Author: Fusion Business Services

Over five million new businesses were started in 2022 in America alone. The first step when starting a new business is to go through the different business structures you can use. This is a crucial decision as it affects various components of your business like taxes and liability.

There are five common options when it comes to an organizational structure, so you need to learn about them all before you make a decision. A business structure is the legal representation of a company. It clearly defines who owns the company and how it distributes its profits.

Before you register your business you need to have a business structure in place. It can also be time-consuming and costly to change structures later on.

Keep reading to find out more about the different business structures out there.

Sole Proprietorship
When you think of buying a business, a sole proprietorship is most likely what you have in mind. This structure means one person owns the business and is in charge of its operations. It is a common business structure and one of the easiest to set up.

If you’re planning to work alone or do the bulk of the work, this might be the right business type for you. Just keep in mind that you’re solely responsible for all the business’s financial obligations like debt. This is why this structure works well for home-based, low-risk businesses, or retail businesses.

A sole proprietorship also allows you to test out your business idea before creating a formal company.

A Partnership
This business structure refers to two or more people owning and operating a business together. A partnership is the simplest multi-owner business structure.

Similar to a sole proprietorship, a partnership allows the owners to test their idea out and flesh it out further before they establish a more formal company.

A partnership can be classified as general or limited. A general partnership means all partners have equal roles and responsibilities when it comes to the company.

A limited partnership is a bit more complicated. In this type of partnership, some of the partners will still be general partners, but the limited partners refer to investors. Limited partners have limited control and liability when it comes to the company.

A Corporation
In the previous business structures, the companies and the owners are one. When it comes to a corporation, the company is an independent entity that exists separate from the owner.

This business structure is more complex than the previous two, and also more expensive. A corporation has to comply with a lot of rules and regulations that the previous two don’t have to worry about.

A corporation isn’t meant for a start-up business. This business structure, also known as a C corp, is geared toward established medium- or high-risk businesses. General people opt for corporations when they need to raise funds, plan to sell the company or plan to take the company public.

Corporations come in various shapes and sizes. Common corporation types include:

Benefit corporations
Nonprofit corporations
Closed corporations
Open corporations
Benefit corporations, or B corps, are a good choice for for-profit businesses that strive to make an environmental or societal impact. Nonprofit corporations are companies that don’t focus on making money and are tax-exempt due to the nature of their work.

Closed corporations are privately held companies that don’t have many shareholders and that have limited liability protection. Open corporations allow the public to trade sticks,

S Corporation
While this might seem like it should fall under the corporation section, S corporations are business structures that stand alone. They have the liability protection of a corporation, but they have added tax benefits, making S corps a great option for smaller businesses.

These businesses need to meet specific IRS criteria in order to classify as an S corporation. S corps can’t have more than 100 shareholders and these shareholders need to be citizens of the United States.

An S corp allows shareholders to sell their shares without tax consequences. There also isn’t a disruption in the business if a shareholder leaves the corporation.

Limited Liability Company
A limited liability company combines some aspects of a partnership with those of a corporation. To create a limited liability company you need to file paperwork with the secretary of state for the state you plan to open your business in.

This structure is well suited to medium- or high-risk businesses where you would want to protect your personal assets. This means if the company doesn’t succeed and goes bankrupt, your personal assets will be protected. So you might lose the money you initially invested in the business, but you won’t be held responsible for the debt the company owes.

This business structure also has some tax benefits. Instead of paying corporate taxes, the income and expenses go to the owners’ personal tax returns. So the owner will pay income tax on the profits.

Different Business Structures Explained
Buying a business can be a complicated procedure. You need to understand the different business structures before you even spend a dime. Each type of business ownership has its own pros and cons, so you need to do your research to ensure you pick one that suits your needs.

If you’re ready to take the next step in becoming a business owner, contact us. We’re happy to answer any questions you might have about pricing and valuation issues, exit strategies, business financing, or any other subjects related to the purchase or sale of a business.

7 Reasons You May Need to Sell Your Business

Did you know that around 20% of new businesses fail during the first two years, and 45% fail during the first five years? Though everyone wants to see their business succeeding, running a business is never easy.

Business owners face different obstacles that can cause them to sell their businesses. Though you may have dedicated your time and finances to starting and growing your business, selling it might be the most brilliant move you can make. 

But what makes people decide to sell their business? Here are some common reasons why you may opt to sell your business.

1. You Need Money

One of the common reasons for selling a company is money. Business owners sometimes convert their businesses to liquid cash and use it for different purposes, especially emergencies.

Some people sell their businesses to pay medical bills, travel the world, start another business or chase a new hobby. In such cases, selling your business may be the best way to get the money you want. 

Note that, though buyers are interested in investing in a new business, especially if the owner is losing interest in it, buyers shy away from businesses running at a loss. 

Therefore, if you are selling a company to fund another lifestyle or need, ensure you still pay attention to the business until you get the right buyer. 

2. Unforeseen Business Risks

There are several risks that a business can face. Some common risks include security, financial, legal, compliance and more. The success of any business relies on how much they prepare for business risks.

Some people choose to sell their business because they do not have enough money to operate it while failing to open their doors after a security breach. When starting a business, it is imperative to determine the risks you may face and have a robust risk management strategy. 

Suppose you don’t have a good plan to handle risks and can no longer hold the business together. In that case, it may be an excellent time to sell. Though you will still lose your business, selling will allow you to start over again.

3. Retirement

You have dedicated several years of your life to growing and building your business. Now it may be time to take a break from it. Several entrepreneurs sell their profitable businesses because they are retiring.

Others choose to pass the business down to their family members. However, the latter is only possible if your family members share your passion and have the right skills to run the business.  

If you feel it’s time to take it easy and enjoy your good golden years, consult the best business services providers near you and find the right buyer for your business. They will maximize your sale price, give you different offers or options and ensure you make good money from your business.

Whether you are moving to a retirement home, want to buy a house, or start an easy-to-manage business, you will get enough profit to fund your plans and have some money for retirement. 

4. Relocation

Several business owners sell their businesses because they have to move to another state or country. Since relocating a business can be challenging, it may make sense to sell the business and start another in your new location. 

In some cases, you may need to sell your current business to explore a better business opportunity in another location. Since relocation also involves strict timelines, you may need to find a buyer as soon as possible. 

This can also affect your selling price. To ensure you have enough time to transfer your business and that you don’t sell your business at a loss, consider hiring a broker immediately after you decide to sell. 

5. Looking For a Change

Changes in dynamics can cause a business owner to sell their company. This can be as simple as losing interest in the business. It is okay to desire to change or take time off and figure out the next step.  

Changes in life, such as a divorce, can also cause a business owner to sell the business as they divide their assets or change their spending habits.  

Whether you want to pursue another different type of business or not, you can choose to sell the business while it is still profitable. 

6. Burn Out

Running a business is very involving. To ensure your business is successful, you may need to stay actively involved, which can be very tiring. If you are no longer interested in the business or feel tired, consult a business broker and know your options. 

This way, you will get expert selling advice, including the best time to sell the business at a good profit. Note that when burnt out, it is best to sell the business before losing interest in it.

This way, you will be patient enough and more determined to sell it at a reasonable price.

7. Business Partner Problems

If you disagree with your business partner, you may want to sell the joint company and venture out independently. In some cases, one partner may consider buying the other partner out, or both parties may decide to sell to a neutral party. 

Before selling the business, consult an expert business broker and get a possible asking price from an outside buyer. Sometimes, selling to an outside buyer may be more profitable than selling to your partner. 

At times, it may be easier to sell the whole business instead of retaining some equity. Get to know what is achievable and the best decision to make for your company. 

Sell Your Business with Fusion Business Services

Selling your business is a vital decision. Since you have invested your time and money in your business, it is only fair that you get the best deal when selling it. At Fusion Business Services, we work with businesses and help them get the best from their investments. 

We will evaluate your business and ensure you get the right buyer. Consult our experts and learn how you can take advantage of our network to sell your business. 

6 Things to Consider When Selling Your Restaurant Business in St. Louis

The restaurant business is a lucrative one with annual sales comprising more than 4 percent of America’s gross domestic product. That’s a whopping $863 billion in sales. So, there’s no doubt about it, the hospitality industry is cut-throat.

With so much competition around you, owning a restaurant is not for the faint of heart. This is probably one of the most common reasons most restaurant owners choose to sell when the time is right. 

If you’re one such business owner, check out these selling tips before you put your restaurant on the market. 

1. Know What Your Business Is Worth 

As a business owner, there’s nothing worse than undervaluing or underpricing what you’ve spent many years building. Before you list your restaurant for sale, ensure you have a clear idea of what it’s really worth. 

To add to this, potential buyers or investors will want a detailed breakdown of your financials because they need to know what they’re buying into, too. 

Set aside enough time to gather all the necessary financial data you need so that your sales pitch is attractive to potential buyers/investors. They’ll want to see a steady influx of cash flow as well as high-quality sales. During this time you can also augment and streamline your sales and expenses to improve your cash flow. 

It’s also a good idea to scope out what other restaurants are selling for in your area. Hire the expertise of an appraiser if you want to make extra sure that you sell your business for the right price. 

2. Understand the Terms of Your Lease 

Selling a business is not always as easy as finding the right buyer. You often have other responsibilities that need consideration, such as the terms of the space you are leasing. 

If you do not own the restaurant building/space, you’re most likely leasing it from someone. Before you sell your business, you must ensure you aren’t breaching any lease terms. 

Remember that your landlord could jeopardize the terms of a good sale if you are in breach of a lease agreement. If you’re unsure of all the legal particulars when it comes time to sell your company, it’s best to hire a lawyer who can explain your legal rights to you.   

It’s in your best interest to speak to your landlord about your plans to sell the restaurant. They might be willing to let you out of your lease early, so it’s worth being open and honest. 

3. Enlist the Expertise of a Business Broker 

While you think you might have a good handle on the restaurant industry, no one understands trends like a restaurant business broker. These professionals specialize in selling and buying restaurants of all types and sizes, in different markets too. 

A business broker can help you create the perfect marketing scheme in order to find the perfect buyer. They are specialists in their field and have a full grasp of the restaurant business, current trends, what buyers look for, and how to settle on the best deal. 

If you have no idea where to start when trying to sell your restaurant, a business broker has you covered.

4. Sell Your Restaurant as a Commodity

How well is your restaurant doing? If it’s a thriving business with great staff, good customer turnover, intact furniture and fixtures, and up-to-date equipment, it’s a real commodity. And you should consider selling it as such. 

In short, this means selling your business as a whole, an entire asset, rather than in parts. In general, most buyers find a thriving business that’s well established far more enticing than buying it in parts. 

5. Consider Selling Off Your Liquor License

As a restaurant owner, you’re probably fully aware of just how valuable a liquor license is. In fact, it’s one of your most lucrative assets, depending on the location of your restaurant. 

If you don’t plan on selling your business as a whole, you can begin by selling your liquor license to a willing buyer. Most of the time, you could receive a decent profit as liquor licenses are difficult to acquire so a potential buyer might be willing to pay. 

Again, you can opt for the help of a broker to find you the right buyer. 

6. Improve Your Restaurant’s Physical Condition

Selling a restaurant is much like selling a home — its ”sellability” hinges on what it looks like and its physical condition, especially from the outside. Curb appeal is not only important for homes, but for all street-side restaurants and businesses. 

Before you list your business for sale, put some effort into upping your curb appeal, first. This might include a fresh coat of paint for the exterior, new paving, awning covers, light fixtures, tables, and chairs. 

Always keep rubbish and other forms of refuse out of sight from your customers. The staging of the interior of your restaurant is also important. This is probably one of your key selling points. 

You might need to consider replacing outdated furniture, the interior might need a repaint or updated tablecloths. Going that extra mile to improve the physical space of your restaurant can do wonders for how quickly it sells, and the profit you pocket. 

Looking To Sell Your Restaurant Business? 

The decision to sell your restaurant business is huge — that’s why you need the right guidance. With Fusion Business Services you have the expertise, support, and industry connections of one of the best business brokers in the St. Louis region.

We can put you in touch with legitimate business buyers willing to offer you the price and profit that you deserve after many years of hard work. Learn more about how we can help! 

How to Work With a Small Business Broker in St. Louis

There are plenty of reasons a small business owner in St. Louis would choose to sell their business.

The market may be in your favor, and you’re ready to make a profit by selling. It could be time to move on to the next thing or just time for you to end this professional chapter. Finding the right buyer can be difficult regardless of why you’re selling. 

When you’re ready to sell, working with a small business broker is always a good idea. Having extra help from an expert who knows the ins and outs of the local market can be a huge help.

If you’re considering hiring a business broker, you’ll want to ensure you get the most out of your arrangement. Here’s what you need to know to have the best experience possible with your broker.

Understand How Payment Works 

Every business broker handles payment in their own way.

Some require money to be paid upfront, others collect money once the sale has gone through, and some do a combination of the two or something new entirely. Regardless of how the broker handles getting their payment, ensure you understand payment terms before agreeing to work with them.

Most business owners expect brokers to take a small commission from the sale. The issues start to arise when they’re unclear about how much the broker plans on taking or when it’ll happen.

It isn’t unusual to see some brokers request anywhere from 8% to 15% in commission. In addition, some brokers charge monthly or progress fees on top of that commission. 

Make sure that payment is discussed and understood early in the process. This way, everyone involved can avoid unpleasant surprises. 

Come Prepared 

When working with a business broker, there’s no such thing as giving them too much information. The more information you can provide the broker about your business, the easier job they’ll have finding the right buyer. 

Take the time to prepare for your first few meetings by gathering all the documents and files they’ll need to sort through. Going as far back as possible can help give them insight into your business, but generally, a good rule of thumb is to have documents going back at least three years. 

Bring documents around money like profit/loss statements, balance sheets, and information about cash flow. They’ll play a significant role in your business valuation. However, they’re far from the only helpful documents your broker will need. 

Any paperwork you can bring that explains your business plan or executive summary can benefit your broker. It’ll teach them essential details about your business and could help them form their marketing plans and sales pitches. 

Agreements with vendors, suppliers, and employees can also be beneficial. This can educate your broker on any legal obligations with employees and entities. 

Be Prompt 

Things move fast in the business world. The last thing you or your broker would want is to miss out on something because you didn’t notice a missed call or sent email. 

Remember, you’re far from the only small business owner that wants to sell their company. You can have a lot of competition in your local market or industry, and they could snatch up your buyer if you aren’t careful. 

Make it a point to check your phone and email throughout the day. Answer questions your broker may have as quickly as possible, and don’t be afraid to let them weigh in on some of your decisions. 

Develop a Communication Cadence 

Some business owners want weekly updates from their brokers to see how things are progressing. Others only want to hear from their broker when they think they’ve found the right buyer. Regardless of your choice, talk to your broker about how often you wish to communicate. 

Both you and your broker are busy professionals. Coming up with a communication schedule is an easy way to ensure you get the information you need at the right time. 

When thinking about how often you want to be in contact, also think about how you want to be contacted. For example, some people prefer to talk on the phone. Others only want things in writing and prefer texting or emails. 

Have the Right Expectations 

Brokers may be a great asset, but there are some things even the best brokers can’t do.

It can take time to sell a business, and as recession fears loom, it may take even longer. Your broker may be able to find a buyer, but they won’t be able to help you make thousands in profit if your business is underwater. 

A lot of the tension that happens between brokers and business owners comes from having misaligned expectations. This is why both parties must be as open and honest as possible. 

Be as upfront as possible with your broker. Talk to them about your expectations around how long it’ll take to find a buyer, the broker’s involvement, and how much you think you’ll get for the business.

This allows you to be transparent about what you want. The broker may change some expectations, but that can be good. You’ll want to work with someone realistic who also understands what you want.

Find the Right Small Business Broker for You

A broker is a must when you’re trying to sell your business. If you follow the tips in this post, you’ll be setting yourself up for success with your small business broker.

Are you ready to work with brokers that understand the right way to sell in St. Louis? We’re dedicated to helping you find the right buyer. Contact us today to discuss the best way to market and sell your business.