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Giving Back

The Business Brokers, Inc (TBBI) believes that giving back is what successful companies and its people should do.  This is a picture of two TBBI colleagues participating in an Urbandale Educational Foundation fund raiser…hard work!  TBBI was a Title Sponsor for this event.

Additionally, TBBI personnel have been active participants in the Johnston Rotary Club, Grimes, Johnston and Urbandale Chambers of Commerce, Youth for Christ fund raising sponsors, Johnston Educator’s Appreciation Banquet,  The Principal Charity Classic/Lutheran Services of Iowa, Youth Homes of Mid-America, All 4-Youth Golf Classic, Iowa Sister States (TOKA), Animal Rescue League, Humane Society, The Eisenhower Foundation, Courage League Sports and over a dozen Small Business Development Center (SBDC) presentations/workshops on business selling and buying.

“What is important is family, friends, giving back to your community and finding meaning in life.”   Adrian Grenier

 

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What You Need to Know Before Buying a Business

Buying an existing business offers the opportunity to become an entrepreneur quickly.  With a staff in place, an established customer base, and existing relationships , you are a step ahead.

Before buying a business, you need answers to critical questions.

  • Why is the current owner selling? This is crucial.
  • Is it a profitable business?
  • Is the business trending up or down?
  • Will the business continue at the current levels with opportunities for growth?
  • Are there any outside impactors that could help or hurt the business?
  • Does the business have a good reputation?
  • What has made the business popular?
  • Are you getting everything you need to take over the business- customer lists, trademarks, patents, etc.?
  • Will key employees stay?
  • Who are the competitors in the area?

Answers to these questions are key to making the final decision to purchase an existing business.

Connie Mendrys

cmendrys@tbbinc.com

515-986-0741

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Business Owners – The Yellow Pages are Dead!!

It’s a new day in the world of business!  Social Media is critical to your success.  If you are not on Facebook, Twitter, LinkedIn, and/or Google Plus, it is going to be difficult for your customers to find you.  Having an internet presence is essential because of how younger customers search for goods and services.

As a school principal 10-15 years ago, I remember telling my teaching staff that we needed to prepare our students for a world that did not yet exist. Times were rapidly changing, and teaching problem solving and analytical thinking skills were crucial. That was before apps and all the Social Media tools that exist today.

My words and predictions came home to me when our own son and daughter landed their jobs in the marketing field in social media.  Both are college graduates in their 20’s.

The Millennials operate in a digital world, and the next generation is even more reliant on their devices.  The Yellow Pages and the phone book are dead!  Small business owners need to jump on the social media bandwagon or risk being left behind.  Social Media Marketing consultants are springing up everywhere today, and finding a good one can make all the difference in the future health of your business.

Dan Meyer

dmeyer@tbbinc.com

515-313-1739

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SHOULD YOU BUY A BUSINESS?

Before you consider buying a business, it is very important to consider all the options involved, both pro and con.  People tend to gravitate toward the positives of owning your own business—

  • Working for yourself
  • Being “the boss”
  • Having the ability to make decisions for growth
  • Being the central key figure, having all the dynamics flow around you

Some important things to consider before making the decision to buy a business—

  • Your age and how long do you want to run the business?
  • Will family be involved?
  • Do you have the right employees to keep the business running?  Will they stay?
  • Do you have the dedication and commitment to keep things running in both good and bad times?
  • Are you prepared for serious challenges?  The recession of 2008-2009 was stressful for many people, including me.  You are responsible for the recovery of the business or making the decision to call it quits.

Owning a business can be very rewarding.  If you have done things the right way, a business can be in your family for many years.  You just need to consider everything possible before making a decision.

Dave Hooper

dhooper@tbbinc.com

515-249-6053

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WE HAVE A BUYER FOR YOUR BUSINESS!

I recently came across a cartoon with a business owner showing an employee a large File Room and he said…

                     “This is where we store all the letters from brokers who claim to have buyers for our business.”

Unfortunately, business owners have heard this topic a number of times.  In most cases, it is just not true.  How can a buyer be interested in buying your business, when they know little about it?

Our experience in working with buyers is that they may have an interest in a certain industry or business type.  But until they see and learn all kinds of information about your specific business, they are truly not a buyer.

So, the old, but true phrase we’ve heard numerous times of “buyer beware” ALSO holds true for sellers!

Mike Schoville

mschoville@tbbinc.com

515-306-8487

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What to do with my business

Nothing is forever, even your business.  It’s not a question of whether you will exit your business, but when and how.

There are quite a few ways to exit your business; one of the strategies is to sell. Selling a business is very personal and often it is an emotional decision.

When is the right time to sell?  Many business owners wait until their business is on the decline to sell THAT IS WRONG.  You want to sell when your business is at the top.  You have to think like an entrepreneur, NOT A BUSINESS OWNER.

Remember you want to be bought, not sold!

 David Johnson

djohnson@tbbinc.com

515-491-3160

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Buying a Business: Assets v. “Blue Sky”

Investing in small businesses can be a scary and “risky business”.  Many buyers traditionally have looked for businesses with solid assets to protect their investments.  Banks have traditionally looked for assets to collateralize loans.  But, times are changing and many successful, cash flowing businesses today are asset-light.

During the industrial age, businesses looked to stock up on real estate, equipment and raw materials.  With the onset of the digital age and the service economy, businesses are more heavily engaged in human resources, intellectual property and services provided.  We are seeing more profitable businesses with fewer assets and asset heavy businesses that don’t cash flow as well.

Buyers typically feel that if they buy a business that has a strong asset base they can cushion themselves against tax liabilities through depreciation of fixtures and equipment. When a buyer invests in a business strong in assets, they are not as much buying the “business” as they are the “bricks and mortar”.  Buying a business entity that is light in assets can mean that the new owner can inherit contracts, customers and technology that can generate revenue at a much higher rate of return than depreciating equipment and fixtures.

Buyers who are looking at asset light businesses can be very successful, but they need to be comfortable in that they can replicate the business model and seize opportunities for expansion into new market areas.

“Assets” do not automatically translate into revenues and a lack of assets does not disqualify a business from profitability.  It can be quite the opposite in today’s business climate.

Dan Meyer

515-313-1739

dmeyer@tbbinc.com

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ONE PERSON BUSINESS…IS IT SALEABLE?

Very difficult might capture a typical response.

For example, you live in a relatively small community, most everyone uses Joe Plumber, who owns and operates by himself Joe’s Plumbing.  Joe is reliable, has reasonable rates, does good work, and home owners are comfortable in having Joe in their home.  Joe started with a bigger plumbing business in a larger town as an Apprentice plumber, then became a Journeyman plumber and finally became a Master plumber.  Joe moved to his current smaller-town location, works hard, has made a good living over many years and is now ready to sell and retire.

The responses typically heard from buyers for a business like Joe’s are; how do I know that customers will continue to do business with me, my family does not want to move to that smaller community, I do not have my Master Plumber’s license, I could start a business for significantly less than Joe wants for his business, I do not want to work that hard, I do not want to do the accounting, marketing, scheduling, inventorying…I just want to do plumbing.

Can it be sold…yes.  Will it be difficult…yes.  There is an alternative that business owners in this situation might want to consider.  Five to ten years from retirement and/or selling, have the business large enough so that an assistant can be hired.  This assistant should be someone that over time could own and operate the business and has aspirations for ownership.  Over time work to give this assistant more responsibility, ultimately ending up where this assistant can run the business.  Then, complete the transition to the new owner.  There are many advantages to this plan, but the most important being a smooth succession plan.

Mike Schoville

mschoville@tbbinc.com

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SELLING IS TOUGH

As a past business owner and having experienced each step of the sales process, I can say that selling a small business can be a complex venture. It can require that you enlist a broker, accountant, and an attorney.  Whether a buyer can be found will depend on the reason for the sale, the timing of the sale, the financial trends, the physical location, the employee group and the strength of the business operation. Some tips to increasing the likelihood of the sale are:
…Prepare for the sale as early as possible, preferably a year or two ahead of time.  This will help you improve your records, business structure, and customer base.

…Use a broker can help you free-up time for you to keep the business running, keep the sale confidential, and get the highest price.

…Prepare documents—financial statements and three years’ tax returns—and review them with your accountant.  Make sure the business is presentable prior to the sale. Make necessary equipment repairs, etc.
A business sale usually takes nine months to a year.  Selling a business can be time consuming and emotional. Using a qualified business broker can ease the process.
Connie Mendrys
cmendrys@tbbinc.com
515-986-0741

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PREPARING FOR EXITING YOUR BUSINESS

Business owners have emotional as well as financial considerations when preparing for the sale of their business. While the lump sum from the sale can be life changing, it may be secondary to planning the next phase of your life.   Owners become married to their businesses and often times have a deep “sellers remorse” reaction and a degree of anxiety when making this major change in their lives. Handling the transition is the key!

Your business name is just a sign on the wall.  Your strong, key people are the foundation of your business. The preparation really begins a few years before you sell your business by hiring the right people. As you get closer to the time to sell, delegate more and more of your duties until the business is running itself for the most part without you.  Many times the new company wants you to shepherd your old employees into the new system. If you are asked to stay for a period of time, make sure that the parameters of this understanding are crystal clear and in writing… length of commitment, possible payment to stay, your role in the process and anything else that may affect your new future plans once you are completely removed.

Lastly, it may be beneficial to secure a good set of advisors as you transition.  Determine how much you need to set aside for your next business venture if that is your plan.  Tax planning is crucial in a sale, as well as estate planning in retirement.

 

David Hooper

dhooper@tbbinc.com

515-249-6053

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