Unlocking Opportunities in Underutilized Businesses

Today, I want to share an intriguing scenario that highlights how underutilized businesses can present fantastic opportunities for savvy buyers. https://www.youtube.com/watch?v=ZJgNWU-sxeQ 

The Scenario

I was chatting with a friend who recently visited a small seaside tourist town and delivered a marketing course to local business owners. One of the participants owned a retail shop that operates only five months of the year, catering to the summer tourist crowd. Despite the seasonal nature of her business, she gets phone calls around Christmas from people wanting to order her products.

When asked what she does with her inventory at the end of the season, she mentioned that she discounts it to clear out as much as possible. My friend then suggested she consider taking her business online and collecting email addresses from her summer customers to build an online presence. To her surprise, she had never thought of this.

The Opportunity

This situation represents a classic example of an underutilized business with great potential:

1. Established Base: The business already has a base of sales and some level of profitability. It’s not starting from scratch.

2. Brand Recognition: The shop has brand recognition and customer interest, evidenced by people calling even after the season ends.

3. Growth Potential: The business could benefit from modernizing its approach by moving online and leveraging digital marketing.

For someone who understands the internet and e-commerce, this represents a significant opportunity. Instead of starting a business from the ground up, you can buy an existing one and implement digital strategies to enhance its profitability and value.

Why This Matters

In my business buying courses, I often emphasize the principle of not paying for "blue sky"—that is, not overvaluing a business based on speculative future benefits. However, the real value in buying a business comes from what you can do with it. Here’s why this approach is advantageous:

1. Pre-existing Assets: The business comes with established sales and some degree of brand awareness. You’re not starting from scratch; you’re building on an existing foundation.

2. Realizing Potential: You can acquire the business at a reasonable price and then apply your expertise to evolve it into something much more valuable.

3. Strategic Improvement: By integrating online sales and digital marketing, you can significantly increase the business's revenue and market reach.

Looking for Opportunities

If you’re considering buying a business, look for these types of opportunities:

• Underperforming Businesses: Businesses with potential but lacking modern strategies.

• Seasonal Operations: Seasonal businesses that could benefit from year-round revenue through online channels.

• Owner Fatigue: Businesses where the owner is ready to retire or lacks the interest to innovate.

These scenarios often provide a head start and allow you to leverage your skills to enhance the business’s value.

Final Thoughts

If you’re interested in exploring small business buying, selling, sign up to my email list https://www.DavidCBarnettList.com to keep you updated whenever we post new videos and content. 

Patrick small online ecommerce Video

 

This is a PAID consulting call for a real viewer who needs help on a deal. It's all incelebration of my new book 'Buying vs. Starting a Small Business: Search or Startup? A Guide to keep you from Going Broke' Find it now at Amazon.com here: https://a.co/d/bdsOvUe The Canadian Amazon store here: https://a.co/d/cEEPheJ The UK Amazon store here: https://amzn.eu/d/7GFGeUz The Australian Amazon store here: https://amzn.asia/d/g6ZbNa1 Or any other local Amazon store you frequent. You can even buy a pdf copy from Gumroad here: https://dbarnett.gumroad.com/l/BuyvsStartSMB

Non SBA Deal Financing

 

***New Video Alert!

This week- a question from a Canadian who wants to know how to do deals where he lives.

But- even Americans should learn how non-SBA deals are done because they can be cheaper!

I’ll walk you through it in this week’s video:  https://youtu.be/Pwa_EsrHl58 

Cheers

See you over on YouTube

David C Barnett

LIVE Fractional People in the C-Suite

 

Bits and Pieces of Leaders- The Fractional C-Suite Movement.

New Livestream guests-

Devoreaux Walton MBA, CMO
Jennifer Doherty MIRHR
Kevin Robinson, MBA, CPA F-CFO
Mathew Kerbis, Fractional GC  

I’m happy to have this great group of professionals join me on a live broadcast.

Tune in and as we’ll be discussing when and how growing small businesses can take advantage of fractional specialists and maybe when they need to get one full-time.

This is a ‘must see event’ for anyone with ambitions to grow beyond their own personal abilities as business owners.

Be sure to join live so that you can ask questions, replay will be available.

Set yourself a reminder on YouTube here: https://youtube.com/live/i-7HOd2qSyY 

We’ll be going live Monday September 23, 2024 at 12 Noon Eastern Time and 1PM Atlantic Time

See you there!

David C Barnett

The Reality of Managing a Business from Afar

 The Reality of Managing a Business from Afar

Today, I want to address a common scenario where business owners, after many years of running their operations, transition to a more passive role. They may spend most of their time in Florida while a manager handles the day-to-day activities. It sounds like a dream opportunity for many buyers, but there's more to it than meets the eye. https://youtu.be/GszdyDQulEI

The Ideal Scenario

Imagine this: after decades of running a business, the owner puts a trusted manager in place and enjoys a semi-retirement in a sunny locale. The business appears to run smoothly with minimal involvement from the owner, and they only need to stay in touch occasionally. For a potential buyer, this setup might seem perfect—less hands-on involvement and a well-oiled operation.

The Reality Check

However, this scenario isn't always as ideal as it seems. Here’s why:

1. The Owner’s Expertise

• Deep Industry Knowledge: The owner has accumulated decades of industry-specific knowledge and experience. They understand the nuances of the business, interpret financial reports effectively, and know exactly what to ask the manager. This depth of understanding is hard for someone new to the industry to replicate quickly.

• Skill Development: The skills developed over many years by the owner are not just in managing daily operations but also in setting up systems to monitor and guide the manager. This includes interpreting performance metrics and understanding what they mean for the business.

2. Management vs. System Oversight

• Systems and Oversight: In large organizations, managers operate within a framework of systems and oversight. For example, chain restaurants like Olive Garden have regional managers and standardized systems to ensure consistency across locations. Similarly, a well-managed business has systems in place to monitor the manager’s performance. When buying a business with a manager in place, it’s crucial to assess these systems and ensure they are robust and functional.

• Building a Framework: If you’re buying a business in which the owner has mostly stepped away, you may need to build or understand a similar framework to effectively monitor and guide the manager. This requires experience and a solid grasp of the industry.

3. Manager Turnover

• Potential Issues: Managers, like any employees, can leave. When this happens, it’s essential to have a plan for how to handle the transition and whether the systems in place can maintain business continuity. A manager’s departure can disrupt operations and may require the new owner to step in more actively during the transition period.

What to Consider When Buying

1. Learn the Business

• Get Involved: If possible, spend time learning how the business operates before purchasing. Understand the key metrics and the systems in place for monitoring performance. This will prepare you for a smoother transition and allow you to manage or guide the manager more effectively.

2. Evaluate the Systems

• Assessment: Ensure that there are effective systems for tracking performance and managing the business. Assess the quality of reports and how well they reflect the actual state of the business.

3. Prepare for Transition

• Contingency Plans: Have a plan for managing the business if the current manager leaves or if issues arise. This includes understanding how to step in and manage the business temporarily if necessary.

4. Consider Industry Expertise

• Seek Advice: If you’re new to the industry, consider working with an advisor or consultant who can help you understand the nuances and assist with the transition.

Final Thoughts

Buying a business with a manager in place might seem like a great opportunity, but it’s essential to thoroughly evaluate the situation. Ensure you have the systems and knowledge needed to manage effectively, and be prepared for potential challenges. By doing so, you’ll be better positioned to take advantage of the opportunity and make a successful transition.

If you enjoyed this and never want to miss any of my content, be sure to sign up for my email list at https://www.DavidCBarnettList.com

Leverage a Consulting gig into an Acquisition

 

***New Video Alert!

This week- a question from France about whether it makes sense to start a consulting business to meet and learn about businesses that one might buy one day.

Great question.

I personally know a few consultants who have ended up buying businesses they’ve worked on.

I’ll walk you through it in this week’s video:  https://youtu.be/E-fdHY7qxmw 

Cheers

See you over on YouTube

David C Barnett

LIVE Mike Finger and Clinton Lee Is there good SMB content online

 

The great debate- Is there good small business content online?

New Livestream guests-> Mike Finger and Clinton Lee

These two have been guests on my show before but never locked in heated debate!

Clinton is a long-time consultant who helps leading UK entrepreneurs find the best fit business brokers to represent them in selling their businesses.

Mike Finger is a multi-exit SMB survivor who coaches small business owners in the US on how to make their businesses more saleable.

The discussion?

Is there good content online for people interested in buying and selling small businesses or is it all just hype?

Mike questions what he finds to be most popular.

Clinton says it’s there, but you’ve got to discern the quality of what you consume.

We’re going to discuss this and see if online content creators deliver for SMB learning or if you should be spending your time at the library or something.

Be sure to join live so that you can ask questions, replay will be available.

Set yourself a reminder on YouTube here: https://youtube.com/live/4KG_DlzUmwM 

We’ll be going live September 16, 2024 at 12 Noon Eastern Time and 1PM Atlantic Time.

See you there!

David C Barnett

Understanding Vendor Financing Collateral When Buying a Business

Understanding Vendor Financing Collateral When Buying a Business

Today’s question comes from Tomo, and it's a great one: What is the collateral for a vendor financing note when you buy a business? https://youtu.be/CzbU6DCLsVo

Vendor Financing Explained

When you purchase a business, vendor financing (or seller financing) is when the seller agrees to lend you part of the purchase price. Essentially, instead of getting all the money upfront, the seller finances a portion of the sale, and you pay them back over time.

Collateral in Vendor Financing

Just like when you take out a car loan or a mortgage, the collateral for the vendor financing note is typically the business itself. If you fail to make payments, the seller can foreclose and take the business back. This gives the seller some security, knowing that they have a claim on the business if things go south.

Why Sellers Might Hesitate

Sellers might be wary of relying on the business as collateral. They could be concerned that if you mismanage or "wreck" the business, the value of the collateral (the business) will decline. This is one reason why vendor financing often aligns the seller's interests with yours—they want to ensure you succeed so they get paid.

Benefits of Vendor Financing for Both Parties

• Seller as a Mentor: Because their money is on the line, sellers often provide more extensive training and support to the buyer. They have a vested interest in ensuring that you succeed, so they may act as a mentor during the transition period and beyond.

• Transition Assistance: With vendor financing, sellers are usually more willing to help ensure the business runs smoothly, offering guidance and assistance that might not be available otherwise.

Other Forms of Collateral

• Tangible Assets: Any other valuable assets within the business, such as equipment or inventory, are typically already used as collateral for other lenders like banks. This leaves the business itself as the primary collateral for vendor financing.

• Personal Assets: In some cases, a buyer may offer personal assets as collateral. However, most buyers are financially stretched after the down payment and may not have much left to offer as collateral.

Key Takeaways

• The Business Itself Is the Collateral: In most cases, the business you are buying serves as the collateral for the vendor financing note.

• Mutual Success: This structure incentivizes the seller to support the buyer to ensure the business continues to thrive and the seller gets fully paid.

If you enjoyed this and never want to miss any of my content, be sure to sign up for my email list at https://www.DavidCBarnettList.com

Parks and Rec Risk Management Businsess- REAL startup consulting call SMBThis is a PAID consulting call for a real viewer who needs help on a deal. It's all incelebration of my new book 'Buying vs. Starting a Small Business: Search or Startup? A Guide to keep you from Going Broke' Find it now at Amazon.com here: https://a.co/d/bdsOvUe The Canadian Amazon store here: https://a.co/d/cEEPheJ The UK Amazon store here: https://amzn.eu/d/7GFGeUz The Australian Amazon store here: https://amzn.asia/d/g6ZbNa1 Or any other local Amazon store you frequent. You can even buy a pdf copy from Gumroad here: https://dbarnett.gumroad.com/l/BuyvsStartSMB

 

This is a PAID consulting call for a real viewer who needs help on a deal. It's all incelebration of my new book 'Buying vs. Starting a Small Business: Search or Startup? A Guide to keep you from Going Broke' Find it now at Amazon.com here: https://a.co/d/bdsOvUe The Canadian Amazon store here: https://a.co/d/cEEPheJ The UK Amazon store here: https://amzn.eu/d/7GFGeUz The Australian Amazon store here: https://amzn.asia/d/g6ZbNa1 Or any other local Amazon store you frequent. You can even buy a pdf copy from Gumroad here: https://dbarnett.gumroad.com/l/BuyvsStartSMB

10 Industry Selection Criteria for Buying a Small Business

***New Video Alert!

I often get asked what kind of businesspeople should be looking for.

So, today I made a list of criteria for people to consider when deciding what to buy or start when it comes to the world of small business.

I’ll walk you through it in this week’s video:  https://youtu.be/_6rezgHbVN4 

Cheers

See you over on YouTube

David C Barnett

 

LIVE Are you in Sales? Or are you a CLOSER?!? with Bob King

 

Are you in Sales? Or are you a CLOSER?!?

New Livestream guest-> Bob King- extreme closer and author.

I’m happy to have Bob join me on a live broadcast.

He’s got years of experience in Hollywood and in direct sales and closing deals in one day.

Tune in and as we’ll be discussing his new book; The Joy of Closing. 

This is one of the best sales books that I’ve read in awhile. 

I enjoyed it so much, I asked Bob to be on the show.

This is a ‘must see event’ for anyone who needs to bring in revenue to a business or manage some sales people. 

Be sure to join live so that you can ask questions, replay will be available.

Set yourself a reminder on YouTube here: https://youtube.com/live/RBLsCIr4cUY 

We’ll be going live  Monday September 09, 2024 at 12 Noon Eastern Time and 1 PM Atlantic Time.

See you there!

David C Barnett

The Pluses of Handling the Negatives of Running Your Own Business

 Today’s topic comes from John, who’s curious about the benefits of running a business despite the stress, frustrations, and anxieties it can bring. Here's a detailed look at the positives and how they outweigh the negatives:

1. Time Freedom

• Flexibility: One of the greatest perks is the ability to control your own schedule. I work while my kids are in school and can be there for them after school. This kind of time freedom allows you to balance work and personal life on your terms.

2. Unlimited Earnings Potential

• Income Growth: Unlike a fixed salary, running your own business means there’s no cap on how much you can earn. The more successful your business, the greater your potential income. You can continually create new products or services to increase your earnings.

3. Place Freedom

• Location Independence: You have the freedom to work from virtually anywhere. As your business grows, it can become less dependent on a specific location, allowing you to travel and work from different places if you choose.

4. Mission Freedom

• Personal Goals: Owning a business lets you align your work with your personal mission. For me, it’s about providing a great childhood for my kids. Running my own business supports this mission by offering more control and flexibility.

5. Flexibility

• Work-Life Balance: The flexibility to take extended time off is a huge benefit. I can spend weeks traveling without the constraints typically associated with a traditional job. This flexibility enhances your quality of life.

6. Leveraging Others' Time

• Efficiency: By employing others or using contractors, you can leverage their time to create more value. This means you can focus on high-value activities while delegating tasks that others can handle more efficiently.

7. Diversified Income

• Reduced Risk: When you own a business, your income is spread across multiple customers rather than relying on a single employer. This diversification can reduce financial risk and provide more stability.

Handling the Negatives

1. Problem with the Business

• Identify Issues: If running your business causes significant stress, it might be due to underlying problems. Analyzing and resolving these issues can improve your experience and make your business more enjoyable.

2. Personal Management

• Stress Management: Stress and frustration can stem from poor time management or inadequate organization. Improving your personal management skills can alleviate some of this pressure.

3. Growing Pains

• Adaptation: Growing a business often involves overcoming challenges. These experiences, while stressful, contribute to personal and professional growth. Learning to manage these situations effectively can turn them into opportunities for development.

Buying vs. Starting a Business

Starting a business can indeed be stressful, particularly if it’s not yet profitable. Buying an established business with proven cash flow can be a less risky way to enter entrepreneurship, as it avoids many of the initial struggles and uncertainties of starting from scratch.

Final Thoughts

Running your own business brings a range of significant benefits that often outweigh the stresses and frustrations. It offers freedom, flexibility, and the chance to align your work with your personal goals. Managing stress effectively and addressing any underlying issues in your business can enhance these positives and contribute to a more fulfilling entrepreneurial experience.

If you’re interested in learning more about buying a business or managing your own, check out my new book Buying vs. Starting a Small Business: A Guide to Keep You from Going Broke available Find it now at Amazon.com here: https://a.co/d/bdsOvUe