A Great Interview with Lauren Feldman from 21 Hats podcast

 The Tricky Business of Selling Small Businesses

About the Show: 

This week, in episode 231, special guest David Barnett, who started helping owners buy and sell businesses in 2008, offers some guidance on an often-misunderstood sales process. Early on, David was a business broker. “I sold over three dozen companies for other people,” he tells us, “and it was very interesting and exciting. It was also a terrible business.” So he changed business models but has continued to do pretty much the same work. 

As a result, he’s amassed a lot of first-hand knowledge, much of which he shares in our conversation, including: why many owners fail to think of their business as an asset, why sellers shouldn’t be too quick to reject earnouts, why buyers should consider making multiple offers for the same business, how buyers can protect against the post-purchase loss of important customers, why businesses are selling for less than they were a couple of years ago, why there may be a smarter way to buy a business than by scouring business-for-sale websites, and why there really isn’t a true market for buying and selling small businesses.

Funding Transitional Seller Salaries

 

***New Video Alert!

Tim is making an offer on a business and needs the seller to stick around for a year of training.

Where does the money come from for his salary?

Tim needs a salary too.

Cash flow conundrum. 

I’ll tell you your options and how you need to think about this scenario.

Check it out right here: https://youtu.be/KID93MAaq8I 

Cheers

See you over on YouTube

David C Barnett

A fantastic Interview with the Humans of Flippa Flippa Podcast

 Join us for an insightful conversation with David Barnett, M&A advisor and author, as he shares his expertise on small business valuation, acquisitions, and common pitfalls to avoid. Learn why most small businesses don't sell, how to properly value a business, and what it really takes to succeed as a business buyer.

Key Takeaways:

*Understanding the difference between hobbies, jobs, and true businesses
*How to evaluate business seller's discretionary earnings (SDE)
*Why passion alone isn't enough for business success
*Common valuation mistakes and misconceptions
*The importance of business experience before acquisition
*How to know when you're ready to buy a business
*Understanding working capital requirements

Whether you're considering buying your first business or preparing to sell, discover practical insights from David's decades of experience helping entrepreneurs make smarter acquisition decisions.

PREMIER- Neal Isaacs Listing to Legacy

 

Listings to Legacy

New Video Premier interview guest- Neal Isaacs

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

Neal is a business broker in Raleigh, NC and has sold dozens of businesses.

Tune in and as we’ll be going through a bunch of business for sale listings and giving our advice to the sellers.

This is a ‘must see event’ for anyone who wants to sell a business one day and buyers who want to hear about what we see in some of these deals that might not be obvious.

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

I will be in the comments for the premiere.

Set yourself a reminder on YouTube here: https://youtu.be/FbohMhvkw4Y 

See you there!

David C Barnett

Understanding Security Registries: Protecting Your Collateral in Lending Deals

 When lending money, especially in private transactions, ensuring that the collateral offered is secure and legitimate is critical. One common concern is this: What prevents a borrower from using the same collateral to secure multiple loans? The answer lies in security registries, which serve as public records to prevent such issues. https://youtu.be/MeFAmvf6veE

In this article, we’ll explore what security registries are, why they matter, and how they streamline the lending process, while also offering practical tips for lenders and buyers.

What Are Security Registries?

A security registry allows lenders to register their claim against a borrower’s collateral, making it publicly known. This prevents the borrower from pledging the same asset to multiple lenders. Originally developed for real estate, these registries have evolved to cover movable assets like vehicles, machinery, and even business inventory.

For instance:

• In the United States, the Uniform Commercial Code (UCC) provides a framework for registering personal property as collateral.

• In Canada, the Personal Property Security Registry (PPSR) fulfills a similar role.

• Globally, comparable systems ensure transparency, simplify the lending process, and reduce the risk of disputes.

Key Features of Security Registries:

1. Public Access: They allow anyone to check if an asset is already claimed.

2. Legal Protection: Registered claims ensure lenders’ rights to recover their loans during defaults or bankruptcies.

Why Security Registries Matter

Without security registries, multiple lenders could unknowingly accept the same collateral, leading to complex legal disputes if the borrower defaults. A registered claim offers:

• Transparency: Lenders and buyers can verify whether an asset has existing claims before proceeding.

• Priority Rights: A lender’s claim is prioritized based on registration date, offering a fair mechanism for asset recovery.

For example:

• In some jurisdictions, when lending against a vehicle, lenders might hold the vehicle title or list their claim in a registry.

• Others file a lien, ensuring that their claim remains even if the borrower sells the vehicle, protecting their rights.

Streamlining the Registration Process

Filing collateral claims can sometimes be a complex and costly process, especially for unique assets like:

• Mobile homes

• Business equipment

• Specialized machinery

To reduce complexity and expense, consider these tips:

1. Prepare Clear Instructions: Provide your legal team with a detailed list of what needs to be registered. This reduces back-and-forth communication, saving time and legal fees.

2. Include Costs in Loan Agreements: Ensure that the borrower is responsible for covering legal and registration costs as part of the loan terms.

By simplifying the process, lenders can better protect their investments while minimizing administrative burdens.

A Crucial Tip for Buyers

If you’re buying used equipment, vehicles, or other movable assets, conducting a lien check through the appropriate registry is essential. This helps you verify whether any outstanding loans are tied to the asset. Failure to do so could lead to unexpected disputes or financial losses after your purchase.

How to Perform a Lien Check:

1. Identify the relevant registry for the asset’s jurisdiction.

2. Search for the asset’s unique identifier, such as a Vehicle Identification Number (VIN) or serial number.

3. Verify that no active claims exist before proceeding with the transaction.

4. It’s easiest if you have a qualified lawyer or paralegal help with this.

Final Thoughts

Security registries are indispensable tools for both private lenders and borrowers, ensuring transparency, trust, and legal protection in lending transactions. Whether you’re lending against a car, machinery, or other personal property, understanding the rules in your jurisdiction is critical to avoiding legal headaches and financial losses.

Don’t forget to join my email list for updates and exclusive resources—plus, receive 7 FREE gifts when you sign up today! Visit: DavidCBarnettList.com.

A terrific interview with the host of Reaching Abundance | video version Virginia Elder

Owning a small business is challenging, and selling it can be a complex process. Having someone with industry experience in your corner can make a huge difference.  

Joining us today is David Barnett, former finance broker turned business broker then consultant. As a finance broker, he witnessed firsthand the struggles small business owners encounter when buying or selling a business. Now through his consulting, he provides unbiased advice, prioritizing client needs without the conflicts of interest often associated with commission-based brokerage.  

David emphasizes the value of strong business connections and highlights the critical factors in a successful business sale: robust cash flow and well-defined, transferable processes that enable a smooth transition for a new owner.  

Cash vs Terms when Selling your Business. Seller financing Earnout

 

***New Video Alert!

I made this video for business owners who want to sell one day.

I also made it for buyers who deal with sellers who don’t understand that price and terms are two sides of a seesaw.

So, check out the video and if you are a buyer who deals with an ornery seller who demands all cash, then maybe share it with them.

Check it out right here: https://youtu.be/1PFDc0iI5Ss 

Cheers

See you over on YouTube

David C Barnett

LIVE - Idan Shpizear Get Out of the Truck

 

Get out of the Truck!

New Livestream guest-> Idan Shpizear

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

He’s the founder of Restoration 911, a franchise system in the flood/fire restoration industry.

Tune in and as we’ll be discussing moving from being a hands-on owner/manager to becoming someone who can spend their time working ‘on’ the business.

This is a ‘must see event’ for anyone who owns a business or will buy one.

Especially if you fill a work role in the business or likely will when you buy. 

We’ll help you evolve. I promise.

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

Set yourself a reminder on YouTube here: [Youtube URL]

We’ll be going live Monday January 20, 2025 at 1 PM Atlantic Time and 12 Noon Eastern Time

See you there! 

David C Barnett

Exploring Investment Attraction Options for Small Business Owners

 Exploring Investment Options for Small Business Growth

As a small business owner, reaching your next milestone often requires external funding. But where should you begin? Let’s explore the diverse investment options available to help fuel your business growth. https://youtu.be/WX3MXtOF8RY 

1. Debt Financing: Traditional and Modern Approaches

• Debt financing is a go-to option for many businesses. Here’s how it works:

• Bank Loans: Great for businesses with solid credit histories.

• Supplier Credit: Vendors may extend payment terms to help with cash flow.

• Equipment Financing: Perfect for acquiring machinery or tools.

• Repay over time, build credit, and keep control of your business.

Mezzanine Financing: Bridging Debt and Equity

Not quite debt, not quite equity. Mezzanine financing offers flexible repayment and potential profit-sharing, often involving subordinated debt or preferred shares. Ideal for businesses ready for more sophisticated investment structures.

Equity Financing: Sharing Ownership for Growth

By selling a stake in your business, you gain capital while sharing ownership. Common equity sources include:

Off-Balance-Sheet Financing: Creative Alternatives. Think outside the box with these innovative funding strategies:

• Equipment Rentals: Lease capital goods instead of purchasing.

• Landlord Contributions: Premises upgrades in exchange for higher rent.

• Supplier Arrangements: Extended payment terms or additional inventory support.

Practical Tips to Attract Investors

Here’s what every investor looks for:

• A well-thought-out business plan.

• Accurate cash flow projections.

• Clear evidence of your ability to deliver returns.

• Preparation is key to securing the funding your business needs.

Conclusion: Choose Wisely and Plan Strategically

Every funding path has its benefits and trade-offs. The key is to align the right type of investment with your business goals.

Ready to dive deeper into small business financing? Explore free resources, courses, and expert insights at davidcbarnett.com.

Be sure to join my email list if you’re not on it already at https://www.DavidCBarnettList.com and receive 7 FREE gifts.

David C Barnett

How to Value a Business with no equipment

 

***New Video Alert!

We all love the tax savings of depreciation.

But what about a small business that owns no equipment?

Does the fact that there is nothing to depreciate affect the value of the business?

That’s what we explore this week.

Check it out right here: https://youtu.be/otRV0SBzpR4 

Cheers

See you over on YouTube

David C Barnett

LIVE Belinda Rosenblum- Getting your Pricing Right

 

Pricing Strategies to WIN in Business

New Livestream guest-> Belinda Rosenblum, CPA

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

Belinda is a pricing and money strategist for entrepreneurs.

Tune in and discover game-changing strategies to price your products and services for maximum profit and growth. 

Whether you're a small business owner, freelancer, or aspiring entrepreneur, Belinda will share invaluable insights on how to overcome pricing challenges, boost your confidence, and increase your bottom line. 

Tune in on January 13th to learn how to align your pricing with your true value and transform your business's financial future. 

This is one conversation you can't afford to miss!

This is a ‘must see event’ for you and your friends, please let them know!

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/i1N3WrEIOhM 

We’ll be going live January 13, 2025 at 1PM Atlantic Time, 12 Noon Eastern Time 

See you there!

David C Barnett

Exploring Investment Opportunities for Small Business Owners: On and Off the Balance Sheet

 Exploring Investment Opportunities for Small Business Owners: On and Off the Balance Sheet

This week, we’re diving into a fantastic question from a YouTube commenter: What are all the different ways a small business owner can bring in outside investors to help their business grow?

This blog will serve as a comprehensive guide to understanding the types of investments available and how they impact your business, touching on both on-balance-sheet and off-balance-sheet options. https://youtu.be/K_y2ihtc95k

Why Understanding Business Investments Matters

Whether you're looking for a cash injection to grow or diversify your business, understanding your options can save time and money. Investors can contribute in different ways, which impact your financial statements and overall business structure.

Let’s break it down by examining the balance sheet, which organizes assets, liabilities, and equity.

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On-Balance-Sheet Investments

Types of Liabilities

Liabilities are obligations your business must repay. Here’s a breakdown:

1. Current Liabilities (Payable within 12 months):

• Accounts Payable

• Credit Cards

• Short-term Loans

2. Long-term Liabilities (Due beyond 12 months):

• Business Loans

• Mortgages

• Equipment Financing

Subordinated Debt and Preferred Shares

These hybrid instruments often come from private equity firms or family and friends, providing flexibility in repayment and returns.

Common Stock

Represents ownership in the company. Typically held by founders, business partners, or close associates.

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Off-Balance-Sheet Investments

These options involve resources that don’t directly appear as debts on your financial statements:

1. Equipment and Vehicle Rentals
   Renting instead of buying helps reduce upfront costs.

2. Leasehold Improvements
   Landlords may invest in renovations in exchange for higher rent.

3. Supplier Financing
   Key suppliers may offer extended payment terms or trade credit to support inventory growth.

---

Conclusion: Make Your Business Investor-Ready

Understanding these investment options can help you strategically grow your business while maintaining financial health. 

If you want to dive more deeply into this topic, my Business Buyer Advantage: Online Training program was recently updated to include an entire new module just on raising private capital.

Be sure to join my email list if you’re not on it already at https://www.DavidCBarnettList.com and receive 7 FREE gifts