An Alternative Approach To Finding And Buying An Absentee Run Business

Comments & Replies: 2     Views: 22285     Posted By: Business Broker  

As a business broker, the phrase I hear most often from my buyer clients is, "I am looking for an absentee owner business." Since it is such a popular topic of discussion, let me offer an alternative method of business selection with several ideas and tips that I offer my buyer clients when asked.

Topics: Buying A Business     Tags: absentee run, buying a business


Contributor: Business Broker, SF Bay Area

As a business broker, the phrase I hear most often from my buyer clients is, "I am looking for an absentee owner business." Since it is such a popular topic of discussion, let me offer an alternative method of business selection. There are a couple things to keep in mind as you search for an absentee owner run business.

1. EVERYONE is looking for an absentee owner business. So, if you are looking for an absentee owner business and are looking for a great deal, I don t believe you have a very good chance of that happening. You can view other articles here on BizBen that show the likelihood of finding a true absentee owner business.

2. Very few absentee owner businesses sell. After all people sell businesses because they are burned out, tired of dealing with employees, etc. With an absentee owner business, this is less likely to happen. If a business is completely absentee and profitable, why would anyone sell it? Even if someone is retiring, if the business is absentee and profitable, they don t need to sell it even into retirement. Many baby boomers aren t looking to sell their absentee owner business to retire, but rather to keep it to retire.

3. Related parties. In the rare exceptions, where even though a business is absentee it still needs to be sold, such as divorce or cash emergency, many times the business is sold to a related party, such as a relative, employee, vendor etc.

So to sum up, if for example (numbers are only for simple illustration purposes) 5 out of 100 businesses for sale are absentee owner businesses, probably only a few are going to make to the public offering arenas like BizBen. Also of 100 potential business buyers 95 have absentee ownership as the number 1 criteria for their business search. So, you have 95 percent of the business buying population looking at 5 percent of the business listings. That isn t where you are going to find your gem.

I suggest an alternative approach.

You will find your diamond in the rough, by looking at businesses that aren t absentee owner, but have the potential to become absentee, or become more absentee than they currently are. In some cases, business owners are so up to their eyeballs entrenched in the business that they fail to see certain small changes that can make the business more absentee.

Certain small business owners might poor delegators. Many small business owners believe that an employee won t do as good a job as they will so they don t like to let others do the important tasks. However, its common practice in large profitable businesses to delegate tasks even though the delegatee won t do as good a job. According to Peter Drucker, a good rule of thumb is if your subordinate can do the task at least 70 percent as well as you can, you should delegate.

Besides delegation, another way to improve a business is marketing. Many businesses have an owner who has extra time so he begins selling and marketing, until he creates an excess of business so he gets busy managing and stops marketing. Then once that business is complete and things start to slow down again he starts selling and marketing again and so what you end up with is a sales cycle of peaks and valleys and with no steady reliable sales revenue. It's difficult, in this situation, to be able to hire and pay for more employees. It's a vicious cycle.

Making some improvements to the marketing of your target small business, by creating automated marketing strategies and maintaining a marketing calendar can reduce these peaks and valleys, and therefore make it easier to hire and train staff and therefore create an environment that supports absentee ownership.

An injection of cash. Many small businesses aren t in need of any changes but instead just need an injection of cash to take it to the next level. In this case, the current owner takes all profit from the business each month to pay for his living expenses. Especially in the San Francisco Bay Area where living expenses are so high. So, because the owner takes all net profits to survive, he doesn t have any money left over at the end of each month to invest in growing the business.

Maybe the business needs an increase in inventory, a new sign, a new piece of equipment or some other capital expenditure. A simple injection of cash to purchase a "certain item" can drastically improve the profitability of a business and therefore the opportunity to become more absentee.

If absentee ownership is the number one criteria for your business search, look for businesses that aren t currently absentee owner, but can easily be converted to such. A little creativity and foresight will assist in making a business purchase decision that will get you the return on investment you are looking for as well as the level of owner involvement. It may take 6 to 8 months to get the business where you want it to be, but it is a much better approach than searching and searching for the illusive absentee owner business.


Craig's approach makes a lot of sense. Let me emphasize another dimension to his observation: often people are selling a business not because they want to, but because they don't know how to take the next step or don't have the resources to grow their business. Sometimes these sellers would be very happy to identify their particular skill set (e.g., marketing, production, operations, sales, finances, strategic planning, tactical management, or whatever it may be), and stay on in that capacity with a new owner who brings in the necessary supplemental resources to make the business successful. This seller may want to be an employee, or minority-share owner, or a combination of both. It's a valuable and proven platform for profitable semi-absentee management.

And, note I used the term "semi-absentee." I only believe in true absentee management in large multi-milion-dollar corporate operations where established management, a "deep bench," handles the day-to-day, week-to-week, month-to-month operations, and the owner is mostly focused on the long-term strategic direction of the business. Any small business owner needs to be committed to some meaningful oversight on a fairly regular and consistent basis -- like Tim Ferris's "four-hour work week."


  Helpful Resources To Assist In Selling And Buying California Businesses
Elizabeth McGovern: Escrow Services - San Francisco Bay Area

McGovern Escrow Services, Inc., is a leading independent escrow company. We are a trusted partner with our clients, assisting them through the tangled bulk sale & liquor license transfer process. We provide attentive, quality & innovative customer service. Phone Elizabeth McGovern at 415-735-3645.

Diane Boudreau-Tschetter: Escrow & Bulk Sale Services - CA

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.

Janet Carrera: Escrow & Bulk Sale Service - SF Bay Area

Redwood Escrow Services, Inc. is a full service, licensed independent escrow company. We are EAFC Fidelity bonded, fully insured & licensed with the Department of Corporations. Committed to offering our clients the most comprehensive variety of escrow services available. Phone Janet at 510-247-0741.

Prabhjot Randhawa, Broker: SF Bay Area, Central Valley

I'm a Business Advisor at Liberty Business Advisors of San Francisco. I have over 20 years of experience in all phases of entrepreneurship. During the past 15 years my concentration has been in business of mergers and consulting. I have owned and operated over 10 businesses. 209-815-3842 Cell.

Timothy Cunha JD, Business Broker: SF Bay Area

SF Bay Area experienced attorney, & business broker. I & my EvergreenGold team offer owners sound advice & expertise to build business value & achieve profitable sales. For a FREE business evaluation & SWOT analysis for your business call me direct at 650-600-3751, 650-866-5393 Text.

Mike Nova, Business Broker: North Bay Restaurant, Retail Specialist

I have over 30 years of direct restaurant industry experience, including my personal experience as a restaurant owner. For the last 7 years I have worked as a Broker specializing in this challenging and ever changing field of restaurant and bar sales. Contact me at 510-708-6682 Cell.

Helen Yoo, New Century Escrow - Escrow Services In 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.

Peter Siegel MBA, BizBen Founder, ProBuy, ProSell, ProIntermediary Programs

Founder Of BizBen.com (since 1994). I am the Lead Advisor for the ProSell, ProBuy, & ProIntermediary Programs. I consult daily with buyers, sellers, and brokers daily about buying and selling California small to mid-sized businesses. Call 925-785-3118.


  Related Articles, Events, Blog Posts, Discussions, Videos, Interviews
BizBen Podcast & Webinar: Business Purchase Financing And SBA Loan Options

Ever wonder what is involved in obtaining business purchase financing to buy a business or franchise? Peter Siegel, MBA who has over 25 years advising on all types of financing for business buyers in this BizBen Podcast & Webinar - SBA loans, Non-SBA Financing, Alternative Financing Sources.

Buying A Business: Why Is It Important To Look At Its Tax Filings?

Business tax filings are very important factor in determining the credibility of business financials. Just seeing those financials, you can't determine whether those values are overstated or not. Some business owners provide made up financials to buyers - so, that's where tax fillings come in.

Due Diligence Checklist: 10 Key Items To Investigate When Buying Businesses

Buying a California small business involves reviewing due diligence checklists so buyers can learn enough to determine whether to proceed with a deal. Here's a due diligence checklist. Peter Siegel, MBA (BizBen ProBuy Advisor & Business Purchase Financing Expert) at 925-785-3118 shares his views.

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 925-785-3118) a business purchase financing expert delves into the myths and facts regarding SBA loan financing.

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 925-785-3118 (BizBen ProSell Program) explains these factors for owner/sellers.

Business Purchase Financing Expert Peter Siegel - 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/cash flow. Peter Siegel, MBA (BizBen ProBuy & ProSell Lead Facilitator) at 925-785-3118 explains.

Purchase A Small Business With Limited Or No Cash: Financing Tips For Buyers

Purchasing a business with no money down can be difficult, but not impossible. Financing a business purchase or down payment can often be accomplished with these strategies offered from Peter Siegel, MBA (Business Purchase Financing Expert, ProBuy & ProSell Program Advisor with BizBen) in this post.

6 Simple Things To Increase Business Value Before Offering It For Sale

How do you value a small business before putting it on the market? Tim Cunha, JD offers 6 items all business owners should consider. Other advisors and business brokers also weigh in on this very important topic especially when over 70% of small businesses never end up selling (due to pricing).


Tim Cunha Business Brokerage
Redwood Escrow Bulk Sale Services
Escrow Services Diane Boudreau-Tschetter
Jim Saxton SF Liquor Licenses
Facebook
Twitter
Linkedin
Vlogs and Podcasts
California Educational Events Buying And Selling Businesses
BizBen ProBuy Program
BizBen Blogs And Articles
BizBen ProSell Program
Business For Sale California Stats
Instant Email Alerts On BizBen


BizBen - Where California Deals Get Done! 888-212-4747
7172 Regional Street #364 · Dublin, CA. 94568
BizBen · Copyright © 1994 - 2020, All Rights Reserved



Clost Login


Please confirm your registration by clicking the link we've sent to .

If you can't see it, please check your junk mail folder.

If you have any problems registering, or need assistance with your new BizBen User Account please phone BizBen Customer Support at 888-212-4747.



First Name:*
Last Name:*
Email Address:*
Confirm Email:*
Create Password:*
Confirm Password:*
Phone:
(   
 


You Are A:
Individual
 
Intermediary
 

Email Address:
Password:
 

500 New & Refreshed Detailed Postings Daily
Over 2500 Resources Available On BizBen
Since 1994. Where California Deals Get Done!
Buying A Business: Why Is It Important To Look At Its Tax Filings?
Read More News
8 Tough Questions You Most Likely Will Be Asked When Selling Your Busine...
Read More News