I had the
pleasure of speaking to a business owner in Toronto while I was away on
vacation. It was just a brief consult done from a park bench in Brussels.
He and the
other owners had become aware of a competing firm that had been acquired by a
larger company and wanted to try to do the same thing.
The
conversation centered around the best strategy… hiring an intermediary, hiring
someone in-house to try to find a suitor, etc.
During this
time, my client made a little comment about how he and the other founders of
the company were working almost 16 hours a day and how they found it impossible
to hire people to help them out.
I made this
recording telling the story and how you can go about fixing it. Listen here (audio only on YouTube): https://youtu.be/9n68EuvNXfw
Needless to
say, it is quite difficult to convince someone to pay money to buy a business
that needs this kind of management engagement.
Proper
businesses have structure, organization and everyone knows what they’re
responsible for and what duties they need to get done. Without this, it’s impossible to grow and it
sure does look scary for anyone looking at buying.
The topic
was very apropos as I’m in the middle of creating my latest workshop; Building
a Business that Someone Will Want to Buy.
It’s going to be presented on October 18 in Moncton, NB and will likely
become an online course.
Please
remember to like and share this article, it’s the only way the people who run
the internet have of knowing if the content is any good or not. The more you
share, the more likely someone who needs this information will be able to find
it.
If you would
like to hear from me weekly before anyone else, you can sign yourself up just to the left of this post. If you need my help with your
project, give me a call at (506) 381-8416.
Do you live
in the Maritimes? I’ve got workshops
coming up on buying and selling businesses in the fall. Book now http://davidbarnett.eventbrite.ca
You see for
a ‘market’ to exist, you need many buyers, sellers and a product or
commodity. For example, there is a
market for 4-door used cars and a market for 3-bedroom homes in each town and
city, but small businesses are very individual.
They’re unique.
Therefore,
they each have their own market!
In the video
I give an example of the process engineer who will never buy the highly
profitable flower shop. I used to see it
all the time when I owned my business brokerage.
As far as
pricing goes, it doesn’t change much over time except if certain industries are
perceived to be more or less risky.
Business are valued on their cash flow and what the buyer is willing to
pay is based on their perception of the risk that the cash will continue to
flow into the future.
There is one
exception though. It’s an old story
about market manipulation.
I’ve seen
first-hand that government programs meant to encourage immigrant investors are
causing price bubbles in certain categories.
Convenience stores, franchise food locations, Laundromats, gas stations.
Anywhere
someone with limited English can run a simple business and quickly learn enough
words to make change and serve customers.
I recently
worked on a case where a newcomer was willing to overpay by 40%... because he
was up against a time-limit and if he didn’t buy a business he would lose a
$75,000 deposit that he had made to get into the country.
Welcome to
Canada, let us into your wallet. I bet
he feels all warm and fuzzy about igloos, beavers and maple syrup.
Just like in
any market where politicians and civil servants decide to meddle, an artificial
urgency has been created and business sellers are taking full advantage of
these victims created by government policy.
If you’d like to learn how to create high returns by making
local private lending and lease deals, check out http://www.LocalInvestingCourse.com
The Local Investing Academy starts in September. For a quick introduction, read Invest
Local. It’s available from Amazon stores
worldwide or as a .pdf here: https://gum.co/quoB
Please remember to like and share this article, it’s the
only way the people who run the internet have of knowing if the content is any
good or not. The more you share, the more likely someone who needs this
information will be able to find it.
If you would like to hear from me weekly before anyone else,
you can sign yourself up at www.DavidCBarnett.com If you need my help with your project, give
me a call at (506) 381-8416.
Do you live in the Maritimes? I’ve got workshops coming up on buying and
selling businesses in the fall. Book now
http://davidbarnett.eventbrite.ca
Ed recently downloaded a copy of my 2015 Best-seller, Franchise Warnings from www.franchisewarnings.com
He wrote me an e-mail saying that he was looking at
franchises and enjoyed the book. He
thought that the central theme of the book was ‘do your homework.’
It’s not. The book’s
purpose was to dispel the myth that buying a franchise is less risky than
starting a business from scratch. Watch
the video here: https://youtu.be/JUItDU5cn-E
Ed also asks what I would look for if I were buying a new
franchise. Interesting question.
My first idea is that I would want a fee based franchise
over a royalty based one. It allows you
to grow the business and keep more of the gravy for yourself.
Secondly, I would need to ensure that the business systems
were actually provided and worked well.
I know of a two franchises who provide no operating manual and one where
the systems are very poor. (I’m sure they’re not alone.)
If you’d like to learn how to create high returns by making
local private lending and lease deals, check out http://www.LocalInvestingCourse.com
The Local Investing Academy starts at the end of September. For a quick introduction, read Invest
Local. It’s available from Amazon stores
worldwide or as a .pdf here: https://gum.co/quoB
Please remember to like and share this article, it’s the
only way the people who run the internet have of knowing if the content is any
good or not. The more you share, the more likely someone who needs this
information will be able to find it.
If you would like to hear from me weekly before anyone else,
you can sign yourself up at www.DavidCBarnett.com
Do you live in Toronto or the Maritimes? I’ve got workshops coming up for Toronto in
September on buying and selling businesses and in October-December in the
Maritimes. Book now http://davidbarnett.eventbrite.ca
Why does the seller make me WAIT so long for information?
I got a call from a client the other day. He’s been trying to decide if he wants to
pursue a business that is rumoured to be for sale.
I say ‘rumoured’ because it certainly doesn’t seem like it’s
for sale. The owner says he wants to
sell, he speaks highly of the business and its potential, but he just won’t
hand over the information the buyer is asking for; the latest financial
statements.
The first thing that is obvious is that this seller hasn’t
read my best-selling book; How to Sell MyOwn Business.If he had, he would know that you never go out looking for
buyers and talk with them before you’re completely prepared to answer all their
questions and you’ve got your ‘package’ together.
Putting together Confidential
Business Profiles is part of what I do for my clients.
From the seller’s perspective here’s what may be going on:
There may have been a pressing emotional or
personal need which pushed the owner to decide to sell and this need may no
longer be so aggravating.
If the business is profitable, then the longer
the seller delays the sale, the more money they make in the interim.
There may be some pressing business needs that
require their attention in the present, selling the business may actually be a
‘side project’ and doesn’t get the proper attention.
Outside advisors or service providers like accountants
may not be available because of workloads or vacations.
Let’s be clear, any delays caused by the seller are not good
for the deal. They upset the buyer and buyers can be hard to find.
One of the hazards of this scenario is that the more a buyer
follows up and ‘chases’ the seller, the more the seller may begin to think that
the buyer is in love with the business.
This can cause them to believe they can get more money for
the business. As a buyer, this is bad.
So stop it. Stop
following up, emailing and calling the seller continuously. Slow down. Look at other businesses.
One of the problems from a buyer’s point of view is that
they may be imagining themselves as the owner.
They start to get excited and REALLY want to buy the business NOW.
This is called Buyer Fever and it’s a very dangerous
illness. It can cost people hundreds of
thousands of dollars in over-payments when it leads them to make bad deals and
not do proper due-diligence.
Please remember to like and share this article, it’s the
only way the people who run the internet have of knowing if the content is any
good or not. The more you share, the more likely someone who needs this
information will be able to find it.
If you would like to hear from me weekly before anyone else,
you can sign yourself up just to the left of this post.
Do you live in Toronto or the Maritimes? I’ve got workshops coming up for Toronto in
September on buying and selling businesses and in October-December in the
Maritimes. Book now http://davidbarnett.eventbrite.ca
If you’d like to learn how to create high returns by making
local private lending deals, check out http://www.LocalInvestingCourse.com
The Local Investing Academy starts in September.
One of the most distinct aspects of the market for small
businesses is that it is a secret one.
The worst thing that a business owner can do is publicize the fact that
their business is for sale.
Telling people that you want to sell your business is like
pushing the ‘business self-destruct’ button.
If any of the following stakeholder groups finds out that a
business is for sale, the business could be ruined and all that an owner has
worked for could be destroyed:
I also explain what business
for sale really means to 95% of the population.
Let me give you a little info on each one:
Employees: If they think change is coming, they may
bail. The best employees always have
available opportunities with competitors.
Customers: If you deliver in the future or people rely on a
warranty, they won`t have any faith in your future if they find out you’re for
sale.
Suppliers: If these guys think there`s something wrong say
`goodbye` to your trade credit.
Lenders: I’ve had more than one client have their credit
line cut when their banker found out they were for sale. I explain why in the video.
Competitors: These
guys will use anything they can to steal business. News that a business is for sale will help
them sew doubt in the minds of prospects.
If you want to learn how I help my clients advertise their
business for sale confidentially,
check out www.HowToSellMyOwnBusiness.com
There are plenty of FREE resources there to help you begin
planning your transition out of your business.
Please remember to like and share this article, it’s the
only way the people who run the internet have of knowing if the content is any
good or not. The more you share, the more likely someone who needs this
information will be able to find it.
If you would like to hear from me weekly before anyone else,
you can sign yourself up at www.DavidCBarnett.com
Do you live in Toronto?
I’ve got three workshops coming up for Toronto in September. Book now to get summer special ticket pricing. http://davidbarnett.eventbrite.ca
Some sessions have fewer than 20 seats left. Learn more about these
workshops in this video:https://youtu.be/l2T3pwr9lkw
Hey guys It’s Dave Barnett once again from
InvestLocalBook.com . I got a question from Sandra who simply asks what kind of
investments would I recommend for people that are young, like 18 years old and
you know what thanks Sandra for the question it’s a great question.
You know there’s two different ways you can go down
this path and one sort of voice of reason might say that a person who’s only 18
years old has the whole life ahead of them. So they should put as much money as
possible to really secure you know, sort of fixed income product that grow very
slowly because they have such a long planning horizon by the time they get to
sixty-five or whatever. They’ll have accumulated wealth I’ll be really well off
the problem with that kind of thinking. I believe is that number one you’re
wasting huge amount of opportunity that a young person has an eighteen years
old has.
If anyone knows anyone who’s young person just getting
out of High School or college, please please share this message. The
opportunity is that you’re at a point your life we have very little responsibility
and the risk of the save now and wait for later plan is that there might not be
a later you know. I unfortunately in my own life have all kinds of people
around me, who are in their sixties who are falling ill with different health
conditions and it really makes you understand your own mortality. And the risk
of being alive you know, things happen. So the whole idea that you need to work
hard your whole life and then at some point in the future, you’re finally gong
to be able to rest, relax and enjoy the fruits of your labor. I think is flawed
thinking I think people need to enjoy their life through their life so that
they have no regrets at any given point back to the opportunity for the young.
Right now I have two children that I’m responsible for
about, I’ve got a home mortgage, I have all kinds of responsibilities in my
life. So I have to be careful as a forty-year-old, what sort of risks I take
because I have to make sure that I’m able to pay my bills and meet my
obligations and those obligations are important. We’re talking about my kids.
An eighteen-year-old likely is not going to have a mortgage, they’re not going
to have children and maybe they’re still able to live in their parent’s
basement for example and if they haven’t gone to college or university and go
on a huge amount of student loan debt, they also don’t have the burden of debt,
so in my opinion one of these people should definitely get into business. Get
into a business will learn through doing and you know what with the lack of
wisdom and experience at a young person has in all like hood the business will
fail and that’s okay.
That’s how people learn you know when you’re learning to
walk you keep falling down as a child and eventually get it right and I think
that the point in a person’s life where you can most afford to fail and have
the failure will mean the fewest repercussions for you is when you are that
young adults. 18 years old you can get out there do something crazy, get in
over your head in a lot of different ways, fail and learn some tremendous
lessons and the advantage of course is that in failing at that young age or
even succeeding you’re going to learn how to get into business and if it’s a
successful business will be a little leverage, the efforts of other people,
employees. Grown a business, learn how to manage a business. And that’s going
to set the person up not for a comfortable retirement in 45 years. It’s going
to set them out for an exciting active life of business ownership and with that
hopefully increased earning in the ability to enjoy life to its fullest throughout
the course of Life. Taking holidays, vacations, owning you know different
property, having an RV, all that kind of stuff is all fruit from the labor of
getting into business and taking the risk so Sandra that’s my advice for
someone who’s young like 18 years old is not to be cautious in any respect but
you get into business and learn by doing and just knowing that whatever happens
there’s going to be a tremendous amount of information gathered, a tremendous
amount of knowledge and wisdom and that even if it doesn’t work it’s ok anyway.
If you disagree or if you have another idea, please share in the comments below
and if you are older in life and you’re not ready to take on some risks because
of the responsibilities you have and you want to get into business, not through
starting one up and experimenting but you want a sure thing and you want to buy
a mature successful profitable business then you should be checking out my
online course BusinessBuyerAdvantage.com where it’s actually a full day over
nine hours of video tutorials and a workbook on how to go out and find the
process of how to purchase ad analyze and price a business that you can buy.
Anyway thanks and we’ll join you next time! You made it to the end of the video that’s great. Don’t
forget visit www.InvestLocalBook.com. Sign
up for my email list it’s right down here under the welcome video thanks and
we’ll see you next time.
Back before Christmas I had done a video where I encouraged viewers to get some kind of business going outside of their regular employment.
Owning a business gives so many tax advantages and teaches self-reliance.
Today I was listening to Entrepreneur on Fire podcast and Nick Loper was interviewed. Nick runs Side Hustle Nation, an online community dedicated to getting businesses going 'on the side.'
The entire site is about getting your entrepreneurial juices flowing without taking the big risky step of quitting your day job. Check it out.
I talk about a string of local business failures and why its critical to understand that no business can last forever. It's critical to take your chips off the table because all businesses are on the path to obsolescence. Are you in the buggy whip business?
When I made the video I had mentioned the MIC Pub in Dieppe but later edited it out because it wasn't public knowledge. They've since closed as well.
The Invest Local Book blog is all about small business, franchises, local investing, home economics, small business systems and borrowing money for your business. It's full of great content and I look forward to seeing your feedback. Follow me on FaceBook at www.FaceBook.com/DBarnettMoncton.
Take a moment to download my collection of published articles. You might learn something and its FREE. Pass it along to someone you know who owns or wants to own a business.
I was corresponding via e-mail yesterday with Ted J. Leverette. Ted is the mind behind the Partner On Call network. A professional consulting system which trains people on how to run a business helping people buy small and medium sized businesses.
We were discussing his new book that will be hitting Amazon in a few weeks, its about the do's and don'ts of buying a small or medium sized business. He promised to let me review a copy when it's almost ready for print. (stay tuned for a review on this blog)
Back in 2010 when I was still a business broker I worked on Canadianizing Ted's amazing book, 'How To Get ALL the Money You Want for Your Business Without Stealing It.'
If any of you are looking for money to start, expand or buy a business, this book is a fantastic resource and tackles all sources of money:
Debt
Equity
Internal Financing
Finding investor money
Definitely worth a read. Buy the Canadian edition by clicking [THIS LINK].
I discuss why you want to always have a business going even if you're employed. Also, be sure to do business when you travel, I'm going to Vegas.
The Invest Local Book blog is all about small business, local investing, home economics, small business systems and borrowing money for your business. It's full of great content and I look forward to seeing your feedback.
Here's my new 45 page report on how your business can achieve strategic goals by using credit cards. It's going to be available for Kindle, softcover eventually, and right here as a .pdf.
If you own a business, you should read this report.
David
Barnett is a small business expert who has owned 5 companies in his adult life.
His
experience in advertising, management, buying and selling companies and modern
banking and finance give Barnett an exceptional insight into how companies are
run and how they can take advantage of the modern payment system.
Credit Card
Advantage will show you how the correct use of credit cards as a payment tool
can help you achieve strategic goals in your business.
Barnett
walks you through the process of analyzing your vendors, selecting a card
program, and calculating your financial and reward benefits.
Every
business owner should be using these techniques to enhance lifestyle, reduce
expenses, grow sales and save on bank interest.
I came across a great news article from PBS which described the rise of alternative small business lenders online.
This is a great article because it reinforces several of the messages in my book; Invest Local.
There is a need for financing choice for small businesses. Bank loans are too complex and many are rejected.
Small businesses need capital and want to borrow for upgrading or adding productive assets.
Small businesses are willing to pay great interest rates to obtain this financing.
In some of the feedback I've received about my book, investors who are used to traditional 'retail' investments say they don't believe that its easy to get returns of 9% to infinity using some of the strategies I detail in the book.
This news article demonstrates how and why there are tremendous opportunities out there.
Please take a moment to share this blog with others and if you haven't already, BUY MY BOOK!
"Should my business own the real estate its located in?"
Many business owners and buyers are obsessed with owning the building where a business is located. I tackle this question and show you different ways of looking at it.
Yesterday's post reminded me of the story of the broke bushwhacker.
He was the inspiration for one of my 15 free finance articles which discusses the need to match financing tools with asset lifespan.
Enjoy.
Also, I'm almost done working on my 16 week curriculum for the 'Business Buyer Secrets' study course/coaching program. I'm probably going to give it a nicer name as well. Stay tuned.
My session on Wednesday with a group of newly arrived immigrants was a full day of 'Business Buyer Secrets.' One of the biggest secrets in buying a business is how to manage risk by using vendor financing.
I recorded a video with a few thoughts and an explanation of how this works.
Let me know what you think. Again, more info next week about my online version of 'Business Buyer Secrets' which will be mixed with one-on-one and group coaching.
FREE -- Last night I decided to put together 15 of the articles that I had written for eNBusiness magazine that are still relevant today. The package can be downloaded for FREE. My hope is that you pick up an interesting tidbit or two.
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