Rules When Buying A Business

Ten Rules When Buying a Business

by Calia Roberts,  

With the proper research, buying an existing business can be profitable.

Purchasing an existing business is often more attractive to entrepreneurs than building a business from nothing, as taking over an existing business can be much easier than growing a business from the ground up. While buying an existing business can be a bargain, there are some rules to follow to ensure you are not investing in more problems than profit.

Determine Expectations

Determine what your expectations are from the business, then analyze if the business is able to fit your expectations. This first step will avoid many headaches that come with owning the wrong business for your needs in the future.

Reasons for Selling the Business

Find out why the owner is selling the business. Reasons such as retirement are common and understandable, but reasons such as the business is too difficult to run or has a low return on investment typically indicate future problems.

Making the Transition

Arrange to have the owner stay on for a short time after the sale to make the transition between owners easier. This is especially important for sales-driven businesses, as the previous owner can familiarize the customers with the transition, which is beneficial to avoid losing sales.

Find Out the Problems

Research the business thoroughly to find out the problems of the business. While all businesses have problems, some are bigger and more costly than others. Determining the problems will help you determine the viability of the sale. Avoid purchasing businesses that owners claim are problem-free, as this is a definite indicator of future issues.

Determine Growth Potential

The goal of purchasing a business is to make that business a success and see a return on your investment. Determine the growth potential of the business by analyzing all relevant information, including its track record, to determine if the business has potential for success going forward.

Examine Documents

Become informed about the business by requesting to examine all pertinent documents, such as financial statements, partnership agreements, contracts, leases and tax returns. This information allows you to determine the obligations and the current success of the business.

Negotiate

When purchasing a business, it is essential to negotiate during every aspect of the purchasing process. Successful negotiating gives you the best start and the best options in the future. Enter the purchasing process with the mindset that everything is open to negotiation.

Evaluate the Location

Potential owners interested in a brick-and-mortar business must evaluate the location prior to purchasing. The location of a business is crucial to the success of the business, especially when relying on foot traffic for sales. Research the location and the surrounding area to become informed.

Employees

Before purchasing, determine if the best business move is to keep the existing employees or to hire your own employees after completing the purchase. If you intend to keep the existing employees, you become liable as an employer for all relevant obligations, such as vacation pay, insurance premiums and salary.

Have an Exit Strategy

Always have an exit strategy in place for when you are ready to move on to other ventures. Before purchasing, determine if the business will be difficult to sell. If the business has been on the market for a while, you might be purchasing the proverbial millstone around your neck.

For a complimentary consultation:
Contact  Cecil Williams (cecil@bizbrokerflorida.com) or call  at 888-925-5055 ext.206.  Visit my personal website to search for business for sale in Florida www.bizbrokerflorida.com  Also, visit our Florida Business Exchange website at www.fbxbrokers.com  

Buying A Business - Start By Examining Yourself

Ask yourself these eight (8) questions before making an offer to buy a business.....

1. What do you want from being in business?

• For lifestyle (to work fewer than 40 hours per week, with the freedom to go on holidays whenever you choose)?
• To make a profit by building the business up (increasing sales)?
• To generate more cash-flow than a 9-to-5 job?

Whatever reasons are important under this question, if your reasons are not listed on your list – don’t buy the business.  

2. Why am I buying this particular business?

• It’s in a prime location.
• It has a massive customer database which is not being used to its full potential.
• You’ve created a specific plan to massively grow the sales revenue using knowledge you’ve accumulated from being an manager in a similar business, or from a previous business(es) owned.
• The business has ‘something’ (Intellectual property, branding, contracts, etc) that you cannot easily duplicate or purchase.
• You can buy the business at a price much lower than the market value. The seller is highly motivated to sell.

3. What will be my exit strategy to get out of the business?

• Sell the business for a profit
• Sell the business to a major shareholder(s) and become a silent partner
• Pass the business down to a family member
• Franchise

4. What skills do I have that will make me successful in this business?

Please don’t think that all that is required to ‘improve’ the business is cosmetic – by changing some of the products, re-designing the store interior, etc. These ‘improvements’ won’t double sales.

Only very good marketing, a good sales team and good systems will increase sales significantly. Think MARKETING, SALES and DELIVERY of the product or service (using systems).

5. What skills will I have to "hire in"?

6. What cash flow do I need?

What’s my break-even cash-flow (to cover expenses, wages, etc)?

7. How much working capital do I have access to?

8. Will this business suit me i.e. hours, type of operation?

For a complimentary consultation:
Contact  Cecil Williams (cecil@bizbrokerflorida.com) or call  at 888-925-5055 ext.206.  Visit my personal website to search for business for sale in Florida www.bizbrokerflorida.com  Also, visit our Florida Business Exchange website at www.fbxbrokers.com 

Why Buying a Business in a Sluggish Economy Is a Good Idea

Why Buying a Business in a Sluggish Economy Is a Good Idea
by Phil Miller 

Learn why buying a business when the economy’s bad is a smart decision.

Our economy is the worst that it has been since the 1970s. Suggesting that someone buy a business when the economy’s doing poorly may go against conventional wisdom, but the state of the economy doesn’t matter very much when it comes to buying and running a business. What matters is what you do, not when you do it.

A business’s profit directly correlates to its management, and companies succeed and fail based on the qualities of their owners. That’s why it’s essential to buy a business that you’re capable of managing efficiently. Sure, the economy has some effect on a business’s performance, but a business owner’s experience, attitude, and actions are generally the best predictors of success. There are always customers, but you have to be willing to go out there and find them.

There are also some benefits to buying a business during a sluggish economy. Costs tend to decrease because suppliers may give you better deals, rent costs may be reduced, and people may be willing to work for less. Some types of businesses even thrive during economic downturns. Examples include accounting, debt collection, auto repair, healthcare, and bulk food services.

Don’t Play the “Wait and See” Game
 
Despite the fact that business isn’t necessarily bad when the economy’s bad, people seem to be more risk-averse when the economy isn’t doing well. As a result, fewer people are interested in starting and buying businesses. Many would-be entrepreneurs are waiting till the economy improves before they get their feet wet. However, a bad economy didn’t stop Microsoft and Apple from being founded in the mid-1970s – and look how far those companies have come.

No entrepreneur can succeed by playing the “wait and see” game for an extended period of time. Don’t sit around hoping things will get better because there’s no guarantee that the economy will improve any time in the near future. And if the economy gets worse, you’ll wish you bought a business sooner. Any time is the right time to buy a business as long as you, the buyer, have correctly assessed the opportunity.

Whether the economy’s good or bad, the buying process is essentially the same. Purchasing a business is a major decision and investment, so it’s important to ensure that you make the right choice. Determine what type of business will thrive based on your strengths rather than suffer because of your weaknesses. Moreover, choose a business based on its profitability while considering what you’ll be able to do with it. After all, there are good business owners and there are bad business owners. Even a business that is doing poorly can be turned around in the right owner’s hands.

For a complimentary consultation:
Contact  Cecil Williams (cecil@bizbrokerflorida.com) or call  at 888-925-5055 ext.206.  Visit my personal website to search for business for sale in Florida www.bizbrokerflorida.com  Also, visit our Florida Business Exchange website at www.fbxbrokers.com  

What to Look for in a Broker When Buying a Business

By Jenny Hill

 

When you want to buy a business, it is highly recommended that you use a professional broker. The broker will inform you about the various businesses that are available for sale. They will also help you to gather information about the prospective business for buying. Getting an online broker will entitle you to a long list of available companies. The online platform is also fast and highly efficient. You will be assured of a convenient buying process. It is possible to browse for different categories as well as purchase prices for the prospective businesses. Here, is what you should look for in a broker while buying a business.

Experience
The broker should be experienced in selling businesses. The brokering agency should have been in the business for a considerable duration. This ensures that it has adequate skills and expertise to negotiate for the best deals. An experienced broker will also have links with various companies in the country. The broker will also inform you about the most opportune time to buy a business. The agent will direct you on the purchase prices. You will also be informed on the various requirements that are needed in order to make the purchase.

Professionalism
It is also essential that you buy a business through a broker who is professional. The brokerage firm should always conduct its affairs in a professional manner. It should handle all the clients with uttermost care and concern. The agency should also be focused on providing the best services to the clients. This will ensure that the purchase process is fast and convenient. The broker should also assist you with as much information as needed about the purchase process. The agent should also be courteous and highly respectful to the clients buying a business.

Authenticity
You should always ensure that you get an authentic broker while you want to buy a business. The broker should be licensed and registered by the government agencies to conduct these services. The agent should also be well reputed in the industry. This can only be achieved if the broker is willing to offer high quality and professional services. The previous clients should always have good sentiments about the services offered. The broker should also have adequate skills and expertise to assist you while buying a business. The agency should be willing to conduct research about the business on your behalf.

Quality of services
When you want to buy a business, you should also get a broker who is willing to offer high quality customer services. The broker should always be available whenever you require them. They should also respond promptly to your email messages. The broker should be willing to assist you in the entire process of buying a business. The broker should also assure you of the authenticity of the business. The brokering firm should conduct thorough research on the business before placing it on its site.

For a complimentary consultation:
Contact  Cecil Williams (cecil@bizbrokerflorida.com) or call  at 888-925-5055 ext.206.  Visit my personal website to search for business for sale in Florida www.bizbrokerflorida.com  Also, visit our Florida Business Exchange website at www.fbxbrokers.com

Are Baby Boomers Ready to Exit Their Businesses? - NYTimes.com

Are Baby Boomers Ready to Exit Their Businesses?:

It’s official: as of January 1, 2011 the oldest of America’s baby boom generation started 65 at a rate of 10,000 a day — a trend that will last for the next 19 years. As articles like this one point out, the coming wave will mean big business for many industries. This means that largest wealth transfer in our nation’s history officially begins.

Read: Are Baby Boomers Ready to Exit Their Businesses?: 

For a complimentary consultation:
Contact  Cecil Williams (cecil@bizbrokerflorida.com) or call  at 888-925-5055 ext.206.  Visit my personal website to search for business for sale in Florida www.bizbrokerflorida.com  Also, visit our Florida Business Exchange website at www.fbxbrokers.com

Buying a Franchise - Mistakes to Avoid

Many mistakes that people make are predictable. To help you to avoid making them, FranNet has compiled a list of ten of the dumbest mistakes you can make when going into business. Remember these are mistakes others have made, so take advantage of our experience and save yourself from some potential problems! 


• Don’t overextend financially when buying a franchise. 

• Don’t start to look until you have an idea of what you’re looking for. 

• Don’t assume that starting a business is easy! 

• Don’t try to go it alone. Use Experts.

• Don’t forget about a business plan.

• Don’t pick a business because “there are so many of them, they must be good.”

• Don’t skip talking with the other franchisees.

• Don’t put it on your credit card.

• Don’t pick the business your dad (or spouse) likes best.

• Don’t fall in love with the product.

For a complimentary consultation:
Contact  Cecil Williams (cecil@bizbrokerflorida.com) or call  at 888-925-5055 ext.206.  Visit my personal website to search for business for sale in Florida www.bizbrokerflorida.com  Also, visit our Florida Business Exchange website at www.fbxbrokers.com

Buying or Selling An Internet Business

Buying or Selling An Internet Business:

There is a lot to like about an online business model. For starters, your company may have access to a much broader market, including in other countries. Some online businesses can also be run with no inventory, few to no employees, and without the hassle of accounts receivables when online payment is required at the time of purchase. Additionally, most key support functions can be outsourced, with the exception of marketing and customer service. Finally, if you're armed with the right set of tools, you can even setup and run a business like this with little to no technical expertise.

Read:  Buying or Selling An Internet Business

For a complimentary consultation:
Contact  Cecil Williams (cecil@bizbrokerflorida.com) or call  at 888-925-5055 ext.206.  Visit my personal website to search for business for sale in Florida www.bizbrokerflorida.com  Also, visit our Florida Business Exchange website at www.fbxbrokers.com

Buying A Business - What Should You Think About?

Buying A Business - What Should You Think About?

If you are thinking of buying a business it may be because buying an already established business could be an easier option than starting a business from scratch. When choosing a business to buy you must ensure that the business is totally right for you as it is a huge investment. Whether you are buying a business or beginning a business for the first time, you will need money behind you.

What Should You Think About?

1. If you are buying a successful business you are buying not only a thriving business but you are also buying a business which is based on the previous owner's reputation, this can be an advantage but can also leave you with big boots to fill so make sure you feel totally up to the job.

2. The business will come with established contacts, customers and staff. You may have to honor agreements and contracts which the previous owner made. However, this is hopefully not going to be a problem.

3. Why is the current owner selling? You do not want to be in a situation where the owner is selling in foresight of business slowing, or if the staff is unhappy. They may be selling a failing business which you will have to invest a lot of further money in, beyond the purchase price, to turn it around. Take into account how the current owner's sale will affect the staff and the clients; they may not take well to a new managing director.

4. You should not have to worry about a business plan nor a marketing plan.

5. Applying for loans and financial support should be easier as you will be able to refer to the company's current figures.

6. Your skills and the amount of money you can invest in the business. You would do well to choose a business which you feel you can do well in, a business which you have knowledge and contacts if possible. Buying a business because you are intrigued by it, and are planning to learn on the job, is probably not the best idea. Also rein your ambition in, and keep to things you can afford. This is going to be a huge investment of both time and money so do not make it harder on yourself by going for things you cannot commit to financially for the long term.

7. Location does not matter! Many many businesses have the potential to be relocated, so look for exactly the right business opportunity for you, not for the business opportunity simply located by you.

Make sure you get an accurate valuation for the business. You can receive advice from a business transfer agent or business broker and they will be able to value the business with the help of an accountant. Once you have agreed on a deal for an amount with the current owner you will have a window in which to check the figures and information you have been given about the business is correct. Make sure you use this opportunity you do not want a nasty surprise. This is termed 'due diligence'.

Source:  By Paul Howe

For a complimentary consultation:
Contact  Cecil Williams (cecil@bizbrokerflorida.com) or call  at 888-925-5055 ext.206.  Visit my personal website to search for business for sale in Florida www.bizbrokerflorida.com  Also, visit our Florida Business Exchange website at www.fbxbrokers.com

Advantages and Disadvantages of Buying An Existing Business

Advantages of Buying An Existing Business

• It may continue to be successful
• It may already have the best location
• Employees and suppliers are established
• Equipment is already installed
• Inventory is in place and trade credit is established
• You can “hit the ground running”
• You can use the previous owner’s experience
• Easier financing
• It’s a bargain

Disadvantages of Buying An Existing Business

• It’s a loser”
• Previous owner may have created ill will
• “Inherited” employees may be unsuitable
• Location may have become unsatisfactory
• Equipment may be obsolete or inefficient
• Change and innovation can be difficult to implement
• Inventory may be stale
• Accounts receivable may be worth less than face value

For a complimentary consultation:

Contact  Cecil Williams (cecil@bizbrokerflorida.com) or call  at 888-925-5055 ext.206.  Visit my personal website to search for business for sale in Florida www.bizbrokerflorida.com  Also, visit our Florida Business Exchange website at www.fbxbrokers.com

Five Critical Areas for Analyzing an Existing Business

Five Critical Areas for Analyzing an Existing Business

• Why does the owner want to sell.... the real reason?

• What is the physical condition of the business?

• What is the potential for the company's products or services?

• Customer characteristics and composition

• Competitor analysis

• What legal aspects must I consider?

• Is the business financially sound?

For a complimentary consultation:

Contact  Cecil Williams (cecil@bizbrokerflorida.com) or call  at 888-925-5055 ext.206.  Visit my personal website to search for business for sale in Florida www.bizbrokerflorida.com  Also, visit our Florida Business Exchange website at www.fbxbrokers.com