Many prospective business owners believe that it is impossible to purchase a business without collateral. The simple fact is that banks do expect collateral when making a loan. Since this is the core reality of the business world, it means that many who are eager to own a business will ultimately not be able to acquire one. However, while it is true that banks want collateral for loans, there are some ways that would-be business owners can still progress towards their goal of owning a business. In this article, we will explore a couple of the ways that a prospective business owner can still succeed.
First, we must make a key distinction: there is a difference between not having collateral and having no funds whatsoever. It is key to note that the larger the business you plan to buy, the more money you will ultimately need.
A great place to begin the process of buying a business without collateral is to talk to the SBA. The SBA’s 7 (a) program offers up incentives to banks to make loans to potential buyers. The SBA’s 7 (a) program is a simply fantastic program for those without collateral, as the program will cover a whopping seventy-five percent of the loan amount; this means that you, as the business owner, only need to have twenty-five percent of the price of the business. As though this program was exciting enough, the SBA’s 7 (a) program also allows prospective buyers to use money from investors or gifts towards the needed funds. Thanks to this great SBA program, you may qualify for a collateral free loan option.
A second option is seller financing. Seller financing is actually quite common in various forms. If you can find a motivated seller, such as one who is eager to retire, then seller financing becomes a potentially viable option. It may even be possible to combine seller financing with the SBA’s 7 (a) program for a powerful one-two punch. In this situation, a key part of the process is to find the right business and the right seller.
Working with a Business Broker or M&A Advisor can serve as a massive shortcut towards finding just such a business and seller. Brokerage professionals have databases of businesses for sale along with unique insights. A Business Broker or M&A Advisor may instantly know of a business that is a good fit for buyers without collateral.
Ultimately, prospective business owners shouldn’t be dissuaded by the challenges that a lack of collateral represents. It’s true that a lack of collateral is an obstacle, but it doesn’t have to be an insurmountable problem. By teaming with an experienced brokerage professional, it is possible to find a path towards owning a business even without having collateral.
The post How to Purchase a Business Without Collateral appeared first on Deal Studio – Automate, accelerate and elevate your deal making.
This pandemic caused many business establishments to close down. Specifically, 163,735 businesses closed down during this pandemic, indicating a 23% increase in the number of business closures. However, the good news is that the economy is recovering as restrictions are slowly lifted.
This news is especially good for those looking to start or continue a business. Similarly, it also poses as a good omen for those looking to sell their business as the market just widened.
Are you among these people? Are you wondering how you can sell your business at a profitable price? Keep reading to find out how business brokers can help you with this and more!
1. Learn the Real Value of Your Business
If you’re looking to sell your business, brokers can help you understand how much you can sell your business for. Business brokers can evaluate your business accurately. Employing their expertise in business models, financial, and FF&E, they’ll be able to project your business’ value.
Such knowledge will help you set a promising price without sacrificing your profit. Aside from valuation expertise, a business broker can also help plan.
2. Extensive Connections
To find the right buyer, you need to have the right connection. Again, this is something that a business broker can help you with.
Experienced brokers not only have expertise on how to find potential buyers for you. They also have a list of professional resources such as investors to help them. There are also cases where brokers help the buyer get financing to buy your business.
They can also verify any information related to an applicant to ensure that they are who they said they are. This ensures a fraud-free negotiation.
3. Business Brokers are Great Business Marketers
Marketing strategies are as important as connections in the early stages of a sale. Posting ads on the internet or local papers is no longer enough. Today, customized advertising is a must.
As such, if you have a specific target audience in mind, consult with business brokers. They’ll know the best way to approach different audiences.
4. Negotiate a Great Deal for You
Aside from receiving a helping hand in marketing, brokers can also help in negotiating deals. For example, should the buyer question your price, they’ll use the information they gathered to defend your offer.
Business brokers also have great communication skills. When a potential buyer becomes reluctant, brokers can come in and smooth them out for you. Thus, you can rely on them to close a deal for you.
5. Get Paper Work Done
Selling a business requires extensive paperwork, which is both time-consuming and stressful. The good news is that you don’t have to go through this tedious process when you opt to go to business brokers. They not only offer negotiation and marketing services but also get the paperwork done for you.
You can trust them to get everything done for you in time. Brokers can retrieve and organize all the necessary documents for you. They’ll also be the ones to handle processing the initial offer to close the deal.
6. Allows You to Focus on Your Business
Neglecting your business during the selling process can lead to a dip in its value. This will not only lessen your selling price but can also make it unattractive to buyers. As such, while waiting for a sure buyer, you must maintain your daily business operation.
This is why it’s practical to leave the selling of the business to a business broker. It allows you to focus on your operation and maintain or even increase its value.
7. Fast Business Selling Time
Business brokers commit their time and effort to finish a deal for you. They invest all their resources to make sure that the process runs smoothly from the start.
Their expertise on how to sell a business enables them to set an achievable price range and deal. This heightens the chances of buyers swamping on your offer.
As a result, you’ll be able to find the right buyer and sell the business in no time. Note that the faster you sell, the lower the risk of encountering problems such as competition.
8. Obtain Legal Protection
The process of business acquisition requires a Contract of Sale. Such a contract requires input from various professionals, including accountants, lawyers, and conveyors. This is especially true during the negotiation period.
When you have a broker in your team, that person can act as a go-between party. Brokers communicate with every professional involved and ensure that the process is free of legal pains. The business broker also ensures that the documentation reflects exactly what the purchase and seller needs.
9. Help Maintain Confidentiality
Business sellers need to balance the information they give out to potential buyers. This technique is a known method to help protect not only the owner but also the business itself. However, the advertisement of the sale can bring a worry to the staff, suppliers, and even clients.
As such, you’ll need to ensure that potential buyers decide to forego your offer and keep the information they learned confidential. This task is very difficult to achieve without a broker. Thus, business brokers act as a buffer between you and the potential client.
They can set up a non-disclosure agreement (NDA) to ensure confidentiality. They’ll be in charge of educating potential buyers on the terms of the NDA. A broker can also help in creating a selling memorandum.
10. Maximize Profit
All the benefits mentioned above lead to the greatest one, which is to maximize profit. Some of the factors that influence your profit include setting the price too low. Another factor is when you market your business to bargain buyers.
As we’ve mentioned above, these are some of the problems that business brokers can help you with. Through their expertise, you’ll be able to get the most out of your business and at a great speed too.
Work With the Best Today!
If you’re looking for top-notch business brokers with an experienced team, Fusion is for you! We take pride in our in-depth planning session that allows for a faster and more profitable sale.
In addition, our extensive connections across all industry sectors of various sizes ensure that our clients can reach the best buyer possible. Our team also has an unmatched success record in all of St. Louis.
Still have quarries? Our team is happy to answer all your questions. So take the first step to success, talk, and join hands with us today!Read More
Every business has an array of important legal documents. However, the partnership agreement holds a unique and important place in your business and its future.
The facts are that many people choose to go into business with close friends or family members, and often these personal relationships lead to a forgoing of the partnership agreement. Don’t go this route, as it would be a major mistake. As a business owner, you have a responsibility to protect, maintain, and grow your business.
A well-written partnership agreement can greatly reduce the number of potential problems that your business can face down the road. Establishing a legal framework for the operation of your business is a must.
A good partnership agreement is one in which every major aspect of how the partnership should run is outlined and spelled out in detail. At the end of the day, your partnership agreement should be viewed as a legal document that serves as a key guidepost for the operation of your business. Since a partnership agreement is a legal document, it is essential that you work with a lawyer to create a contract that is specific to your company.
This type of agreement is often a more complex agreement than many business owners would initially expect, and for good reason. Due to the wide scope that a partnership can entail, the partnership agreement can address many different points.
It is important to remember that partnership agreements are designed to minimize misunderstandings and outline how the business should function. Issues such as how money is distributed, what percentage each partner will receive, and which partners are to receive a draw, should all be covered.
However, a partnership agreement does more than simply address how money is to be distributed. It should also outline key operational factors such as what happens in the event of the death of a partner. If that were to occur, for example, who will be in charge of managerial work? Issues such as how business decisions should be made, and how conflicts are to be resolved, are additional important issues that should be addressed.
A good partnership agreement, one that strives to foresee as many problems as possible, serves to protect your business against future disruptions. Every successful operation or enterprise has rules by which it operates, and your business should be no exception.
People frequently dream of owning their own business, as ownership has a range of perks and benefits. However, it is important for prospective business owners to step back and consider if they are truly ready. In this article, we will explore three essential questions that you need to answer before taking the next step and buying a business.
Question One – Do You Have the Right Personality Type?
Truly not everyone has the right personality type to enjoy being a business owner, and it is best that you understand if you have the right set of traits before attempting a purchase. For example, you must be comfortable assuming a certain degree of risk.
Risk and business go hand-in-hand. This is true no matter how well your business may be operated. Not everyone is comfortable with this level of risk. Owning a business means that you are not only taking financial risks, but you are also giving up the stability that can come with just being an employee. Summed up, you must have the right mindset to operate a business.
Question Two – Are You Determined to Grow Your Income?
Owning and operating a business means that you’ll have to put in a great deal of work and potentially longer hours than you are accustomed to. This is typically necessary in order to build your business and increase your income. It is key that you ask yourself if you are ready for the amount of work that typically comes along with owning and operating a business. Statistics show that the longer you own a business, the more money you will generally earn.
Question Three – Are You Comfortable with Achieving More Control in Your Life?
At first glance, many people may instantly feel that they want more control over their professional lives. Yet in reality, this is not always the situation. Being a business owner means that you have far more control over your professional and business life. Most people will view this as a very good thing. Not having someone else control your fate is a good feeling, as you’ll be able to allocate your time as you see fit. As a business owner, you are not just part of a business, but instead are the person controlling, modeling. and guiding it. At the end of the day, there is nothing quite like being your own boss.
If you are ready for the amount of work and risk that goes along with owning a business, then it might be time to take the next step. One of the easiest ways to move forward, and begin the process of owning your own business, is to work with a Business Broker or M&A Advisor. These types of professionals have years of hands-on experience in the buying and selling of businesses and can help determine what kind of business is the best for you.
The post Are You Truly Ready to Become a Business Owner? appeared first on Deal Studio – Automate, accelerate and elevate your deal making.
The restaurant and food industry is one of the unkind sectors to entrepreneurs.
Unfortunately, your restaurant is likely to fail due to a lack of planning and poor management. But in most cases, many restaurant owners find that after a period of success or unsuccessful selling foods and drinks, it’s best to sell their restaurants.
Whether you’re selling because you want to venture into a different industry or are currently experiencing financial strains, it’s best to be prepared. Whatever the reason you have to sell a restaurant business, below are five tips to help you succeed:
1. Estimate the Worth of the Restaurant
The first step to selling your restaurant is knowing how much it’s worth. Any interested buyers will want an in-depth rundown of the business’s financials, whether positive or negative. However, collecting all this information is a hectic, time-consuming process.
Therefore, it’s advisable to take your time to sort everything out. You should also find a way to strengthen your profits, sales, and business offerings for that period. Any buyer with a reasonable offer will want proof of steady cash flow and high-quality sales.
It’s also essential to convince your potential buyers of the potential your business has and its quality. Therefore, reducing your expenses and boosting sales to have a steady cash flow before listing the business for sale is in your best interest. In most cases, restaurants and other businesses in the food industry take six months to two years to sell.
You can take advantage of this time to streamline everything and improve your cash flow. Ensure you also look at areas where you can cut costs to come up on top.
It’s also essential to understand what depreciation is involved in your business. Everything in your restaurant has depreciated in value in the past years, from high-quality food preparation equipment to software and technology options you use.
2. Plan for It
Selling your restaurant business needs ample planning and preparation. You can’t go into the salesroom blindfolded and unprepared. You have likely invested a lot of money, resources, energy, and time into the business to get it where it is today.
You wouldn’t want all your efforts to go to waste because you didn’t take enough time to prepare for the sale. This can be an expensive mistake that you will regret down the line. Therefore, take your time to understand the sales process and how other restaurant owners have done it.
Ensure you also read the rules you need to follow and understand what’s required of you throughout the process. With poor planning and inadequate preparations, so many things could go wrong. For example, a simple contract breach could be catastrophic and derail any plans of selling the restaurant in the future.
Additionally, you can also consult your lawyer on what’s expected of you during the process. The best way to be prepared is to have a strong legal team by your side to advise you.
3. Use a Business Broker Specializing in Restaurants
One of the biggest challenges restaurant owners face when it comes to selling their restaurants is finding a buyer. In most cases, they have no idea how to go about this process and lack the right channels of communication.
This is where using a business broker can be beneficial. These professionals often have a network of potential buyers who are interested in buying new businesses or expanding their existing ones. Every day, they connect dozens of buyers with hundreds of available businesses for sale.
In many cases, you can sell your restaurant business by simply posting on social media or on some popular online platforms that allow you to list your business for free. However, brokers possess more resources and contacts than those available for free on some websites and social media networks.
They can also do a thorough background check on these prospective buyers and weed out those with no real interest in purchasing your restaurant.
4. Stage Your Property and Make It Appealing
Selling a restaurant is similar to selling a home in that buyers want to see an attractive property. Therefore, it’s imperative to make the exterior as appealing as the interior. Always keep in mind that first impressions are crucial to potential buyers.
The physical condition of your business is as essential as the financial condition. If the interior or exteriors are ugly and off-putting, potential buyers will think that you don’t take care of your business. An unattractive business also gives an impression that the business is less desirable than it is.
Hire a professional to paint the premises to improve your aesthetics. Additionally, ensure you also paint the doors and revamp the windows. Replace any broken lighting fixtures, windows, and doors.
Remember to also keep trash out of sight and stage the interior to appeal to potential buyers. Keeping the restaurant clean and organized is also key when looking to sell it.
5. Choose the Right Time to Sell
Unfortunately, most small business owners never have an exit strategy when selling their businesses. This often results in selling the business too late. Planning your exit strategy before selling the business is a smart move to get you the right price.
You can start by getting your bookkeeping and accounting in order and ensuring everything is in good shape. This ensures that your business is easy to sell when the right offer comes in. Remember also to make the necessary financial and capital improvements so that the restaurant sells quicker.
You should also have an in-depth study of the market conditions and the type of supply in the market. Are there any problems with the supply? This helps you find the right time to sell your business.
Are You Ready to Sell a Restaurant Business?
Selling a restaurant isn’t a one-day job. It requires weeks and even months of preparation to get the right deal. But for the business to look attractive to potential buyers, ensure you follow the above tips.
If you’re looking for the right professional brokerage firm to help you with the selling process, contact us today at Fusion Business Services. We will help you sell your restaurant business and help restaurant owners find the right buyer.Read More