W10 E37-40 Preparing to Buy a Business with Bill Kelly

​ The Entrepreneur’s Edge with Bill Kelly
Expert Advice on Buying and Selling a Business 
on the IBGR. Network ...The World of Business at Your Fingertips
 
Week 10, Episodes 37-40, 
Preparing to Buy a Business Welcome to week 10 of the Entrepreneur’s Edge with Bill Kelly

Quote of the Week: “It’s in the moment of decision that your destiny is shaped” – Tony Robbins 

2022 is off to an amazing start! This could be the year you change everything. This could be your year!  


2022 will offer entrepreneurs all over the world tremendous new opportunities to zero in on the changing marketplace and capitalize on overlooked product and services development or enhancements. If you’ve built a solid company and are thinking of retiring don’t hesitate. All the experts say there is more investment capital available now than any time in the last decade! The SBA and Banks are offering business loans at a fever pitch so don’t miss out. My team and I are eager to meet with you and plan the purchase or sale of your business! 


If you or someone you know, is interested in starting, selling, or buying a business or franchise, or perhaps you’re considering expanding your business by becoming a franchisor. Please contact me. My team and I can give you solid advice and help you accomplish any of these goals. 

As a Senior Business Advisor and Virginia Commercial Real Estate Agent I’m proud to be a part of Transworld Business Advisors of Richmond. My company John Almond & Associates, Inc. offers a wide array of professional services to entrepreneurs looking to acquire, sell, or start a business in Virginia. 

Contact me, Bill Kelly, AT 804-510-0670 or email me at bkelly@tworld.com

Episode 37 Preparing to Buy Your First Business
Self-assessment and careful planning is the best recipe … but don’t let it consume your passion.   

Don’t listen to people who tell you … “you can never get rich working for someone else”. Of course, you can, I know many people who have lived wonderful, fulfilling, lives working for an employer, be it a position with a business, organization, or government. All it takes is careful planning, patience, and the will to succeed. It’s no different if you decide to own a business, it’s just a bigger commitment.  

1. Why buy a business vs start one? Perhaps you want to be your own boss, but don’t relish all the groundwork involved in getting a new business off the ground.
   
   
   
2. Buying an existing business is almost always more costly upfront than starting your own. However, it is also easier to get financing for buying a business vs starting one. Lenders and investors are much more comfortable working with a business that has a proven track record with a cash flow.
   
   
   
3. Take stock of your talents, education, experience, and tolerances. Determine if entrepreneurship is what you want before diving into the details of your potential business. Don’t be afraid to ask questions of current business owners, brokers, and advisors.
     
4. Consider talking with a business advisor / mentor. There are wonderful resources available to new entrepreneurs considering their first business purchase.   

 
Tags: Buying a business, financing a business, personal assessment, business brokers, buying a franchise, Transworld Business Advisors

​

​EPISODE 38 Getting pre-qualified will give you confidence
Using friends, family, and investors to reach your goal.    


Most small business entrepreneurs do not have enough capital to buy the business they want to purchase. Taking stock of your resources before you make an offer to buy a business will help you approach a seller and make offers with confidence. If you know how much money you have to work with, you can negotiate from a stronger position. 
​

1. Friends, Family, and Investors … receiving capital from investors … to whom you pay interest and/or a percentage of profits, is one of the best ways to finance the purchase of a business. Unlike banks and other institutional lenders, not all investors expect short-term payments.
   
   
   
2. Seller Financing is perhaps the best form of businesses purchase financing … if you can find it. In some cases, sellers will pair with a young enthusiastic buyer who shares similar beliefs and values about the business, with the seller financing a large portion of the purchase.
   
   
   
3. Money Brokers Another way of finding other people’s money is to use a professional money broker. The best money brokers have close ties to investors, and they have a knack for showing investors the benefit of supporting their clients. But look out for scammers.
   
   
   
4. Perhaps the biggest misconception in franchising is that it’s easy and provide residual income quickly, with little effort. To have the right mindset to franchise, you must duplicate your business first, perhaps three or four times before you fully understand what will be required of a new franchisee.
   
   
   

Tags: Creative financing, buying a business, financing a business, personal assessment, business brokers, buying a franchise, Transworld Business Advisors

​

Episode 39 More creative ways of finding business acquisition funds.
​
Getting creative can bring you the funding you need.
Buying a business will usually involve one or more creative financing methods. Of course, using friends, family, and investors to reach your goal is the first place to look. Here are a few alternatives to review when searching for acquisition capital.

1. Investment forums and clubs are increasingly popular places to pitch businesses. In most large markets, there are weekly or monthly meetings where potential investors listen to presentations about business buying ventures. However investment forums do not often fund offers, but their members do provide quality feedback and advice about how to make the investment idea more attractive.
   
   
   
2. On-line Crowdfunding has become very popular. This method of raising capital uses small amounts invested from a large number of individuals to finance a new business venture. They usually lean toward new concepts and product development, but many entrepreneurs have successfully found funds to purchase existing businesses.
   
   
   
3. Earn-outs - An earn-out is another creative way to generate investment dollars for the purchase of a business. Earn-outs occur when business buyers make payments to sellers with the basis of the payout being the future earnings of the company.
   
   
   
4. Don’t be afraid to advertise for an investor. Major newspapers and their associated websites, along with trade magazines and other online sources, feature capital wanted advertising sections. These affordable media outlets can be utilized to advertise for capital. However, given the public nature of the media, using the ads can draw in a lot of unqualified investors.
    
5. Consider forming a partnership - Buyers who feel confident in their own ability to manage the day-to-day operations of the business, can often attract and investment partner into their deal when they need additional financing. This can workout well for the operating partner allowing him to repay other loans and receive a salary from the business income.   
   
   
   

Tags: Creative financing, buying a business, financing a business, personal assessment, business brokers, buying a franchise, Transworld Business Advisors  ​

Episode 40 The costs of creating financing.   
​
Ensuring the financial stability of the company should never be sacrificed. In the last three episodes we talked about the many methods of creative financing and funding for the purchase of a business. In this episode we will discuss the limits of creative funding and the effects it can have on the success of the business. 

1. Create a realistic 2–5-year proforma to prove out the effect of your chosen financing methods on the business’s profitability.  For example, if creative financing such as the earn-out option increases the businesses post-purchase price the financial plan must account for the difference. 
2. Beware of high interest charges … the interest you pay will likely be higher than you would pay to a bank. However, be very careful to read and fully understand the terms. The terms can be very difficult to live with.  
3. Disclose all financing to the seller if they are providing seller financing. This is not only for the seller’s benefit but yours as well. If the seller is providing even 10% seller financing, you should disclose your other financing plans so they can review them with you. 
4. What happens if the business turns down? This is a scenario I hope you never have to face, but it may not be avoidable. Who would have thought 10 years ago that New York City cab companies would lose 80% of their revenue base to a share a ride business app?
5. Restructuring your financing if the business falls on hard times can be difficult but not impossible. The debt restructuring process typically involves getting lenders to agree to reduce the interest rates on loans, extend the dates when the company's liabilities are due to be paid, or both. Most creditors will understand and work with you.
   
   
   

Tags: Creative financing, buying a business, financing a business, personal assessment, business brokers, buying a franchise, Transworld Business Advisors   

Short Bio: Bill Kelly is a Senior Business Broker and Franchise Consultant for Transworld Business Advisors of Richmond, VA. He is also a Licensed Virginia Commercial Real Estate Agent. Bill has been a lifelong Entrepreneur and has personally started or purchased and then sold eleven businesses. He lives in Richmond, Virginia, with his wife Rebecca, and has two daughters, and one granddaughter. 
   
Contact links: bkelly@tworld.com

Social Media:     Facebook: https://www.facebook.com/BillKelly1955
        LinkedIn: https://www.linkedin.com/in/billkellyprofile/
Website:     https://www.tworld.com/agent/billkelly/

LISTEN LIVE: IBGR.Network
Subscribe to Podcast

​