18 ways Business Brokers will Overprice Businesses for Sale

Thread 🧵 1) Weighting. Probably the most common and most deceptive is weighting the valuation entirely on the most-recent, best-year-ever. This can be appropriate if it's still growing the next year and sustainable, but often it's an outlier. More thoughts here:

https://x.com/ClintFiore/status/1503717345860022273

Today's my 42nd Birthday.

Here's 42 things I've learned so far about life:

🧵 1) Successful marriages and friendships are just choosing an imperfect person and deciding they're 'yours' no matter what.

If you make it about loving/supporting them instead of 'what's in it for you' mentality. The relationship will be fruitful and satisfying.

20 Books I read in 2024 with mini-reviews of each 🧵

Scoring System:
1/5- Don’t waste your time.
2/5- OK, got some out of it, but mostly fluff.
3/5- Pretty good. Glad I read it.
4/5- Very good, lots of value, highly recommend.
5/5- AMAZING and I’m going to re-read it as it ranks among my all-time favorites. 1- “The Meaning of Marriage” by Tim Keller. 3/5. Helps get a better understanding of the long-term seasons of Marriage and what it’s all about, from a Christian perspective. Seemed good when I read it, but 11 months later I feel like I’ve forgotten most of it, so only 3 stars for me.

How to Value a Main Street Business

A step-by-step, street-smart guide:

🧵 (You will want to bookmark this) I've valued hundreds of small businesses.

It's complicated. It's an art and a science.

But I wanted to post my thought process on how I can quickly get in the ballpark of sanity on a business that's in the 500K-5M revenue range and a likely candidate for an SBA loan.

1/36

Here's why the required SBA PG (Personal Guarantee) is such an asymmetric bet with relatively small risk and huge reward.

A thread 🧵 1) Most borrowers have their Net Worth in their home equity and 401k or IRA. Retirement accounts are already protected from bankruptcy. And there's ways to prevent the SBA from taking a lien on your primary home (live in TX or have <25% equity or get there via HELOC).

How to figure out if the SMB you want to buy is over-reliant on the Selling Owner- one of the biggest risks in purchasing a business. 🧵

(BOOKMARK THIS) Buy something from the business if you can. See if you touch the owner at any point in the normal sales process. Now buy a 2nd time and ask for something custom or a policy exception or discount. See if employees can handle the curveball or if they run to the owner.

18 Ways Sellers Inflate Asking Prices on Small Business For Sale

🧵: 1) Weighting. Probably the most common and most deceptive is weighting the valuation entirely on the most-recent, best-year-ever. This can be appropriate if it's still growing the next year and sustainable, but often it's an outlier. More thoughts here:

https://twitter.com/ClintFiore/status/1503717345860022273

THE PLAYBOOK 2.0

How to Buy a Business worth Millions with $0 of your own money.

Bookmark and consider this thread your 𝕏 SMB MBA

This is 100% possible.There are many variations of this, but this structure is super reliable and just works...🧵 First, for this to work, you need three things:
1) Good credit
2) have some relevant skills that lead bankers/investors to believe you're capable of running the business you want to buy
3) willing to sign on the line for a huge loan with an unlimited personal guaranty

How to Identify a Great Deal when Business Buying.

You want as many of these attributes as possible:
🧵 Clean books. Clean books. Clean books. Easy to understand P&L and Tax Returns. No funny business.

HOW TO PHASE INTO AVIATION AS A MID-LIFE PROFESSIONAL OR SMALL BUSINESS OWNER 🧵

You've been dreaming about it your whole life.
It's not that hard.
Time to become a pilot. 🛩️

I'm a CFI and small biz owner and own my own plane I fly for biz and fun. I'll walk you through it! Revised and Updated for Fall 2023.

This was a popular post over a year ago that I've heard inspired dozens of people to start flying!

Was so stoked to received DMs like these that I decided to revise and repost.

18 ways Business Brokers / Sellers will overvalue / inflate the asking price on their SMB business listings for sale.

Thread 🧵 1) Weighting. Probably the most common and most deceptive is weighting the valuation entirely on the most-recent, best-year-ever. This can be appropriate if it's still growing the next year and sustainable, but often it's an outlier. More thoughts here:

https://twitter.com/ClintFiore/status/1503717345860022273

I turn 40 next week.
Here's 40 things I've learned so far about life:

🧵 1) Successful marriages and friendships are just choosing an imperfect person and deciding they're 'yours' no matter what.

If you make it about loving/supporting them instead of 'what's in it for you' mentality. The relationship will be fruitful and satisfying.

Tips on how to figure out if the SMB you want to buy is over-reliant on the Selling Owner, one of the biggest risks in purchasing a business. A thread. 🧵 Buy something from the business if you can. See if you touch the owner at any point in the normal sales process. Now buy a 2nd time and ask for something custom or a policy exception or discount. See if employees can handle the curveball or if they run to the owner.

How to Value a Main Street Business

A step-by-step, street-smart guide:

🧵 I've valued hundreds of small businesses.

It's complicated. It's an art and a science.

But I wanted to post my thought process on how I can quickly get in the ballpark of sanity on a business that's in the 500K-5M revenue range and a likely candidate for an SBA loan.

1/36

Here's why the required SBA PG (Personal Guarantee) is such an asymmetric bet with relatively small risk and huge reward.

A thread 🧵 1) Most borrowers have their Net Worth in their home equity and 401k or IRA. Retirement accounts are already protected from bankruptcy. And there's ways to prevent the SBA from taking a lien on your primary home (live in TX or have <25% equity or get there via HELOC).

THE DEAL WHEEL
How to Build a 4-Person SMB Deal Team :

🧵 This is the Cliff Notes of a popular presentation I've done at the IBBA (Int'l Business Brokers Association) a few times, called "The Team Approach to Deal Making" where I teach how I utilized a small team, working together on every deal, to outproduce "One Man Show" competitors.

20 things Business Brokers should 🚩NEVER🚩 do:

1- Keep up listings after they've already sold as Buyer bait.
2- Fail to mark under contract listings as such.
3- Projections.
4- Set an asking price based on what the Seller wants for it with no defensible logic or support. 5- Set asking price that won't appraise and definitely won't meet minimum debt coverage ratio standards for SBA lending.
6- Go to market before they've reviewed P&L's and Tax Returns of Sellers and have them available for Buyers on the other side of an LOI.

Tips on how to figure out if the SMB you want to buy is over-reliant on the Selling Owner, one of the biggest risks in purchasing a business:
🧵 Buy something from the business if you can. See if you touch the owner at any point in the normal sales process. Now buy a 2nd time and ask for something custom or a policy exception or discount. See if employees can handle the curveball or if they run to the owner.

30 Business Ideas for 2023:

(🧵on observed trends and biz ideas to capitalize on them) Trend: Working from Home

1) Niche remodeling that exclusively turns seldom-used dining rooms, spare bedrooms, and garage bays into dream home offices fully kitted out for remote work and video calls and content. (sound, lighting, etc.) Or just designs them.

SMB Searcher / Buyers, let's have a little fireside chat about your mindset and your ego. Sophisticated Buyers with MBAs and whatnot, which are many of you, are indeed "smarter" than most biz brokers, and most SMB Founders / Sellers.

This works against you in your search. 🧵 I feel you on this. I was you. I know how frustrating it can be trying to work with all these "unprofessional dummies" brokers and sellers and their crappy CIMs, and ugly books, and inability to answer basic questions on KPIs that you think they should know immediately.

Your small business needs a "Cares Fund".

It will help your employees, save you a ton of stress, and solve a common dilemma. Here's how:

Quick 🧵 Issue: Employee asks for an advance on their paycheck or to borrow money. They present their story / reasoning and ask earnestly, nicely (usually).