King & King Business Advisors

Excerpted from Office of Small Business Administration Office of Advocacy’s FAQ

How important are small businesses to
the U.S. economy?
Small firms:
• Represent 99.7 percent of all employer fi rms.
• Employ about half of all private sector employees.
• Pay more than 45 percent of total U.S. private payroll.
• Have generated 60 to 80 percent of net new jobs annually
over the last decade.
• Create more than half of nonfarm private gross domestic
product (GDP).
• Supplied 22.8 percent of the total value of federal prime
contracts in FY 2005.
• Hire 40 percent of high tech workers (such as scientists,
engineers, and computer workers).
• Are 52 percent home-based and 2 percent franchises.
• Made up 97 percent of all identifi ed exporters and produced
28.6 percent of the known export value in FY 2004.
• Small innovative fi rms produce 13 times more patents
per employee than large patenting fi rms, and their patents
are twice as likely as large fi rm patents to be among the one
percent most cited.
Source: U.S. Dept. of Commerce, Bureau of the Census; Advocacy-funded
research by Kathryn Kobe, 2007 (www.sba.gov/advo/research/rs299tot.
pdf); Federal Procurement Data System; Advocacy-funded research by CHI
Research, 2003 (www.sba.gov/advo/research/rs225tot.pdf); U.S. Dept. of
Labor, Bureau of Labor Statistics, Current Population Survey; U.S. Dept. of
Commerce, International Trade Administration.

Below you will find an excerpt from a column written by Richard Parker. Richard Parker, the President and Founder of Diomo Corporation and a world renowned expert on buying and selling businesses. He is the author of six comprehensive programs on buying businesses including the best-selling How To Buy A Good Business At A Great Price© series and has had over 100 articles published. Richard is also a highly sought after intermediary and recipient of the Business Brokers of Florida Top Dollar Producer having sold the highest volume of business in the State of Florida. Since 1990 he has purchased ten businesses and has started several more. As President and Founder of Diomo Corporation, his materials and live seminars have helped thousands of prospective small business buyers in over 70 countries realize their dream of business ownership. He is also on the Trump University faculty for Entrepreneurship a thought leader in the business brokerage industry.

Personally, I don’t agree all of the philosophies or methodologies that I hear some business brokers practice but as a buyer you really should not pay too much attention to it. It just doesn’t matter. This is where I think some business buyers completely miss the mark.

Buyers get too hung up on the broker’s role and forget what their goal is in the process.

The business buying process has plenty of blemishes, of that there is no doubt. Anyone who disagrees has their head in the sand. However, I am convinced that a fundamental misunderstanding of how this process is “supposed” to work is at the core of what causes the friction and lack of communication between buyers and brokers.

Let me first address prospective business buyers and provide you with some insight to business brokers. I will touch on a few points that are basic yet fundamental reasons that cause a lot of wasted time and misunderstanding. I am also going to discuss some issues related to business brokers and their world in the next newsletter which will clearly help anyone who is buying a business understand this process better.

First, most business buyers begin the process thinking that business brokers operate like residential estate sales people. You figure they’ll respond to every inquiry with rapid fire speed, they’ll show you tons of businesses and take as much time as you need to find the “perfect” business. Unfortunately, that’s not the way it works.

The only common thread between business brokers and real estate agents is that they are both paid on commission – end of story. Real estate sales people will generally work more favorably with buyers and there are a number of perfectly good reasons why this happens.

I once read a statistic that said any individual or couple that contacts a real estate person will likely purchase a property within twelve months, seventy percent of the time. Contrast that to a prospective business buyer whereas over ninety percent will never buy a business. That alone could cause some business brokers to proceed cautiously before becoming too involved with any buyer. I know I do. Wouldn’t you agree?

To further complicate matters, the market is absolutely flooded with buyers; always is; always will be. Unless you separate yourself from the crowd, you are simply in a pool of tons of others who, in the minds of sellers and brokers will probably never buy. Here’s a great article on how to separate yourself from the crowd.

Since business brokers are not going to take you to see countless businesses for sale listings, a good part of the search falls to you. Now, this does not mean there’s any excuse for a broker to not return your calls or emails when you inquire about a business (a frequent complaint) and I know how aggravating that can be. On the other hand, if you are able to search more effectively, and ask the right questions (especially in the first contact) you will be miles ahead of the other buyers. Business brokers are not going to do your work. Don’t expect them to.

Second, the misconception exists that banks have their vaults open ready to lend money to small business buyers – not true! And so, many inexperienced buyers who simply do not have the financial resources to complete a transaction go down the wrong path thinking that every business listed for sale is within their reach. Unfortunately, that is not the case.

Financing a business is not as simple as getting a mortgage on a home. While there are many options available to finance a business, you certainly want to understand these early on so that you don’t chase the wrong deals. If not, the only result will be wasted time and frustration. If you do not have the financial resources to execute a sale, a business broker is not going to indiscriminately distribute a company’s financials to you. The lesson is simple - know what you can afford. Be prepared to share your financial information with a broker and provide them with the proof they need to deem you qualified for a particular listing.

Third, learn the business buying process. If you’re really serious about buying a business, then don’t become a “looker”. Educate yourself, hone into a few businesses, present yourself properly, ask the right questions, do your research, and be prepared to make offers. It’s quite simple and the only way to get any deal done.

I know these few points sound relatively simple, and perhaps even obvious. I also know and hear first-hand how frustrating it can be to work with an uncooperative business broker. Yes, those situations do arise. Yet, one thing is certain: every single business broker wants to sell you a business. If not, they don’t eat. They will help you. They will move the deal along. But they are not going to do your work nor will they spend time with you on listings they know you cannot execute.

The business buying process is not perfect; far from it. However; the blame can not rest solely with brokers. I know there are plenty in the profession who should not be there. Chances are that they won’t be in twelve months. Nevertheless, you cannot possibly rely on a business broker to dictate your success and whether or not you complete a transaction.

Brokers have their role but deals get done between buyers and sellers. Placing your destiny in this process in the hands of a broker and then becoming discouraged or worse yet, aborting the project because of their inefficiencies simply does not make sense. That would be like you deciding to take the bus and not buy a car because you did not like the salesman at a particular dealership.

The bottom line here is that business brokers will not pay any attention whatsoever to unqualified buyers. I’m not saying that their methods for qualifying a buyer are always right by any means. However, if you truly want to get the level of cooperation you believe that should be bestowed upon you by a business broker, then you need only follow a few simple steps.

Come to grips with whether you have a real need to buy a business or you are just looking. When you arrive at the former, you’ll be successful.

Get a handle on how much you are prepared to invest of your own money. Buying a business is not like the “no money down” real estate infomercials. Be willing to share this information with business brokers. They will help steer you to businesses they know you will be able to purchase.

Be prepared. I don’t care how smart you are, or what your prior business experience may be, those are attributes that will help you AFTER you buy a business. You absolutely need to educate yourself. In my publishing business where we offer how-to guides on buying a business ( www.diomo.com ), I like to ask prospective clients the following questions (think about this for a second): If you are going to invest your money to buy a business, and especially if you have never bought one before, shouldn’t you first learn how to buy the right one? If not, that would be like your college bound child telling you that they want to become a doctor but they aren’t going to buy any of the books or even attend most of their classes. How would you respond? Buying a good business is well within your reach. We are not talking about sending men to the moon. However, if you fail to prepare; prepare to fail.

So here’s your homework:

1. Compile your personal financial statement and be prepared to provide it to brokers.

2. On your next inquiry to a business broker follow the steps we discussed in the article separate yourself from the crowd .

3. Commit to buying and not looking.

4. Get hold of the materials you need to learn how to become a savvy buyer

5. If you can’t make headway with a certain broker, move to the next one.

Good luck and please send me your thoughts.

Richard Parker

Take Richard Parker’s Buyer Quiz

BUSINESS BROKERS WANTED

We have openings for Business Brokers all over the mid-atlantic region. You do not need a real estate license to sell businesses, nor are there any other regulatory requirements placed on Business Brokers. If you have never bought or sold a business before we can teach you how the entire process works from start to finish and have you up and running in a very short time. This is a great second career type of job, you get to work at your own pace, you are your own boss.

LISTING FINDERS WANTED

Not sure whether or not you want to jump into the whole Business Broker thing just yet but still want to make some great money? If so, you can start out as a LISTING FINDER. LF’s work 2-3 hours a day, 2-3 days a week out in the field placing business cards on the doors of businesses in areas around their city/home. Business owners will find those cards and call the finder to ask questions about selling ther business. The LF ’s goal is to turn that call into an appointment for one of the brokers to do a listing presentation for the business. If we list, and then sell a business from your business card distribution efforts you will receive a finders fee after settlement equal to 10% of the gross brokerage fee or $1,000 which ever is greater.

WE DESPERATELY NEED BROKERS AND LISTING FINDERS IN THE FOLLOWING MARKETS:

Baltimore, Maryland (3 Brokers, 3 Listing Finders)
Charles & St. Mary’s Counties (1 Broker, 1 Listing Finder)
Eastern Shore, Maryland (1 Broker, 1 Listing Finder)
Montgomery County, Maryland (2 Brokers, 2 Listing Finders)
Prince George’s County, Maryland (2 Brokers, 2 Listing Finders)
Harrisburg, Pennsylvania (3 Brokers, 3 Listing Finders)
Philadelphia, Pennsylvania (6 Brokers, 6 Listing Finders)
Pittsburgh, Pennsylvania (4 Brokers, 4 Listing Finders)

ADDITIONAL DETAILS ABOUT THE BUSINESS BROKER AND LISTING FINDER OPPORTUNITIES WE PROVIDE:

If you are a proven big ticket sales person that is used to earning over $100,000 per year then this opportunity is for you. If you recently retired and are looking for a new career that is challenging and rewarding that will let you work on your own, independently-this position is for you.

Business Brokers work closely with business owners to help them sell their businesses. According to national statistics 20% of all small businesses are for sale at any given time. That translates into millions of businesses for sale in any given year. We provide training, you provide the drive, determination and dedication necessary in this business.

To apply for any of these positions please send an e-mail to Jim King, President at jking@knkmgmt.com. Please include an electronic version of your resume with your message.

*****IMPORTANT NOTICE***** King & King Management, P.A. is an equal opportunity company/employer. Applicants for the Business Broker and Listing Finder positions should know that these positions are for Independent Contractors only and that all commissions are paid on a 1099 basis.

We received notification from Ron West, the GURU of the business brokerage profession, on Friday, August 3, 2007 that our leader has been chosen to serve as an Industry Expert in the Construction and Contracting fileds and will be so identified in all their literature and has authority to display the BBP Expert shield. Mr. King has helped many contractors and service companies over the years and is honored to be selected to serve in the expert capacity.

James,

We are pleased to inform you that you have been approved as a BBP Industry Expert! We appreciate your willingness to contribute information to us for inclusion in our upcoming Business Reference Guide 2008. The information that you furnish helps our profession help their clients and customers.

As a BBP Industry Expert, you can use the Industry Expert logos on your business cards and stationary and any other printed materials. You will find a link for these logos below. Also, your name, industry specialization(s), company name, telephone number, web site and email address will be included in our 2008 Business Reference Guide which will be available in January. This information will also be included in our listing of Industry Experts on our Web site (bbpinc.com) and other sources that we feel will promote you and your experience and knowledge as an Industry Expert. Thanks again.