Buying A Small Business

Buying a Business - The Best Or a Fixer Upper?

Whether you are starting your own business from scratch, going into a business opportunity, or buying a business, you need to have certain characteristics, traits, skills, and goals in order to succeed.    So how do you know if you are ready to own a business? Basically, you need to ask yourself some hard questions and give yourself honest answers. If you don’t have the time and commitment to start a business, you need to look elsewhere for your income. You may be better served accepting a job with a company. There are those that need structure and a job is the place for them.  But, if you are inclined to owning your own business, then lets discuss some necessary items.   First, you need to have a plan. The plan can come from your own imagination, the franchisor, or the company offering the business opportunity. It doesn’t have to be something set in stone, and it doesn’t have to be fancy. It just needs to be a basic outline of what your business will be, what you will sell, how you will sell it, and what your operating costs will be. It is recommended that you include at least three months of operating expenses into your start up costs budget, which also needs to be determined in your plan.   The next item is paramount to your success. It is the infamous 4 letter word and that is work.

A Business

Buying a Business - Steps

Are you learning about Buying a Business? For most people, buying an existing business is a better option than starting one from scratch.Buying A Business is generally better than Starting a BusinessBuying an already operating business has an existing cash flow, established customer base, vendor relationships, trained employees, and an established business location.All of these critical factors are non existent with starting a business from scratch. It will take time and a lot of hard work just to get a new business of the ground. In addition you will be literally burning through cash the first year and it's safe to say you should have at least 6 months to a year of personal savings in the bank that can cover your family's expenses while your new business is developing.The choice is easy. Buy an existing business with a proven cash flow so you have immediate income.Financing a BusinessFinancing an existing business can be time consuming but it depends on the route you go. Most small business owners will carry owner financing on a percentage of the deal. So if the total deal price is $100,000, you may only need $20,000 - $40,000 as a down payment and the sellers may carry the balance. Most sellers will carry the loan for 5 years at 6% -7% interest. They may also allow you to finance the loan over 10 years but require a balloon payment in 5. You should always try and get the seller to carry a portion of the financing fist. It's the easiest method in getting a deal done. If the seller will not carry a large enough portion with your down payment then you can look at alternative financing.So how much do I need as a down payment? You should have 5% - 20% of the total purchase price as your down payment. For seller financed notes they may require up to 50% down but this will vary widely with each deal and sellers personal requirements.No Money Down loansIt is a common misconception with Small Business Loans (SBA) on how easy they are to get. First and foremost, there is no such thing as No Money Down Loans when it comes to buying a business. Even before the credit crisis they did not exist. You will need at minimum 10% of the total purchase price as a down payment to get bank financing. Most small business lenders will not loan on purchases under $100,000 - $150,000 and they have additional requirements.Personal Requirements in Financing:10% Liquid Assets as down payment (They will prefer 20%) At least 6 months experience working in a similar business or managing another business A good credit score 620 and above minimum and no recent bankruptcyBusiness Requirements in Financing:The business will need to provide at least 2 of the most recent tax returns and the current years updated Profit and Loss statement.The business will need to show it has sufficient provable cash flow after the loan debt service and the buyers personal financial requirements.If you do not meet all 3 of the personal requirements and the business does not meet it's requirements then you most likely will not receive an SBA loan and will probably be wasting your time. You should focus more of your time on either negotiating with the seller to carry the financing or find a different business.Other Financing Sources:There are a few other ways you can finance the business but it will require refinancing personal assets like real estate.What Type of Business Should I Buy?Look for a business that has some connection to types of work you've done in the past, classes you've taken, or perhaps skills you've developed through a hobby. It's almost always a mistake to buy a business you know little about, no matter how good it looks. Also, try to choose a business that you're excited by. It's easier to succeed in business when you enjoy the work you're doing. Where to Look when finding an Existing Business For SaleThe first place you should look is contact a local Business Broker. Business Brokers are professional Business Advisors, intermediary's that assist buyers and sellers in the sale of a Business and generally are paid fees by the seller. A broker will help you in everything from researching businesses for sale, negotiating the best price for the business, financing the business, incorporating your business, and much more.Although brokers are paid commission by the seller, their interest is in selling the business. Therefore a good broker will work with both the Buyer and Seller in negotiating the most favorable terms for both parties.Brokers are one of the best resources to use when Buying an Existing Business.How to find A Business Broker or Business for Sale:You can find a Business Broker by looking in your local yellow pages or online by using business for sale website like The Business Broker Journal. This site is mainly a marketplace for business brokers as a place to advertise their businesses for sale. Established Businesses

Buy A Business Over A Million Dollars-With No Money, Credit, Banks Or Prior Business Experience

Creating a business from home is not as difficult as people may think. There are a multitude of home businesses that offer people the chance to earn income from the comfort of their own home. All you have to do is find the right home business opportunity to join. Better Business Bureau is a non-profit organization that gives people the opportunity to get an objective review on most home business opportunities. If you are searching for the right opportunity, this non-profit organization is a safe place to see if an opportunity is legit or not.According to home business magazine, marketing contributes to 58% of a business's success.Once you find the right opportunity, you will have to use effective marketing techniques. Being involved with the right opportunity is half the battle, you will have to use up-to-date techniques in order to get the best attention from the marketplace. Below are some effective marketing techniques to use when you are launching your marketing campaign. 1. Seasonal marketingSeasonal marketing is a great way to attract new customers for your brand. For retailers like Hallmark, Valentine's day represents the biggest portion of their business, according to Google. I would recommend that you do some research as to when your products are most in season for your market. If you know when your products and services are in season, you will be able to find demand and promote your products at the best possible time. I would recommend that you go on any search engine and search for free trend-tracking services in order to see when it will be the best time for you to market your product.2. PR marketingThis type of marketing is expensive. If you have a big budget, you can use the power of public relations in order to bring awareness to your product. When Steve Jobs was alive, apple constantly held press conferences to announce new products. You can go on any search engine and research the best public relation marketing services in order to get started. I suggest that you start off with the lowest possible budget first before going to the more expensive packages. 3. Online marketingOnline marketing has elevated to a new level. You can use a multitude of online marketing services, like e-mail lists, in order to come in direct contact with the people who are interested in what you have to offer. To succeed in e-mail lists, you will have to master the art of prospecting and closing. Once people respond to your promotional e-mails, it is best to call them in order share what your product has to offer.You can master the art of calling leads by getting prospecting and closing scripts on any search engine.According to home business magazine, any person who is affiliated with a home business opportunity can succeed as long as they master effective marketing techniques. A Business

The Advantages of Owning a Home-Based Business

On the face of it, it should be a lot less risky now than it used to be to buy a business from a stranger. Most (but not all) States and Governments in the developed world have brought in stringent disclosure rules which aim to even things up between the supposedly rapacious seller and the innocent purchaser.Certainly these rules will expose or prevent blatant fraud and misrepresentation, but they can also lull you into a false sense of security. The very worst thing you can think is "Oh well, if the figures don't turn out right I'll just take them to court and sue the pants off them".If you're stuck with a dud business as a result of being deliberately deceived you certainly can take them to court. But you don't need me to tell you of the costs of litigation, the time it takes (years!), and the very real chance you may not succeed anyway.And in the meantime you have to spend your days desperately running a business that may not generate enough to cover these legals. Remember also that lawyers will only take on work on a contingency basis when they think their chances of success are pretty good. It's way, way better to get it right in the first place.Even though most sellers usually turn out in the end to be nice ordinary honest people, I as a valuer always look at them and their businesses with a suspicious mind, and you should too. Because the truth of the matter is that they know far more about the business and what is happening in the industry than you do, and they are quite within their rights to not tell you everything. If you don't ask, you may not find out until it's too late. "Caveat Emptor" is the Latin for "Let the Buyer Beware" and it is still true today despite all the well-meaning but bureaucratic attempts to shield you. Some of the traps I have listed in this and following articles may be legislated against in some jurisdictions and others may have to be disclosed by the vendor. But it pays to know about them anyway.I'll give you these tips roughly in the sequence in which I would check them out. Let me tell you now that everything is wrong with the business I select, but of course I don't know that when I start out. And if it were real I would walk away very early in the piece.I have chosen a retail business to illustrate these traps, but most of them apply equally to service and manufacturing businesses. I have not specified what type of retail business it is, for very good reasons.First, the facts and figures have been made up and do not represent any particular type of business. Second, the same type of business can be totally different in the way it operates and in its risk level from one country to another and even from state to state. Third, I would not want to give any type of business the bad name that this (imaginary) one deserves.So let's assume it is a general type of retail business and call it the GRB (General Retail Business) Shop. Let's also assume that it is a reasonably secure type of business, though somewhat sensitive to competitionLocation is paramount for retail and most service businesses (though the internet is changing that) but less so for manufacturing enterprises.The business broker gives me a half dozen businesses to look at. I select one that seems to be in the right price range - the asking price is $230,000 plus S.A.V. (Stock, (or Inventory) at Value) - and not too far from home. So I pay a visit.It's in a small suburban shopping mall that looks about 20 years old. The mall is busy for early Monday morning, which is a good sign. The shop is well located within the mall with good traffic flow and prominent signage, but is a little bit tired in appearance. A quick check shows it is the only one of its type in the mall. The owners seem friendly and cooperative. I ask if they do home deliveries. They do and take me for a ride around the area covered. There is a new housing estate going up close by which they say will increase business in the future, and the next nearest business of its type is some distance away.Trap 1. Not Being Told of Known Competitor Plans:I leave and decide to have another look at the housing estate. At the far end of it I discover a large sign announcing the imminent construction of a mega shopping mall with a GRB type of business already signed up. So the business is under threat from new competition nearby.The message here is, don't just check the location, check what is happening in the area. Talk to other shopkeepers, talk to locals, visit the council, and look at the demographics to see if they match the market for your products or services. There may be a new highway going through in five years time resulting in a property resumption, or a diversion of traffic away from your site - or it could be good news as well. A Franchise

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buying a business