Category Archives: small business ideas

More than One Reason to Start or Buy a Business

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How many times do you go to a cocktail party or just hang out with friends and hear things such as “I got this great idea for this new business”, or “Ive got this great idea for this new invention”, or  “If I were the boss and owned this business that I am working at, I would ______________.”   Words are said, heads nod, cocktail parties end and friends go home and nothing happens.

But for some the entrepreneur spirit rises to a greater height than just words, and they are able to turn those words into action.   What is the difference between those at the weekend cocktail party talking about it and the person that wakes up Monday morning and actually pursues it?  Very often, the inspiration to turn words into actions lie in the reasons why one want to pursue this path.  What are the reasons some turn those casual interest into action?

Buy A Business

Photo (c) bluewolf.com

As a business broker I have many discussions with individuals that want to buy a business.  The process of buying a business or starting a business both are filled with trepidation, concern, excitement and pursuing of yet to realize results.  One of my functions in working with individuals in the process of buying a business starts with a  simple question – WHY?   Why do you want to buy a business? or in some cases   Why do you want to start a business?   There is a big difference between the person that talks about buying a business or starting a business and one that actually follows through on those aspirations.  And the reason why one wants to start or buy a business can be very different as well.

The below list is certainly not complete but explores some of the reasons one takes the next step.

Why Do You want to Buy a Business or Why do you want to Start a Business?

1. Sometimes its not just about the money, someone has a passion for a field or effort and just wants to immerse self into that field.

2. Others, want to turn filthy rich. Some studies will speak to the high percentage of individuals that gained significant personal wealth through buying a business or starting a business.

3. Someone may just want to have a job to count on.  If you are the boss (of yourself), Who is going to walk into your office and fire you.  No one.  You have control of your job security.  Maybe this venture will turn into more, but at this point, “I just need steady work”.

4. There is a want to start or buy a new business because a person wants out of existing business due to “burnout”, or fatigue and wants to enter a new venture to re-invigorate and try to re-discover the energy that comes along with an entrepreneurial new start.

5. There may be a compelling wish to pursue a new venture that is genuinely making peoples lives better, and a person has a need to fulfill this want of self- fulfillment.

Real Reason For Starting Your Own Business

People who want to be entrepreneurs cite reasons such as satisfying a self-determination, wanting to set their own hours, wanting to be their own boss, and wanting to test themselves, as reasons for starting a new business. But when we get down to it, most people want to start a business to gain financial freedom. Starting or buying a business in the pursue of financial gain and to provide a comfortable existence for self, family or others is a realistic and well-proven approach.  Starting or Buying a business so one can spend more time with family is both mis-guided and unrealistic.

The reasons one does start a business, or buys a business can vary greatly, and the list is longer than outlined above. But there are only 2 types of entrepreneurs or small businessman when it comes to buying a business or starting a business – Those that Do – And Those that Don’t.

I Want to Buy a Business… I Think

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Starting a business is an exciting and potentially rewarding venture. Buying a business can also be an exciting and rewarding venture. If one wants to be an Entrepreneur or Small Business Owner what route does one take?. Is it best for you to start your own business. Is it best to buy an existing business. Or as in some cases (as in my business career) are you involved with both starting a business and then at some point buying a complimentary business or similar business(s) to add on to the business that you had started.

Buying And Selling A Business – Facts

I am in the business of helping business owners and individuals buy and sell businesses. I interact with both a lot of potential buyers and potential sellers . Understanding the key points below that outline some information regarding the future sale of your business, or if opportunity presents itself buying a business may benefit your situation:

1. ALL business owners are probable future business sellers

We all need some “exit strategy” from our business. Selling ones business for a nice gain is one of the more appealing exits from a business that exist. Prepare in advance for that fact. Also know and understand the value of what may be your largest asset- your business. Even if you are not plannining on selling your business- it makes business sense to know what the value of your largest asset actually Is. On my website www.sellabusinessflorida.com we list 1000’s of businesses for sale. On this site one could locate “like’ businesses and use this information to approximate the value of their own business. But please keep in mind all businesses are different, but this would be a starting point to ballpark valuation.

2. Not all businesses that try to sell actually sell

Homes are bought and sold all the time. Some homes take much longer to sell than others (especially here in the South Florida market). But ultimately most all homes do sell. The same is not the case for all businesses that attempt to sell. The process of selling a business can be a long process, and that process does not always end with an executed contract and or sales agreement .

Buy Or Sell A Business

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3. Most people that say they want to buy a business don’t buy a business

Industry statistic regarding this fact vary, but the numbers may be as high as 9 out of 10 peoplethat actively pursue acquiring a business, talk to business owners about selling their business, and engage in some form of due diligence don’t buy a business. The reasons vary and go beyond the scope of this post, but money “surprisingly” is a determining factor in not having a potential business buyer buy a business.

4. If you have started your own business and are looking at ways to boost sales, buying another like business is a very viable growth business concept

Buying A Business Comes In All Shapes And Sizes

Eliminate the thought that buying a business means $100,000- $5,000,000+ deals. It can be as simple as buying an online web store for $200 that is a perfect fit and the additional traffic that it can drive to you is extremely beneficial. – Eliminate the thought that you need to have big piles of cash and the person selling their business is walking away with an all cash deal. MOST businesses sold today involve seller financing. The seller has both a vested interest in your success, and the seller is eliminating the need for you to go to a bank to finance the acquisition of the business. The seller is your bank. The seller understands their business and the likelihood of your success with their business, very often better than a banker would.

If you have started a business and need to “boost sales” and not sure how to gain additional customers or sales, buying a business that may be a competitor or a complimentary product of service can be an effective strategy. If you are thinking of starting a business, and want to “jump start” your effort buying a small business that you can build on and mold into your own is also a very viable strategy.

Thinking of buying a business? Will you be that 1 out of 10 that actually goes forward and makes that goal a reality.

3 Small Business Owner Concepts that Sound Unusual.

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  1. My business runs better without me
  2. I’m selling my business after 20 years time to take it easy? No, its time to work hard
  3. When Negotiating- Those who want it less – Wins?

My focus is working with business owners and individuals with the process of buying and selling businesses.  These concepts apply both to the process of buying and selling businesses as well  running a small business.

My Business Can Run Without Me

1.  When starting your business, you are the face of your company, you may be the sole or only interface between you and your customers or clients.  Firstly this approach does limit the amount of growth your company can/may experience.  Secondly if the company is so reliant upon you, What happens to your company if you are gone?  Do your customers buy from you or your company? Are they the same thing. Are you building value in your company?  If you sell your company and you leave, what do you have to sell?  In the beginning of building your business- you are the guy/girl.

This business depends upon you, it relies upon you.  Preparing for the eventual exit of your company your efforts should be towards one of reducing that dependence on you.  So what can you say, or what do you want to be able to say- “this company cannot run without me”. Or “this company runs fine without me”.  Is preparing your business for eventual sale similar to your business plan for future long sustaining growth?  When positioning your business for sale, or just growing your business, work on making the company one that is NOT “All about Me”.

Business Owner

Slacking Off When Trying To Sell Your Business

2.  You started a business and have owned it for 20 years and now want to look to sell it in a year-  What should you do? – Run it like you will own it for the next 20 years.   This is done with certain limitations to capital expenditures, and capital improvements, but speaks more to the mindset needed during this period.  Starting a business, growing it and running it for 20 years and then selling it for significant gain is similar to running a marathon.

Like in a marathon sometimes Small business owners “hit the wall”, are done and just want to exit/finish, sell their business and be done.  But why run hard for 22 miles and then walk the last 2 miles? Finishing strong in a race is always good.  And a small business that “finishes strong” can pay big rewards.  Would you rather buy a business that is trending up or trending down.  Also, if you “start walking” and your business doesn’t sell, what is the state of your business at the end of that walk?

Business Negotiation

3.  Could it be when negotiating- He who wants it LESS wins?   If you are looking at a potential new supplier that is hungry for your business and your present supplier is doing a good job, what is the likelihood of negotiating favorable pricing terms from the new supplier?.  A salesman calls you on the phone and wants to offer you SEO services but  you are currently page 1 on Google Search and getting 4000 hits per day but he is willing to do “what it takes” to get your business-can you negotiate a good deal?

You are looking at buying a business.  Currently you are looking at 3 similar businesses to buy.  2 of those businesses offer great seller financing.  You ask for seller financing from the 3rd, and you are willing to “walk away” if you don`t get your terms.  What is the likelihood of you accomplishing those terms.?  When establishing terms you need are you willing to walk away if you don`t get those terms?   Or put another way, my wife wants to buy a new house, she wants this specific house, so I am assigned to negotiate with the buyer.  Being that “we” really want the house, am I prepared to present conditions that are “deal breakers”.

Am I willing to walk away if I don`t get the $3,000 price reduction -No.  And to those that are married- I need not say more.  In these cases negotiating is very difficult as we are not one that “Wants it Less”.    Actually the “wanting it more” is so great that I feel I exit the world of negotiating and enter the world of hoping…

Small Business Owner/Entrepreneur Experts Wanted

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What is an expert? Are you an expert? Do you call yourself an expert? Do your customers refer to you as an expert? Undoubtedly, it provides value to be viewed as an expert in a certain field or line of work. Is aspiring to attain such status a worthy goal, or is attaining such status really just a byproduct of ones efforts towards larger, bigger picture goals?

My current business is helping people and business in the process of buying and selling businesses. My perspective or “area of difference” is from the perspective of a small business owner that has personally bought many businesses over a 20 year period to add to my existing business . The interesting component of what I do in helping people buy and sell businesses is that most people only buy or sell a business once in their life once, most never do at all. So when someone is looking to buy a business or sell a business and only do it once, it can be accurately stated that that person cannot be an expert in that process. Maybe when buying a business or selling a business one should seek advise or help from an expert- but that is not what this article is about.

The Definition Of Entrepreneur Expert

My opinion is that the term expert is a widely used term and its use has only been growing as the internet is reaching further through social networks and into our daily lives. Maybe the term is getting over-used and “watered down.” We all get on Google, search, and run into experts everyday suggesting, telling, guiding so many of our everyday actions and even views, or way of thinking. Personally, while trying to further educate myself on internet marketing, or internet business opportunities, or gaining greater website traffic, I consistently find the following guidance by experts in the field.

“Establish yourself as an expert and provide feedback, advise, opinions on the various

Business Experts

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forums, user groups, etc. to increase your Internet visibility and viability.” It is kind of intimated that gaining the expert status is relatively easy. I personally think the goal of aspiring entrepreneur is to achieve the status of expert or having expertise in a selected field – but the real goal is to have that “tag” or description of you applied by others. – Undoubtedly it carries so much more impact and value when applied by others.

But beyond the impact stop and do the math. If you think of yourself as an expert – 1 person thinks of you as an expert. Now if 100 people think of you as an expert and they tell their 10 friends that comfortably refer and think of you as an expert, you have 1000 people thinking of you as an expert. From that fact, goods things may happen on your way to bigger goals.

Entrepreneurs and small business owners very often perform similar or the same function within your field of choice over and over does that make you an expert? You very well may be an expert in performing that task or service. Again the goal I believe is to have others apply the term expert to your business efforts.

The one common element among the people I associate with and think of as “experts”, is the fact that I never hear them refer to themselves as experts. Actually, I find myself referring to them as very knowledgeable or accomplished people, as I find it difficult to apply this lofty term to most any professional. Again, part of me says expert is a term that should rarely need to be stated in the first person.

Calling Yourself A Business Expert

I was intimately involved with starting, running, and growing a non-internet related business for 20 years and interacted consistently with testing labs, lawyers, equipment manufacturers, regulators, inspectors, trade associations, and educators within the industry. Did I consider myself an expert? I never felt I was. But maybe I was.

Please find what Wikipedia says about the term EXPERT.

An expert is someone widely recognized as a reliable of technique or skill whose faculty for judging or deciding rightly, justly, or wisely is accorded authority and status by their peer or the public in a specific well-distinguished domain. An expert, more generally, is a person with extensive knowledge or ability based on research, experience, or occupation and in a particular area of study. Experts have a prolonged or intense experience through practice and education in a particular field.

What are you calling yourself? What are others referring to you as? Do you display a unique expertise in you field? Is that expertise recognized by those around you?

I think aspiring to be the best in your field, continuously seeking education, and always looking for means to self improvement is the road to success. For some that road may be longer than for others. But remember in lieu of reaching “expert” status, you can be pretty damn good at what you do, and for your customers or target market that may be just what they are really looking for.

How to Fuel Your Business Sales Growth – Organic vs. Acquisition

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Sales Growth. Every business needs sales growth. When the company bottom line is lacking and cash flow is deficient a business owner may pour thru his/hers monthly financials or spreadsheets reviewing line entries to find out where the business is and to find any glaring problems. Most often this analysis results with the same outcome. INCREASE SALES or DECREASE EXPENSES.

I, and many other business owners, recognize that reducing expenses is always a good thing, and during an economic downturn such as the one we are presently experiencing it is more than necessary. But my experience is that you can only reduce expenses so much. It helps your situation month after month to attempt to reduce your expenses to improve your bottom line, (and is a great business discipline), yet at some point you get to the place that you cant really reduce expenses much more, YOU NEED TO GROW SALES.

Types Of Business Grow

Sales growth also occurs across many different efforts, but these different efforts can be simplified to categorize sales growth as:

  1. Internal Sales Growth (or referred to as organic growth)
  2. Growth thru Acquisition

Companies may tend to use just one of the above means, or both of them. In my last business our sales growth came thru a combination of both internal growth and growth thru acquisition. Both means have advantages and potential disadvantages. But both should be considered. The longevity of the business may also dictate what means to utilize for sales growth. Speaking from personal experience of growing and running a business for 20 years here are a few of my findings.

In the early years annualized sales growth of high double digits and or low triple digits was very attainable thru internal growth. But as your sales grows and your year over year comparisons are based on higher sales numbers attaining the higher sales growth figures became more difficult. So acquisitions helped support our internal growth efforts. Efforts for internal growth never stopped, they just got supplemented with strategic acquisitions. Recognize that acquisitions that are synergistic in nature can have some tremendous results on your bottom line.

A poorly performed acquisition can also have the opposite result and can be very costly to the business. Where do you look for potential acquisitions? Competitors are always the first best place to keep your eyes open to. Below are some of the pros, cons associated with growth thru acquisition and thru organic efforts.

Business Growth

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Sales Growth Thru Acquisition and Organic Efforts

Pros/Cons – When acquisitions are truely synergistic the effect on your bottom line can be significant. Even when considering the acquisition cost of money consider the following. If you sell Yellow Widgets and your sales are $10,000 a month – you may have the monthly cost of business to sell those widgets including a building, a telephone, insurance, advertising, company car, receptionist, etc -cost totalling $6,000 per month. You decide to buy a local competitor that sells Red Widgets and his sales are $7,000 per month. He also has similar cost of business- you may find that you may increase your sales now to $17,000 and you no longer need his building, phone, company car, and receptionist. Even considering the cost of money for acquisition- you probably have increased your bottom line virtually overnight. So immediate sales increase is a plus – But consider:

  • Handling/managing a big bump in sales “overnight” can be a daunting task and business can be lost in transition and may need to be factored into the acquisition decision analysis.
  • The customers of the “other” company are used to doing things in a different way. Your way may be an improved way, but the difference may be detrimental in the eyes of some acquired customers.
  • Financing the acquisition can be difficult- Financing thru the Seller is usually easiest, and being they are in the business- they can better understand and see where the money is coming from and the likelihood of payment.
  • Acquisition can grow sales at a much higher more immediate rate. You gain the benefit to the bottom line “today”.
  • In current economic times Acquisitions may be had at more favorable multiples of earnings.
  • Organic growth – the customer is “brought along” with your company philosophy, approach ,and methods and have a certain “comfort factor” with this approach.
  • Organic growth rates may decline as the maturity of the business grows.
  • Organic growth adds to the stability of the company. If acquisitions are not available the company can rely on own internal efforts and have control of those efforts.

Acquisitions for most businesses should be considered. Organic growth can be more “slow and steady”, but “slow and steady” with a surge here and there can be a beneficial company business model towards fueling business Sales Growth.