MANATEE - Real estate may be hot but so are small-business sales, according to a local business broker.
“It’s always a good time to buy or sell a business because there is always growth in small businesses in this country,” said Tonya Merrill, a business broker at BDR Business Brokers in Bradenton.
About 25 percent of small businesses are for sale in the United States, and there are thousands of businesses for sale in Florida, she said. “And in Manatee and Sarasota counties combined, there are more than 300 businesses for sale at any given time,” Merrill said. “Businesses are always changing hands.”
Pat Sawyer, the new owner of Take One Media on Manatee Avenue West, knows all about buying a new business.
She moved here from Britain earlier this year after working with a business broker to seal the deal with her new company, which transfers film onto DVDs and films special events, among other things.
Merrill said many of her customers are moving to this area from abroad and out of state.
It took Sawyer nearly four months from the day she selected the business to the day that she officially became the owner.
“It’s a long process and using a broker is the way to go because you get the guidance that you need,” Sawyer said. Brokers help people buy and sell a business and help the parties with the legal process of a purchase.
But it’s not the only way.
While business brokers do have several listings, aspiring business owners can also peruse the classifieds and several Web sites that offer business listings for sale.
But it’s not always necessarily the right way to go. “Businesses for sale by owner are a lot harder to sell,” Merrill said. “People like to buy through professional brokers unless they know the seller personally.”
Brokers help a seller set a sale price by looking at the company’s earnings, net profit and assets, and at comparable businesses nearby and their selling prices.
Merrill said buying a business is more attractive than starting a new one because you take less of a financial risk. “Buying a business that has a proven track record is easier than starting that track record yourself,” she said. “The business is already making money and has a history.”
Motivated sellers will help the new buyer finance the business and stay on to help with the ownership transition.
“Customers have to like the new owner and the old owner can help to assuage customer and employee concerns,” Merrill said.
There is one disadvantage to buying a business. “No matter how hard you try in your investigation of the business, something might be missed or overlooked,” she said. “Plus, sales also slow down the first year and often the new owners don’t account for enough operating funds right away.”
When working with a business broker, buyers must also sign a confidentiality agreement. “It’s important to most sellers to keep quiet the fact that they are selling their business,” Merrill said. “You can lose customers and employees without being confidential.”
Buyers also provide brokers with their background and financial stability.
Brokers usually receive a specified fee from the seller in a process similar to that of a Realtor. Once a contract is agreed upon, there usually are a few months of due diligence where financial statements are reviewed and new leases and agreements are drawn up.
To get the most for your business when you are ready to sell, Merrill said business owners need to have well-documented accounting procedures and records reviewed and certified by a public accountant.
“Record keeping is the key,” Merrill said. “If you don’t have proper documentation you can be in trouble.”
And for those who want to be their own boss but have never owned their own business, Merrill recommends buying a franchise.
“Franchises are opportunities for someone else to set up the processes so that the lack of experience can be overcome by the processes already in place,” she said.