Your Business Software wants you to borrow money

**New Video Alert!

In this video, I explore the growing world of embedded business financing and why small business owners need to understand the real cost before accepting an instant funding offer.

We discuss merchant cash advances, APR, fixed fees, daily repayments, cash flow pressure, and financing offered through platforms already deeply integrated into your business.

Convenience doesn't necessarily mean good financing. A lender deciding that you can repay the money is very different from determining whether borrowing it is actually good for your business.

Before accepting any business financing offer, calculate the true APR, understand its impact on your cash flow, and compare it with bank loans, credit unions, SBA programs, supplier credit, equipment financing, and other alternatives.

Cheers

See you over on YouTube: https://youtu.be/BxVDPbSVJyo 

David C Barnett

Can You Really Buy a Business With No Money Down?

The idea of buying a business without using any of your own cash sounds attractive—and in some situations, it may be possible.

But there's an important distinction:

Using none of your own cash is very different from having no financial resources at all.

Successful acquisitions still require lenders, sellers, or investors to believe there is enough financial strength behind the transaction.

Cash Flow Isn't Enough

Imagine a business generates $200,000 in EBITDA and the proposed financing requires roughly $100,000 in annual debt payments.

The cash flow may appear sufficient.

But lenders don't evaluate acquisitions based on cash flow alone. They also want to understand the buyer's equity, collateral, experience, and ability to survive if the business performs worse than expected.

Why Lenders Want Buyer Equity

Banks generally want buyers to have meaningful financial exposure to the transaction.

If the buyer contributes nothing, lenders may wonder what prevents that buyer from walking away when the business encounters difficulty.

Having equity at risk creates alignment between the buyer and lender.

Asset-Based Lending Has Limits

Some buyers attempt to finance acquisitions using the assets already inside the target business.

Equipment, inventory, and receivables can certainly support financing, but asset-based lenders generally focus on liquidation value, not the full retail or market value of those assets.

That often means:

• Less financing than expected
• Higher borrowing costs
• Additional collateral requirements

Owning valuable equipment does not automatically create enough financing to purchase the entire company.

Seller Financing Can Fill the Gap

If lenders provide only part of the purchase price and the buyer contributes little or nothing, the remaining financing often has to come from the seller.

That can require the seller to:

• Finance a significant percentage of the deal
• Accept a secondary lending position
• Trust the buyer's operating ability
• Take considerable repayment risk

Understandably, many unrelated sellers may be uncomfortable accepting that level of exposure.

Where "No Money Down" Deals Really Come From

Some buyers successfully acquire companies while using very little cash from their personal bank account.

But they may still have access to:

• Home equity
• Existing business assets
• Investment resources
• Insurance cash value
• Outside investors
• Strong personal or corporate balance sheets

So while little cash may change hands from the buyer personally, substantial financial resources are still supporting the transaction.

Existing Business Owners Have an Advantage

Buyers who already own profitable companies may have more financing options.

Instead of viewing the acquisition as an entirely new venture, a lender may evaluate the combined financial strength of the existing company and the business being acquired.

Strong cash flow, assets, and equity in an existing operation can make financing significantly easier.

Focus on Financial Strength, Not Marketing Claims

A good business acquisition isn't about finding a clever way to avoid contributing money.

It's about creating a financing structure where the buyer, seller, and lenders are comfortable with the risks involved.

The strongest transactions combine adequate cash flow, reasonable debt, sufficient equity, and buyers who have the resources to handle unexpected problems.

Key Takeaways

Buying a business without using much personal cash can be possible, but that doesn't mean the buyer brings nothing to the transaction. Lenders and sellers still expect financial strength, equity, collateral, or other resources that reduce their risk.

👉 Want deeper dives like this? Join my email list at DavidCBarnettList.com for early access to videos, insights, and 7 free bonus gifts.

The Truth About 'Unbankable' Businesses and How to Get Funded Marshall Lebovitz

 

In this "best-of" interview, I sit down with lending advisor Marshall Lebovitz to explore financing options for businesses that don't fit traditional bank lending criteria.

We discuss why healthy and growing businesses can still be considered "unbankable," asset-based lending, working capital, accounts receivable and inventory financing, alternative lenders, and why the cheapest loan isn't necessarily the best financing solution.

Marshall also explains how to evaluate the real cost of borrowing, recognize potentially dangerous loan structures, and understand your business from a lender's perspective before you start looking for capital.

Watch the video and discover how to fund a business when traditional banks say no. https://youtu.be/R3otn4AnJSo 

Cheers

David C Barnett

New SBA rules Nobody is Talking about and how they're GOOD For buyers

 

**New Video Alert!

New SBA rules for buying a business take effect October 1, 2026—and there's already plenty of confusion about what they actually mean.

In this video, I break down the major SBA changes affecting business acquisitions, including the 10% equity injection requirement, seller financing, investor capital, debt service coverage, Quality of Earnings reports, real estate amortization, and longer seller transition periods. I also explain why I believe many of these changes could actually benefit first-time business buyers.

The goal shouldn't be to buy the biggest business possible with the least amount of your own money. It's to acquire a good business with enough financial resilience to survive after closing.

If you're planning on buying a business with an SBA loan, understanding these new rules—and discussing your specific deal with an experienced SBA lender—is essential.

Cheers

See you over on YouTube:https://youtu.be/FMUz_guEpMc 

David C Barnett

Royalty Financing When Buying a Business

What happens when a seller believes their business is worth much more because of its future potential, but the buyer isn't willing to pay today for growth that hasn't happened yet?

Royalty financing can provide a solution.

Instead of forcing both sides to agree on the future value of the company, part of the seller's compensation can be tied to what the business actually achieves after closing.

What Is Royalty Financing?

In a business acquisition, a royalty is a future payment tied to a measurable aspect of the company's performance.

The payment might be based on:

• Revenue

• Units sold

• Customers acquired

• Specific products or services delivered

• Growth above an agreed threshold

This allows the buyer to pay for proven performance rather than projections.

Bridging a Valuation Gap

Royalty financing can be particularly useful when buyers and sellers disagree about future growth.

A seller might argue that new opportunities will dramatically increase revenue after the sale. The buyer, however, may see those projections as uncertain.

Instead of increasing the purchase price based on assumptions, the buyer can essentially say: If that growth happens, I'll pay you for it.

This creates a compromise between today's proven value and tomorrow's potential.

A Practical Example

Consider a business with valuable equipment and inventory but unreliable financial records.

Rather than paying a large amount for uncertain goodwill, a buyer could pay fair market value for the tangible assets at closing and then provide the seller with a royalty based on future sales.

If customers continue buying because of the company's established reputation, the seller receives additional compensation.

If that expected goodwill doesn't produce results, the buyer hasn't overpaid for it.

Royalties Can Be Based on Growth

A royalty doesn't necessarily have to apply to every dollar of revenue.

For example, the buyer and seller could establish a baseline revenue level and agree that the seller receives a percentage only when sales exceed that threshold.

This can be particularly effective when a seller predicts significant growth but can't demonstrate it through historical financial results.

Financing Can Create Challenges

Royalty financing isn't appropriate for every acquisition.

Traditional lenders may have difficulty evaluating transactions where future payments are unknown because those obligations can affect debt-service calculations.

Depending on the financing program and jurisdiction, lenders may prefer a fixed seller note or another structure instead.

That's why royalty arrangements should always be considered alongside the rest of the acquisition financing.

Aligning the Seller With Future Success

One advantage of royalties is that they can keep the seller financially interested in the company's future.

A seller who benefits from future growth has a reason to continue making introductions, referring customers, and supporting the transition.

When structured properly, the buyer avoids paying upfront for uncertain performance while the seller retains the opportunity to benefit if their expectations prove correct.

If you want to learn more about buying businesses and structuring deals while controlling risk, visit BusinessBuyerAdvantage.com.

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Key Takeaways

Royalty financing can bridge valuation gaps by making part of the purchase price dependent on actual future performance. It allows buyers to avoid paying upfront for unproven growth while giving sellers additional upside when their expectations become reality.

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👉 Want deeper dives like this? Join my email list at DavidCBarnettList.com for early access to videos, insights, and 7 free bonus gifts.

Premiere - Franchising a Creative Driven Business with Alisa Sparks

 

New guest – Alisa Sparks

I’m joined by Alisa Sparks, Founder and CEO of Linden Creek, to talk about how she transformed a home staging and interior design business into a franchise model.

Alisa came from a finance background, not interior design. That analytical mindset helped her break a seemingly creative business into systems that could be taught, measured, and eventually replicated by franchise owners.

Tune in as we discuss how she systematized home staging, the investment required to build a franchise, managing furniture inventory for ROI, and why sales and marketing can be more important than creative talent when building the business.

We’ll also explore what makes a good franchisee, why Alisa has deliberately chosen to grow Linden Creek slowly, and the lessons business owners should consider before trying to franchise their own company.

This is a ‘must see event’ for business owners, entrepreneurs, prospective franchisees, and anyone interested in franchising a service-based or creative business.

Set yourself a reminder on YouTube here: https://youtu.be/FYOj7VXT5yg 

It will be going live Thursday August 19, 2026 at 2:30 PM Atlantic Time and 1:30 PM Eastern Time

See you there!

David C Barnett

HOW TO CHOOSE A SPEAKER FOR A SMALL BUSINESS CONFERENCE OR CHAMBER EVENT

 The wrong question is usually asked first

When an organizer begins searching for a small business speaker, the first questions are often about availability, fee and whether the person has an entertaining video. Those questions matter, but they come too early. The better starting point is: what should attendees be able to understand or do differently after the session? A speaker can be polished, amusing and well known while still leaving the audience with little they can use on Monday morning.

Start with the audience’s real decision

Small business audiences are rarely homogeneous. A chamber breakfast may include owners nearing retirement, younger entrepreneurs, bankers, accountants, franchisees and people thinking about buying a company. A useful program does not have to solve every problem for every attendee, but it should be organized around a real decision they recognize. Examples include whether to buy an existing business, how to prepare a company for sale, how buyers and lenders judge risk, or how to make a business less dependent on its owner.

Look for operating and transaction experience

Small business education is strongest when the speaker has seen decisions play out in the real world. Theory alone can make a presentation sound tidy even when small business is not. Owners deal with incomplete records, concentrated customers, informal processes, family dynamics, equipment problems, working-capital shortages and lenders who must be repaid whether the forecast was optimistic or not. A speaker with experience around owners, buyers, lenders and advisors can explain not only what should happen, but what commonly happens instead.

Ask how examples will be used

Good examples make technical ideas memorable. Ask whether the speaker uses composite cases, simple numbers, audience exercises or decision frameworks. A valuation session

becomes more useful when participants can see why the same company may look different to an owner, a lender and a buyer. An acquisition session becomes more practical when the audience must identify where cash will come from after closing.

Match the format to the outcome

A keynote can introduce a new way of thinking and create urgency. A 60- or 90-minute session can teach a framework and work through a case. A half-day workshop allows attendees to apply tools, compare alternatives and ask detailed questions. A panel works well when contrasting viewpoints are the point, but it is usually a poor substitute for structured instruction.

Evaluate usefulness, not just applause

The best evaluation question is not whether attendees liked the speaker. It is whether the session gave them a clearer model for making a decision. Entertainment helps people pay attention. Practical clarity gives the event lasting value.

Speaker resource: David C. Barnett delivers practical programs for small business owners and the professionals who serve them, covering business acquisition, exit planning, valuation, financing and deal structure. Barnett has been maintaining a blog and YouTube channel on these topics for over a decade.

Your First Business is Probably Not a Platform

 

**New Video Alert!

Thinking about building a HoldCo, executing a business roll-up, or buying multiple businesses? Buying your first company is one thing. Turning it into a platform for multiple acquisitions is something completely different.

In this video, I break down what business owners and acquisition entrepreneurs should understand before buying business #2. We cover management capacity, debt, integration, business systems, roll-ups vs. conglomerates, operational synergies, personal financial risk, and why one successful year doesn't automatically mean you've built an acquisition platform.

You'll also learn why every acquisition should make sense on its own, why spreadsheet synergies can be dangerous, and how buying more businesses can actually increase your personal financial risk.

Cheers

See you over on YouTube: https://youtu.be/nm2PS9oaac0 

David C Barnett

How to Buy a Business and Prepare for a Recession

When recession fears increase, business buyers naturally start asking whether they should wait, what industries are safest, and whether business prices will fall.

But focusing only on the broader economy can distract you from a more important reality: every small business can experience its own recession—even when the overall economy is doing well.

That's why preparing for uncertainty should be part of every acquisition strategy.

Every Business Faces Its Own Risks

A strong economy doesn't guarantee that an individual business will continue growing.

A company can suddenly lose revenue because of road construction, changing traffic patterns, a major customer leaving, new competition, or dozens of other circumstances outside the owner's control.

For a buyer, this means historical performance should never be treated as a guarantee of future results.

Don't Depend Too Heavily on Historical Averages

Looking at three years of financial performance can be useful, but averages can also hide volatility.

Even a mature business with relatively stable revenue can experience meaningful year-to-year fluctuations.

One unusually large project or customer order could create an exceptional year that isn't likely to repeat. If that strong year influences your valuation and financing assumptions, you could end up paying too much.

Be Conservative With Debt

One of the biggest dangers in a business acquisition is committing too much of the company's future cash flow to debt payments.

If everything must perform perfectly for you to pay yourself and make the loan payments, you've created a fragile deal.

A modest decline in revenue could quickly create serious cash flow problems.

Instead, buyers should leave enough financial breathing room to handle weaker-than-expected performance.

Build Risk Protection Into the Deal

Managing recession risk isn't about predicting exactly when the next economic downturn will happen.

It's about structuring the acquisition so the business can survive when something doesn't go according to plan.

That means considering conservative forecasts, comfortable debt-service margins, sufficient working capital, and deal terms that provide flexibility when circumstances change.

Don't Try to Predict the Future

No buyer knows exactly what the economy—or an individual company—will look like several years after closing.

The objective isn't to eliminate uncertainty. That's impossible.

The objective is to control the amount of risk you're accepting when you buy the business.

A well-structured acquisition should still make sense when results are less impressive than expected, not only when every assumption goes according to plan.

If you want to learn more about creative private investments, check out my book Invest Local — available on Amazon or as a PDF from DCBBooklist.com

If you're looking to buy a business using a risk-controlled approach, visit BusinessBuyerAdvantage.com to learn more.

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Key Takeaways

Don't build a business acquisition around the assumption that historical performance will continue perfectly. Conservative forecasts, manageable debt, and flexible deal structures can help protect you whether the downturn affects the entire economy or just your business.

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👉 Want deeper dives like this? Join my email list at DavidCBarnettList.com for early access to videos, insights, and 7 free bonus gifts.

A Terrific Interview with MyMarketer Podcast Show with Host Danny Decker

 

 David C Barnett and Danny Decker break down what really makes a business sellable... and how founders should begin planning for their eventual exit far in advance.

It’s a practical conversation about business transferability, cash flow, and designing a business that’s valuable beyond the founder.

10 Reasons to be optimistic about buying a business

 

**New Video Alert!

Buying a business isn't easy but for a prepared buyer, this could be one of the most interesting times in decades to become a business owner.

In this video, I break down 10 reasons to consider buying an existing business, from acquiring proven cash flow and customers to taking advantage of new technology, retiring business owners, fragmented industries, financing options, and businesses with untapped growth potential.

You don't need to find hundreds of great businesses. You only need to find one good business at the right price with the right deal structure.

Cheers

See you over on YouTube: https://youtu.be/a744DDTYXs0 

David C Barnett

Why Some Businesses Are Almost Impossible to Sell

 A company can have customers, revenue, equipment, employees, and years of history—and still be extremely difficult to sell.

Why? Because buyers aren't simply purchasing an operating company. They're investing money with the expectation of receiving a reasonable financial return.

If the business cannot provide that return without depending heavily on the current owner, its value may be much lower than expected.

Is It Really a Business?

A healthy business should generate enough cash flow to pay the owner a fair market wage for their work and provide an additional return on the money invested.

If the owner earns roughly what they could make working for somebody else, they're essentially buying themselves a job.

If the business can't even provide a reasonable wage without the owner contributing unpaid labor, its value becomes even more questionable.

The Owner Dependency Problem

Some businesses become difficult to sell because the owner is the business.

This commonly happens with consultants, professionals, and specialists whose companies depend heavily on their:

Personal reputation

Expertise

Customer relationships

Direct involvement

When the owner leaves, customers may leave too.

That means the goodwill belongs primarily to the individual rather than the company, making it difficult for a buyer to acquire and retain that value.

Specialized Skills Can Reduce the Investment Value

Highly skilled professionals face another challenge.

Imagine someone can earn $150,000 working for another company. If buying a business requires investing hundreds of thousands of dollars but only generates another $20,000 or $30,000 beyond that fair salary, is the investment worthwhile?

A buyer must compare the additional return against the capital required to purchase the business.

Sometimes simply getting a job produces a better financial outcome.

Revenue Doesn't Automatically Create Value

Another reason businesses become unsellable is weak financial performance.

A company might own valuable equipment, inventory, or real estate while producing very little cash flow.

If the earnings don't justify the investment required to acquire those assets, a buyer may conclude that the assets are worth more than the operating business.

At that point, liquidation may become more realistic than selling the company as a going concern.

Watch for Hidden Subsidies

Business owners should also determine whether something is artificially making the company appear profitable.

Real estate is a common example.

Suppose a company owns its building outright and therefore pays no rent. The financial statements may show a healthy profit.

But what happens when you include fair market rent?

If the profit disappears, the building is effectively subsidizing an otherwise weak business.

A buyer considering the true economic cost of operating the company will recognize this immediately.

Make Your Business Transferable

Business owners who eventually want to sell should start preparing well before they reach the market.

Focus on:

Reducing owner dependency

Creating repeatable systems

Building relationships around the company rather than yourself

Improving sustainable cash flow

Accounting for realistic market costs

The ultimate goal is simple: build a business that continues producing value after you leave.

If you want to learn more about creative private investments, check out my book Invest Local — available on Amazon or as a PDF from DCBBooklist.com

Key Takeaways

A business becomes difficult to sell when its profits depend heavily on the owner or don't justify the investment required from a buyer. Building transferable systems, sustainable cash flow, and company-owned goodwill can make the business significantly more attractive.

👉 Want deeper dives like this? Join my email list at DavidCBarnettList.com for early access to videos, insights, and 7 free bonus gifts.

A Great Interview with the host of Self- Publishing for Professionals podcast Lynn "Elikqitie" Smargis

 

I sat down with David Barnett, an author of ten books who has spent over a decade helping entrepreneurs buy and sell small businesses. 

David shares how a simple PDF lead magnet he created in 2014 evolved into his first published book, Invest Local, and how that experience revealed the power of books to serve as a lasting business card—one that opens doors to podcast appearances, speaking engagements, and unsolicited client inquiries from strangers discovering him on Amazon. 

Business Funding Secrets: How to Raise Private Capital | Spencer Hilligoss

 

In this "best-of" interview, I sit down with Spencer Hilligoss to discuss what it really takes to raise private capital and build lasting relationships with investors.

We explore how to find the right investors, build trust before you have a deal, create compelling investment presentations, avoid common fundraising mistakes, and why transparency is the key to attracting long-term investment partners.

Whether you're raising money for a business acquisition, real estate investment, or another entrepreneurial venture, this conversation is packed with practical advice for first-time capital raisers.

Watch the video and learn how to raise private capital for your business. https://youtu.be/jUt60obI5xU 

Cheers

David C Barnett

Why Business Brokers Ask for Proof of Funds Before Showing a Business

**New Video Alert!

Why do business brokers ask for proof of funds before they'll share confidential information about a business for sale?

In this video, I explain why this practice has become much more common and how today's business acquisition market has changed. We discuss why brokers need to qualify serious buyers, how the rise of "no money down" business acquisition programs has affected sellers and intermediaries, and why many legitimate buyers are concerned about sharing sensitive financial information.

I also share a practical strategy for demonstrating financial capability without revealing your entire financial picture. Whether you're buying your first business or working with brokers regularly, understanding how proof of funds works can help you build credibility, protect your privacy, and move through the acquisition process more effectively.

Cheers

See you over on YouTube: https://youtu.be/2G_Xo-4iLEw 

David C Barnett