30% of all business buyers have been through the process before and therefore have learned, through experience, what they should do and not do. They graduated from the very expensive but enlightening "School Of Hard Knocks." I myself learned how to become a business broker, hard money loan broker, real estate speculator, builder, and land developer by going to this school. I must tell you, that the tuition is more expensive than Harvard Medical School or any other top notch University in the world. Being sixty-one years old it is sometimes very enlightening to reflect on ones life, in retrospect, and see what was done right and wrong.
This exercise is often called the "What if?" It is sometimes productive and sometimes demoralizing. We all have made mistakes and the only person who hasn’t is the person who never takes a chance. While doing this introspection, one big repetitive action repeated multiple times is my reason for repeatedly going back to the "School of Hard Knocks."
One of the reasons I joined professional associations was to have contact with people who knew things about my industry that I didn’t. They became my associates, from whom I could call and ask questions. Occasionally I met an old timer who really knew the ropes. When it was possible, I went out of my way to build a relationship. I wanted him to be a "mentor" to me.
Not everyone who is an “old timer” and has experience can mentor others. When I was a member of the Building Industry Association I met one of the top ten industrial general contractors in the USA. His advice to me was to just jump in and do it. I kept asking him, How? He could not understand my questions, so he stopped spending time talking with me. A real mentor would have helped me outline the plan step-by-step. He would have helped me overcome the obstacles that inevitably occur, because an experienced person usually has the solution.
At the beginning of this article I stated that 30% of all business buyers have been through the process before. That would naturally lead to the conclusion that 70% of all business buyers have never bought a business before. The 70% knowing that they do not know anything about buying a business usually look for some family member, or family friend, who has experience, to help them. Some of these inexperienced buyers understand that they need a team to help. They look for an attorney to help them develop or write the contract and form the legal entity. They find an accountant who will review and audit the seller’s records. They may even look for a business appraiser to tell them what the business is actually worth, in order to make sure that they do not over pay for the purchase. The one thing that many buyers realize but cannot find is a business-buying mentor. This is someone to educate them through the process and tell them about the pitfalls of locating and purchasing a business.
The attorneys and accountants have specific functions that come into play only after you are 100% sure you are intending to buy a business because you must be ready to pay for these services. But what about before you reach that point? What about when you are asked to make an offer even before the financial information has turned over to you to have an advisor study? What do you do then? These are hard questions for even a seasoned buyer to answer, and impossible for a novice. What is needed is a mentor to help guide the way. The word mentor is defined--in a business setting: as the act or process of helping someone younger or less experienced to learn the ropes.
When buying a business today, one needs to be educated in the whole process. Each prospect that examined and evaluated can and should increase the knowledge and understanding of the buyer. Only in this way, can a buyer truly know a good business deal when he finds it.
By mentoring buyers instead of just offering only due diligence, I have found that when you lose a client, after you educate them, you may still had a lifelong friend.
About The Author: Serving all of California, Willard Michlin, CPA offers business buyers Due Diligence Services (Second Opinion, Offer Assistance, Final Due Diligence) when they are thinking of making an offer on a business or in the process of investigating a business purchase. Mr. Michlin has written numerous articles on the due diligence process and can be reached direct at 805-428-2063 for more information and an appointment.
|Helpful Resources To Assist In Selling And Buying California Businesses|
|Diane Boudreau-Tschetter: Escrow And Bulk Sale Services
California Business Escrow, Inc. is a full service independent escrow company serving all of California and has expertise in a wide range of escrows. Our team prides itself on providing an exceptional escrow experience. For more info phone Diane Boudreau-Tschetter at 888-383-3331 or 209-838-1100.
|Helen Yoo: Escrow & Bulk Sale Services - Southern California
New Century Escrow, Inc. is a fully licensed & bonded independent escrow company. Over 20 years combined experience in handling bulk escrow transactions. Multi-lingual staff that speaks your language, including Korean, Chinese, Vietnamese. Call Helen Yoo direct at 626-890-1151.
|Willard Michlin, CPA, Certified Fraud Examiner, Due Diligence Services
Willard Michlin, CPA #106752, offers buyers step by step training & assistance in doing Due Diligence Services when they are thinking of making an offer, or are in process of investigating a business purchase. He helps to determine the actual net profit even when there is cash. Call 800-864-0420.
|Mark Chatow, Esq.: Legal Services For Buying, Selling Businesses
Mark has a broad range of small business purchase & sale experience from analyzing potential acquisition targets to successfully guiding buyers and sellers through the purchase & sale of small businesses. Mark can assist with contracts, negotiations, legal matters, etc. Reach Mark at 949-478-8393.
|Mike Hurrell, Broker: Coin & Card Laundry Specialist Brokerage
Providencia Properties Inc in association with Golden State Laundry Systems is a full service Coin Laundry Real Estate Broker. At GSLS you will receive personalized attention from our professional staff of coin laundry experts. To sell or buy a Southern CA laundromat call Mike at 310-223-2240 X209.
|Bob Baumgarten, Business Broker: Orange, LA Counties
National Business Brokerage is a full service brokerage company that has been serving buyers and sellers of Southern California businesses since 1994. We are dedicated to providing the highest standards of professional service for our clients. Phone Bob direct at 949-588-8727.
|Chuck Post: Laundry Buyer Representation, Consulting, Due Diligence
Chuck Post has 32 years experience in the laundry industry, specializing in assisting laundry buyers (and entrepreneurs) with buying or starting up, building, re-tooling, laundries throughout California. Laundry buyer representation, consulting, due-diligence, lease negotiations, laundry valuations.
|Chris Seaman, Business Broker - San Diego County Area
Founded in 1994, First Choice Business Brokers has accelerated to become one of the most successful Business Sales Organizations in the world. Our team of agents have gone through extensive training to become experts in the field of business brokerage. Call Chris at 858-578-4111 for more info.
|Related Articles, Events, Blog Posts, Discussions, Videos, Interviews|
|Due Diligence Issues: What Business Buyers Should Know About The Process
Willard Michlin, CPA, CFE at 800-864-0420 elaborates why you can do a large portion of the due diligence yourself, depending on your background, but you should never try to do it solely on your own. In this BizBen blog post he explores ways business business buyers get themselves into trouble.
|Getting An SBA Loan To Buy A Small Business: Dispelling Some Major Myths
When seeking SBA loan financing many potential business buyers have wrong information about the process of securing the best financing to buy a business. Peter Siegel, MBA (at 866-270-6278) a business purchase financing expert delves into the myths and facts regarding SBA loan financing.
|What Steps Do I Take When Closing A Business That Doesn't Sell And I Close?
Every business broker knows that a listing taken is not a listing sold, in fact the ratio of listed vs. sold could be discouraging if you really thought about it. Joe Ranieri (Orange County Business Broker) discusses what you should do if you finally have to close the doors and call it quits.
|Video/Podcast: Business Purchase Financing Chat: SBA Loan, Non SBA Financing
Ever wonder what is involved in obtaining business purchase financing to buy a business or franchise? Peter Siegel, MBA who has over 20 years advising and obtaining all types of financing for business buyers in this video/podcast - SBA loans, Non-SBA Financing, Alternative Financing Sources.
|Business Purchase Financing Expert Gives Tips On Proving Cash Flow
What are the actual "provable" adjusted net earnings (cash flow) of a small to mid-sized business being purchased? Buyers need to look carefully at all financial info for the "real" adjusted net income or cash flow. Peter Siegel, MBA (business purchase financing expert) at 866-270-6278 explains.
|Attorney Specialist Shares Escrow Instruction Tips When Buying A Business
Once you have successfully negotiated the Asset Purchase Agreement ("APA") for your acquisition it's natural to relax a little and let your guard down. Attorney Specialist Mark Chatow discusses what business buyers should look out for when opening escrow and getting escrow instruction in place.
|BizBen Index: Weekly Results - 265 California Businesses Sold 7/24 - 7/28
For the week of 7/24 thru 7/28, 265 California small businesses were sold by business owners, business brokers, and agents. In 2016 16,858 CA small businesses were sold. This year (2017) 9,781 small to mid-sized California businesses have sold so far by brokers, agents, and business owners.
|Thinking About Selling A Small Business? Know These 8 Factors That Matter
The likelihood of selling a business is often determined by external factors in the marketplace. Here are eight influences on how easy, or difficult it might be when selling a small California business. Peter Siegel at 866-270-6278 (BizBen ProSell Program) explains these factors for owner/sellers.
|See All News, Tips And Events|