s... take an honest inventory of skills

I’ve written a few times about the benefits of buying an existing business rather than starting a new one. 

By purchasing an existing business you can dramatically minimize the risks associated with starting one from scratch.   Existing businesses have a proven track record of profits, they may have a well-known brand, name, location, product mix, etc, and an established customer base for immediate cash flow.  Many new start-up businesses don’t make it through their first birthday and fewer make it to their 5^th anniversary. 

Whether your decision is to buy or start a business, I can suggest a few things that will help to ensure that you will be happy with your decision.

First, get a solid understanding of your financial situation.  While financing may be available, it is imperative that all aspiring entrepreneurs know how much money they are prepared to invest.  Plus, and perhaps more importantly, how much they expect to make. 

Second, take an honest inventory of your skills, knowledge and interests.  Things such as, do you enjoy interacting with people or are you more comfortable behind a desk?  Do you like being the leader, making decisions and managing people?  Do you have some technical expertise or talents that you can leverage?

Finally, one of the keys to a successful business is finding the right business for your personality. Adapted from Rhonda Abrams’ book, What Business Should I Start?  The E-Type Test will show you what of nine E-Type personality traits and working styles you identify with. Answer all the questions and your E-Type will be displayed in a pie chart. More information will be displayed as you mouse over the results.

Once you complete steps 1-3 start your search by scheduling an appointment with a business broker.  They can show a buyer a variety of businesses that are legitimately interested in selling and help them through the purchase process.  With plenty of businesses to choose from in today’s market, it is more important than ever to make sure that their efforts remain focused on choosing the right business for them.

Do you have small business questions you would like answered about this article or others?  Please visit www.VRWindsor.com or call 519-903-7807. 

William Sivell is a sales representative of VR Windsor Inc., Business Brokerage; his blog appears every Tuesday.

Business Quotes that will make you go... hmmm

On the heels of another wonderful holiday long weekend I thought it would be appropriate to share some of my favourite quotes.  The truth is these long weekends often times are more tiring than relaxing and lightening up the weekly blog seems to be the appropriate thing to do. 

Enjoy, and I would love to hear some of your favourites…

    · “When I asked my accountant if anything could get me out of this mess I am in with my business, he thought for a long time and said, ‘Yes, death would help’” – Robert Morley

·         “I don’t want any yes men around me.  I want everyone to tell me the truth…. Even if it costs him his job.” – Samuel Goldwyn

·         “I always arrive late at the office, but I make up for it by leaving early” – Charles Lamb

·         “His insomnia was so bad, he couldn’t sleep during office hours” – Arthur Baer

·         “When a man tells you that he got rich through hard work, ask him ‘Whose?’ ” – Don Marquis

·         “You’ve got to be very careful if you don’t know where you’re going, because you might not get there” – Yogi Berra

·         “We didn’t actually overspend our budget.  The allocation simply fell short of our expenditure.” – Keith Davis

·         “Be kind, for everyone you meet is fighting a harder battle” – Plato

·         “Most of what we call management consists of making it difficult for people to get their work done.” – Peter F. Drucker

And my current favourite…

·         “The definition of a consultant: Someone who borrows your watch, tells you the time and then charges you for the privilege.” – Anonymous

Do you have small business questions you would like answered about this article or others?  Please visit www.VRWindsor.com or call 519-903-7807. 

William Sivell is a sales representative of VR Windsor Inc., Business Brokerage; his blog appears every Tuesday.

Being a Leader is more than just being in Charge

Being a business owner is no easy tasks.  Yes, the rewards can be great, but there are many sacrifices made along the way to achieve those rewards.  It’s not for everyone, but those business owners who do succeed and those aspiring entrepreneurs who will become masters of their own destiny all must become great leaders in their own way.

Recently, I found some interesting information I wanted to share with you.  I cannot take credit for the information, as it’s coming to you 3^rd hand (and I don’t know it’s original source), but it was shared with me very early in my business career and I think very relevant to small business owners and aspiring entrepreneurs:

1)   Understand that, at the end of the day, leadership is all about relationship: 

People will not follow you if they don’t trust you.  Showing leadership in your work means that building high-trust relationships is Job#1.  To cultivate these bonds, peak performing leaders remember that the little things are the big things when it comes to building loyalty.  Here’s the key: if you simply fill the needs of your staff, they will remain with you until someone who can do it better comes along.  But if you deeply connect with them as an individual, they just might remain with you for life.

2)   Remember leaders strive for mastery over mediocrity.

The quality of your professional life ultimately comes down to the quality of the choices that you make every minute of every hour of every day.  Our highest personal endowment is the ability to choose our response to a given event.  We can choose to get angry with a difficult staffer, or we can see this as an opportunity to deepen the relationship by dealing with the problem in a creative, effective way so that the staffer is impressed enough to tell the world, positively, about your management style, and you.

3)   Stop doing what is easy, and focus on doing what is right.

Weak performers spend their time taking the path of least resistance.  Bold leaders are different.  They know that the tougher you are on yourself, the easier life will be on you.  When you have the courage to do what your heart tells you is the right thing to do in every instance, rather than doing what is easy, you will raise the quality of your professional life to a whole new level.

4)   Smart leaders know that the time is now.

If you don’t act on life.  Life has a habit of acting on you.  The days slip into weeks, the weeks slip into months, and the months slip into years.    You can, most assuredly, influence today and in turn tomorrow.  Those who act now, find their way to success.

Do you… or can you… master 1 through 4?  Everyone can be a good leader, and be successful in business with a little drive and perseverance. The answer ultimately rests on how committed and focused you are at achieving you goals. 

Do you have small business questions you would like answered about this article or others?  Please visit www.VRWindsor.com or call 519-903-7807. 

William Sivell is a sales representative of VR Windsor Inc., Business Brokerage; his blog appears every Tuesday.