Why Aren't Millennials Buying Main St. Businesses from Baby Boomers? How to Buy Sell a Business

[@kevdawg62]

This is me right now with our 80 year old family business. Trying to learn as much as I can before I put myself in a tough spot

[@DavidCBarnett]

Maybe you'd be a great guest for Your Exit Squad? It's a new podcast where we talk to business owners and explore their challenges and set them up with experts who can help. If you visit www.YourExitSquadGuests.com and fill in the form, my co-host Mike will give you a call.

[@paulntalo1425]

Thank you once again for bringing this to the forefront

[@DavidCBarnett]

Glad you enjoyed this Paul

[@derekturbacuski4092]

Thank you for applying common sense. The majority of business owners/brokers/etc.. don't comprehend these basic business principles.

[@DavidCBarnett]

Thanks Derek. It's why I make these videos. To share understanding. Cheers.

[@marioandultrachap]

Contrary to popular belief most people still shop in stores for what they need. I think its like e-commerce or online purchases only make up like 13 to 15% of all retail sales. I say this all the time buying things online is not as big as it seems. My guess would be people don't want to wait a day or two or more for their item they need it sooner so its better to go a store and buy it and plus you can physically see what it looks like. Maybe if same day shipping or delivers by drone where you can order something and its there within an hours becomes a thing I think physically retail store buying will still be preferable for a while.

[@DavidCBarnett]

Yes, totally. The video is not a critique of retail sales, but rather trying to demonstrate how this business likely isn't worth buying even though it's current owner may actually be benefiting from it.

[@marioandultrachap]

@@DavidCBarnett oh OK I only said that cause you mentioned the online aspect of it taking business away but I was letting people know that's only a fraction of the sales. I think it's more of economic problems than anything for why stores are going under but i know that's a different topic

[@cryptocarlitos]

Your points were very eye opening. Such as purchasing the building you're operating in vs leasing. The whole main street analysis. Great video.

[@DavidCBarnett]

Thanks Carlos. Glad you enjoyed this one... It's been popular.

[@civilgod]

I have been running into this issue of "businesses not worth buying" for more than year. Thanks for clarifiying this issue further.

[@DavidCBarnett]

No problem Byron. Thanks for being a loyal viewer.

[@ThangLe-yf6wj]

Wow that's a sobering, non-bias, none inflammatory inform opinion, thank you.

[@DavidCBarnett]

Thanks Thang. Be sure to subscribe so you don't miss any new videos. If you want to buy a business, check out my program at www.BusinessBuyerAdvantage.com

[@simonashari9079]

Great video. Found you through your appearance on Aaron Clarey's channel. This notion of "dead capital" is something I hadn't thought of before.

[@DavidCBarnett]

It's common in businesses that have been around forever as most business owners are technicians and not finance experts they rarely question the rate of return they're generating on all their 'assets under management.' Thanks for watching and keep the comments coming. If you're interested to learn how to buy a business, check out the online course at www.BusinessBuyerAdvantage.com

[@theognis1002]

Could it be worth it to purchase the business, relocate it to somewhere cheaper that makes more sense, and the just rent out the original building?

[@DavidCBarnett]

The new location wouldn't be proven. The whole point of buying a business is that you have an idea of how it's performing. Your idea is exactly what the current owner should have done 5 years ago. Then he would have effectively separated the two assets (the business and the building.) He could then have a financial history of the business in its' new location which would facilitate a sale. The question of the building would be completely separate once the business was gone.

[@hugorodas9174]

I'm happy I found your KZbin channel, David. Thank you for sharing your wisdom. I'm learning a lot. This is another great analysis.

[@DavidCBarnett]

Thanks Hugo. It would help a lot if you like and share some of the videos to help make them easier for new viewers to find. Cheers!

[@capeedon]

Thank you for your wisdom I bought all town laundry and added three apts that's what I'm doing with these sought of buildings and businesses in Iowa land and prices are cheap any of your videos to watch to help with me getting knowledge how to buy small businesses in small towns less than 5k populatio5 thank you god bless

[@DavidCBarnett]

Sounds like you've got a plan and you're executing it. Good for you. Too many people just sit on the fence and suffer from 'analysis paralysis.'

[@mcashnv]

Just because the business has owned the building for a long time doesn't mean they aren't paying a mortgage and debt service. I wouldn't assume otherwise without reviewing the company P&L. The truth is about 25% of 'main street' businesses advertised for sale will actually sell. A good business broker will sell 75% + of his listings.

[@DavidCBarnett]

Yes, without seeing financials we have no idea what's going on in a business. This was an analysis from what information was available in a news article and there were plenty of assumptions. I tried to be sure to verbalize them as I went along.

[@carlosotero772]

Great video!!!!!

[@DavidCBarnett]

Thanks Carlos.

[@calloway2117]

Just seeing this great

[@DavidCBarnett]

thanks, glad you enjoyed it.

[@damindabandara5594]

In the UK this would be a prime "commercial to residential" conversion project, attractiving a higher return for the building owner. Maybe there are laws in the states preventing this?

[@DavidCBarnett]

No, I agree with you. The building has a lot of value here. It's the business that doesn't.

[@Antonsiu]

great content. this is exactly the situation I am running into here always. In my case we are talking about 20-25 years old small businesses and they almost already bought a building where they have been operating. And than when it comes to the price of the business the building is always a deal breaker as they want to sell it as well. Or if not than they do not understand that they have to reduce the SDE by the renting cost new owner needs to pay. But let me turn it around. what should business owner do than if he owns a building where he is located. should he rather sell it and rent it from new owner?? I know some they have the real estate as private person and than lease it to own company. is the any other solution?

[@DavidCBarnett]

There are lots ways out. My favourite is the two-step. The buyer buys the business and rents from the seller. After two years the buyer has financials to show he can run the business. Banker then lends him money for the mortgage and he buys the building. Other owners sell the business and get a lease in place then sell the building to a REIT or other landlord. The cash flow has to work though. Sellers who don't understand what they are selling should be directed to www.HowToSellMyOwnBusiness.com I can straighten them out.

[@Pernection]

David Barnett Would not an option work so you could at least have the first right if refusal or just tie it up?

[@peterchang452]

When buyinga business with a real estate, how about create another company that owns the real estate, then the first company pays rent to the second real estate company?

[@DavidCBarnett]

This is a common asset protection strategy and would help keep you honest. Now here's the big question- if your operating business couldn't afford the rent, will you have the discipline to evict it and find another new tenant? I've only met a small handful of people who can truly operate from these 'different hats' effectively.

[@jd5787]

I suppose what the owner did was plough the cash into the building to remove volatility on the business operations and ride appreciation on the real estate piece. Having to move your business every few years because lease expires and owner wants to jack up the rent is common place and tiring for the owner...

[@DavidCBarnett]

What the owner did was what many do, he just wanted to pay off his debts and spent little time thinking about the capital invested or what his long-term business goals were.

[@luisqp66]

Thanks for this video. However I have a question from the potential buyer side. Will it be easier to buy a business having its own real estate as we could get collateral for a loan (LBO) ? How can we make an LBO if business is leasing all its premises ? Thanks

[@DavidCBarnett]

No, It's harder to get the money for the business if you buy the real estate. Yes you can get a mortgage on real estate but not 100%. So if you buy the business and real estate together not only do you need the down payment on the business, but you also need the down payment on the real estate. You need more capital. This is another reason why big corps lease, they save their cash and leverage the capital of their landlords. Watch some more videos and if you're really interested in learning how to buy a business, I recommend my online course at www.BusinessBuyerAdvantage.com

[@georgelewis8831]

Your right - but, the fact that there are so many boomers wanting out is a great opportunity to buy service based businesses for almost nothing! Why so negative?

[@DavidCBarnett]

I have yet to see any deals for 'almost nothing.' Most sellers are still looking for 2021's inflated prices.

[@mindofzyzz8805]

Very good video.

[@DavidCBarnett]

Thanks, glad you enjoyed it. Don't forget to send in things you find or questions. The inspiration for my videos come from viewers.

[@holycow3355]

I won't shed tears for these owners if they can't sell & walk away, they already milk the biz all those years !

[@DavidCBarnett]

I don't feel bad for them because they were the captains of their own ship, and I agree they shouldn't be upset because of the position they und up in. If you're going to be in business, these lessons give you something to learn from.

[@Pernection]

I've been thinking of buying many businesses so i can get off my damm job. Is buying multiple convenience stores and rebranding them as a portfolio a good idea?

[@DavidCBarnett]

Putting small businesses together to make a bigger one is a strategy used by private equity groups. The bigger a business is, the more options for lowering costs, etc. But it also gets more complex as you need to have systems in place to manage them all. My first question would be- Have you ever worked in or managed a convenience store? If not, do yourself a favour and take a job in one to see how things operate so you can make your plan with a better understanding of what you're getting into. I would recommend my course at www.EasySmallBizSystems.com for helping to create the framework of the new group of businesses and the course at www.BusinessBuyerAdvantage.com to learn about the actual purchase deals. Cheers.

[@egdapo]

This isn't the typical main street business that millenials arent attracted to though. IMO, this hardware store is the exception rather than the rule. Yes this one has tough problems to ensure its survival, however, i think its more millenials wanting more "excitement" or "aspiration/glitz" from a business that looks great on Instagram, rather than a boring boomer business. Still, an excellent breakdown David!

[@DavidCBarnett]

The comment came from the article and I believe it was the boomers complaining that the millenials didn't want to buy their businesses. Easier to blame than to analyze the situation in some cases.

[@marioandultrachap]

Which is dumb boring businesses would probably less risky and more profitable because these are things people always need. No matter which way the economy goes people are always going to need tools, clean clothes, cars, storage, etc. The big instagram stuff is nice but what good is it if has a much higher failure rate especially if its based on a trend that could end tommorrow

[@calloway2117]

Are u still around? Definately have a question or 5 lol

[@DavidCBarnett]

Of course, I release new videos all the time.