The University of Georgia Small Business Development Center is helping you navigate the world of entrepreneurship by taking a look at independent and franchise opportunities. The University is hosting an upcoming event titled, How to Buy a Business, which will be completely virtual on May 5. In this segment, we’re pleased to welcome Leslie Kuban, who is a franchise industry expert and owner of FranNet of Atlanta, to discuss buying a business and what attendees can expect from the online course, which we highly recommend that you attend.
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Transcription:
Jim Fitzpatrick:
Welcome back to the show, Leslie. It’s always a pleasure having you on.
Leslie Kuban:
Thanks. Great to see you, Jim. Pleasure to be back.
Jim Fitzpatrick:
Sure. So, soon you’ll be back in the studio now, with COVID kind of starting to phase out. Everybody’s getting vaccinated and such, so things are starting to get back to normal. Have you seen that in small business here in Atlanta, those things are starting to open back up and people feel a little bit more confident about going out and conduct their business face-to-face?
Leslie Kuban:
It’s interesting, and sometimes you wonder has there ever been a pandemic.
Jim Fitzpatrick:
That’s right.
Leslie Kuban:
When you’re out and about, and seeing people getting back to their lives, and eager to have their kids back in school, and graduations, and getting back to business.
Leslie Kuban:
And interestingly, even before vaccines really started to roll out, there are certain businesses that haven’t skipped a beat during all of this. Different businesses have had different experiences, but everybody is gearing up for a good second half of the year.
Jim Fitzpatrick:
Not only have there been businesses that haven’t skipped a beat, they’ve jumped ahead a few beats. There’s been some that have reported back to us that said, my business was moving along nicely before the pandemic. And then, depending on what their business was, of course, if they were food delivery to homes, their business took off, right? And, there were those businesses that happen to do very well during the pandemic. Not that we’re wishing the pandemic on the nation.
Jim Fitzpatrick:
However, it’s good to hear that entrepreneurs did pretty well for those that could serve their customers and such, or continue to serve their customers, I should say. There’s been a number of restaurants, as you know, that had to shut down their dining room, but opened up a tremendous takeout business and found now that the pandemic’s going away, they have both. They’ve got a take business they never thought they’d have, and people are coming back into the restaurant. So, it’s got kind of a silver lining to it, right?
Leslie Kuban:
Yup. I have a client who bought an up-and-running paint contracting franchise. And it was already a good business to start with, but he’s more than doubled it over the last year, just from the demand from being at home and fixing up their homes.
Jim Fitzpatrick:
Yup. Sure.
Leslie Kuban:
So, that’s-
Jim Fitzpatrick:
Everybody’s getting their stimulus checks and wanting to spend them on home improvements. So, pools have been a big thing, and of course anything having to do with the backyard, barbecue sales, patio furniture, it’s all been just selling as quickly as it comes in, because people during last year, they were staying at home. So they’d say, well, let’s make our own house an oasis.
Leslie Kuban:
Yup.
Jim Fitzpatrick:
Interesting. There’s been, I’m sure, a number of franchises too, that you’ve sold over the last year of people kind of wanting to get into that. Right?
Leslie Kuban:
And even some food franchises actually have seen incredible starts when they have a grab and go model, or a dominantly take out model. So, even industries that have seen a lot of hardship, it kind of depends on the model. We’ve got some comfort food franchise concepts that have seen great record starts in the pandemic.
Jim Fitzpatrick:
Right.
Leslie Kuban:
We have some health food concepts that have also seen a record launch. If someone’s in the market for good opportunity, there is a lot of opportunity to be had and consider.
Jim Fitzpatrick:
Yeah, yeah. For sure.
Leslie Kuban:
You just have to look in the right places.
Jim Fitzpatrick:
Overall, here in Atlanta, good time to open up a business, or are you telling people to wait a little longer?
Leslie Kuban:
I’ve been telling people to take advantage of this time to explore.
Jim Fitzpatrick:
Okay.
Leslie Kuban:
Because interest rates are still at an all time low.
Jim Fitzpatrick:
Yeah.
Leslie Kuban:
And I’m seeing clients acquire their real estate for their business a lot faster than they’ve been able to in the past. And unfortunately, part of that is because of vacancies as a result of the pandemic. But, I’ve had clients secure their leases in under three months from signing their franchise agreement, where a year ago, two years ago, that probably would have been six to 12 months. There’s a labor pool to hire from.
Jim Fitzpatrick:
Yeah.
Leslie Kuban:
There are a lot of reasons to explore, to see if this is right for you at this time.
Jim Fitzpatrick:
Sure. Sure. And we all know that one day it will be back to normal, and everybody will be vaccinated, and there’ll be no more terrible virus to worry about. And I think that there’ll be somewhat of a celebratory economy out there, of people that are doing the staycations and vacations and cruises, as we talked about earlier, and going out to dinner more and just being in this celebratory mode to say, let’s go out and spend and enjoy our lives, right?
Leslie Kuban:
Living life. That’s right. It’s time.
Jim Fitzpatrick:
That’s right. Hey, let’s talk a little bit about what the challenges are of buying an existing business. I know that you’re an expert in franchising, and many people may buy an existing franchise. But, they also might just buy a business that’s not a franchise. What are some of the challenges in buying an existing business?
Leslie Kuban:
And, we’re going to talk a lot about this in the event coming up on May 5th. And, I think the biggest challenge is finding the right business to buy, to finding the right existing business to buy.
Jim Fitzpatrick:
Right.
Leslie Kuban:
Because when you look at that, it is a much longer criteria list that has to be satisfied. It’s got to be the right business.
Jim Fitzpatrick:
Right.
Leslie Kuban:
The right type of business for the person who’s buying it. The deal has to be right, the buyer/seller transaction, and the financing, and the negotiating, and the due diligence. There’s just a lot more to consider, and it’s got to be the right location. And so, finding something that satisfies all of those criteria is just more difficult. And I’ll tell you, the trade off is usually in the location. If someone who’s really bent towards buying an up-and-running company, it being the right business, the right deal, and it’s a mile from your house, is a tall order to try to accomplish. Oftentimes, people end up commuting or relocating for that right existing business.
Jim Fitzpatrick:
Okay.
Leslie Kuban:
Is what I see.
Jim Fitzpatrick:
Sure. I know you’re going to be talking about this in depth at the event. So, give us an idea of what are some of the other lessons that you want the attendees to learn from and take away with?
Leslie Kuban:
And, there’s not just challenges, there’s benefits, too. And we’re definitely going to talk about that. And some of the benefits of considering buying an existing business are that the ramp-up time can be a lot shorter. That runway to positive cashflow can potentially be a lot shorter. The ability to access attractive financing options, there could be more opportunities with an existing business. There’s challenges, but there’s a lot of potential benefits too, and those are some of the things we’re going to discuss in the event, as well as what is the timeline that a prospective business buyer needs to think about?
Leslie Kuban:
It can take quite some time to go through the exploration process, the due diligence process, the deal process, and what are the steps in those process? What kind of a resource team do you need to have working with you in terms of attorney, in terms of maybe a business broker or franchise broker, an accountant? You’re going to have a spend on professional service fees to help you analyze and ink the deal when you’re buying existing business.
Leslie Kuban:
The class is going to get a realistic understanding of what all you need to do, what kind of time does it take, what does the process look like, and who do you need to help you?
Jim Fitzpatrick:
That’s right.
Leslie Kuban:
When you’re buying an existing business.
Jim Fitzpatrick:
That’s right. Would this be a class that would be for both people that want to sell, to learn from this angle, as well as those that are thinking about buying a business over the course of the next year?
Leslie Kuban:
Absolutely. I think that even though it’s really geared toward the buyer of an existing business.
Jim Fitzpatrick:
Okay, yeah.
Leslie Kuban:
But, sellers of existing businesses need to hear what they need to do to prepare. And it is often a lot more than they think. It’s not just the for sale sign in the window, I’m ready to sell my business. It often takes several years of advanced planning to really put your business in the position so it’s an attractive asset for someone else to buy and pay top dollar for it.
Jim Fitzpatrick:
Yeah, that’s right. This is one of those situations in life. If you’re listening to us have this conversation, entrepreneurs, don’t do this alone. This is something that you need an expert like Leslie Kuban, if she’s available to help you. But, somebody that’s in your corner, that’s got that checklist and that has been down this road before. Because if you just walk in blind and you talk to the business owner, and he or she gives you just a very rosy picture of everything. And it looks great, you’re there, the place is busy. You can’t wait to take it over. And sometimes your emotions can get the best of you, and you can put on those goggles that everything looks great, and you picture yourself running to the bank with huge deposits every day. When in reality, right Leslie, it just isn’t always that way.
Jim Fitzpatrick:
Now, that’s not to say to your point that it’s not great to buy a business. Just do it carefully, take your time. Make sure you got a good accountant that knows how to read the books and read between the lines. Make sure you got a good attorney, so that down the road whose liability is where, and what are the expectations on both sides. And then, just somebody that can help you determine what the longevity of this business is, right? And where this is going, and what the forecast is. And, right down to the surrounding area of the business. You might say, wow, this is a great business in this particular strip center that I’m in. And, it looks like there’s all these neighborhoods and what have you. And once you do a little bit of research, you find out that, oh, wait a minute. They’re putting a corporation across. That’s all going to be flattened. They’re going to put a huge corporation over there and its warehouses. And, in fact, my lease can’t go beyond two years because this is going to be a condo.
Jim Fitzpatrick:
These things are realities that do come up. And that might be something that the business owner knew when they put it up for sale, hoping that you might not do your homework on it. There’s so many different questions to ask when entering into this. It can be a great thing. I highly recommend it. Obviously, I’m a huge entrepreneur and somebody that is an advocate for entrepreneurs, but it’s important that you do it right.
Jim Fitzpatrick:
And Leslie Kuban is just an expert in this area, for sure. That’s why we love having her on the Atlanta Small Business Show, because she’s helped so many people in this area. So Leslie, give us the dates, and we’ll show all the information here on as well. But, what are the dates and times of the event?
Leslie Kuban:
It is, again, virtual, all online.
Jim Fitzpatrick:
Great.
Leslie Kuban:
The course fee is $39.
Jim Fitzpatrick:
Okay.
Leslie Kuban:
And, it is Wednesday, May 5th, from 10:00 AM to 11:30 AM. And it’s a panel of experts. I’m going to be talking about the process of buying an existing franchise, which does have some differences, too.
Jim Fitzpatrick:
Sure.
Leslie Kuban:
Buying someone’s independent business. But, the main thrust is the Small Business Development Center. And you and I agree, they’re such a wonderful resource for business owners-
Jim Fitzpatrick:
Yeah. No question about it.
Leslie Kuban:
But, they’re really going to lay out the whole process of acquisition, how to begin your search, how to craft your criteria list for your search. There’s also going to be an attorney who is well versed in small business acquisitions, kind of talking from the contractual legal side of things. So, I think we’ve got kind of a rockstar panel to help people learn about what really is involved in buying an existing business and doing it well.
Jim Fitzpatrick:
Boy, there’s no question about it. For those that are listening, if you called any one of these individuals and said, hey, I’d like to take 90 minutes of your time and ask you a whole slew of questions about buying a business, whether it be franchise or non-franchise type business, they would say, great. I charge about $950 an hour for that. So, that’ll run you about 1500 bucks. Okay, this is $39. You’re a click away from getting an incredible amount of information for $39. This is the price of a lunch.
Jim Fitzpatrick:
I highly recommend that you take Leslie up on this. Be there, and get just headed in the right direction. And that’s what events like this will do. It’s going to be a first-class deal with, as you said, a star-studded panel.
Jim Fitzpatrick:
Leslie Kuban, franchise industry expert and owner of FranNet, right here in Atlanta. Thank you so much for joining us on the show. As I said, I know that our subscribers and viewers get a lot out of your visits here, so thank you.
Leslie Kuban:
You’re so welcome. Great to see you again, and hope to see you all at the event next week.
Jim Fitzpatrick:
Absolutely. Yup.
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