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Career reinvention doesn’t happen overnight. In fact, for Nashville entrepreneur Zach Heil, it took five years.
His big change began at the end of his corporate career in retail management. After one too many years in his nine-to-five routine, Heil was ready for something new. Desiring more autonomy, Heil set his sights on small business ownership and began searching business-for-sale marketplaces for the right opportunity.
After three years of diligent searching, Heil found a listing for the Nashville circulation of Getaway Magazine, a local tourism publication distributed bi-monthly to over 125 locations and 18,000 hotel rooms. Entering its ninth year in business as a goldmine of local advertising, the magazine was a promising option.
“My [former] company had advertised with the previous owner of Getaway.” said Heil. “I knew it was successful and well-received in the Nashville area.”
Heil then solicited a friend in banking to guide him through the loan process. They quickly discovered that businesses built on relationships and with little assets, like Getaway Magazine, do not possess adequate collateral to secure a conventional loan. While turning him down for a loan, the bank believed he would qualify for a loan through the Small Business Administration (SBA), a government agency that reduces risk for lenders, making business ownership easier for first-time entrepreneurs. A banker gave them the contact for an SBA officer at a local bank that was qualified to conduct loans on behalf of the government without getting government approval beforehand.
Fortunately, Heil did qualify. With his contact from the bank and resources on the SBA website, Heil built out a formal business plan. Heil used the SBA’s template which allowed him to complete forecasts and budgets. But to get everything right took plenty of due diligence and diligent communication with his SBA officer at the bank.
“Over the course of four months working with [the SBA officer], we talked weekly for updates and things like tax documents that were still outstanding,” said Heil. “On top of talking, we probably communicated through email and text at least every couple of days.”
The next challenge was communication between the brokers. Somewhere along the line, it was decided that Heil would pay for 10 percent of the business with a seller’s note. A seller’s note is a form of capital in which the seller agrees to a portion of the purchase price being paid in a series of payments. While fairly common among small business sales, especially those involving unique industries or business models, there is still a degree of risk involved for the seller as repayment is directly tied to the continued success of the business. Unaware of this change, the owner became upset. For three stressful days, the sale was up in the air. Done communicating through a mediator, Heil picked up the phone and called the owner himself, apologizing and laying out what had happened since the beginning.
“This was the biggest obstacle I faced,” said Heil. “Fortunately, I spoke to the seller personally and we were able to reconcile the issues between us.”
The post-purchase experience was more pleasant. Because the previous owner was retiring , as part of the purchase, he agreed to be available for six months of interim training and transition assistance. During this time, the two worked together to keep current customers happy by meeting with them in-person clearly outlining the changes that would be made— providing Heil with a deeper understanding of client relationships. By the end of the sale, Getaway Magazine had retained nearly its entire customer base.
“We wanted to put our customers at ease,” said Heil. “Reassuring old clients that we weren’t changing anything about the experience.”
Pursuing his dream career of running a business had its hardships, but with the proper resources and support Heil made it his reality. While still working out the kinks, Heil is beginning to enjoy the benefits of business ownership. And as profits improve, even his wife plans to join him at the magazine.
Entrepreneurship is not easy, but there are tactics available for first-time business owners that can simplify the journey:
- Pursue an existing business. For first-time entrepreneurs, the reassurance of an existing business can be their most valuable support tool. Unlike startups, established businesses offer the insurance of pre-existing cash flows, reducing the stress of “breaking even” after initial investments. Other extremely valuable benefits include inheriting a proven business models, brand recognition and an established customer base.
- Consider SBA loans. Not qualifying for traditional loans doesn’t equal a dead end. SBA loans offer new entrepreneurs, startups, minorities and veterans the opportunity to pursue ownership with low interest rates and flexible terms. The SBA website is a great resource for first time business owners to find assistance and counseling.
- Use a business-for-sale marketplace. Whether the end goal is financial independence or career autonomy, there are endless opportunities. Turning to an online marketplace can help first-time business owners sort through a wide variety of listings to find the opportunities that best fit their needs. Most are free to search and offer alert options to stay on top of current offerings. These websites often come with additional resources to guide entrepreneurs through the purchase process and help them succeed.
Being your own boss isn’t for everyone. The road to becoming an entrepreneur is full of potential roadblocks: transaction relations, loan approvals and customer confidence in the change. But for those like Heil, it also provides necessary positive change and a chance to pursue something new. Whether it’s a franchise or an independent venture, taking the leap towards small business ownership is the first step towards financial independence and the career of your dreams.
March 7, 2019 at 01:09PM
Forbes – Entrepreneurs