we can do for you..."
A big advantage
in buying an ongoing business is that you, as the new owner, have an
immediate cash flow and an established customer base.
You do not have to build a business; you simply take over an
existing, successful business with the present owner’s assistance.
We assist you in obtaining financing.
Banks are reluctant to finance business purchases for several
reasons. One, all small
businesses attempt to minimize profits shown on financial statements
to reduce tax liability. Also,
a bank cannot come in to manage a business if foreclosure becomes
over ninety percent of business purchases are financed by the owner
himself, which demonstrates his confidence in the business.
Unlike the sale of real estate or franchises, the sale of an ongoing
business is very confidential for both the seller and the
prospective buyer. All
inquiries are held in strict confidence.
Meetings are confidential, and we are available after hours
and on weekends.
a buyer should know
are advocates of finding a business that you like and feel
comfortable managing. You,
like every other prospective buyer, have a vision of being your own
boss and calling your own shots.
An old saying in the real estate industry is … “The three
most important things a buyer should look for are location, location
& location.” While
location is important to a business buyer, be aware that track
record and management round out the three components of a successful
business. Let us assume
that you find a business that you like and its location is fine, but
because of poor management, the business may not show the greatest
record of accomplishment. Purchased
for the right price and terms, this business could become more
proper management making it a good way to achieve
your vision of being in business for yourself.
Finally, the broker will assist you in determining an appropriate
price and will prepare your offer.
it is a business that you like, do not be afraid to
make what you consider to be a low offer.
process of buying a business is as follows:
Evaluate the basic information on alternative businesses that
sound interesting to you.
Visit the business (if possible) without announcing yourself
as a buyer (incognito) to get a
“feel” for the
Meet with the Seller, asking from general to probing
questions on anything and everything, except actual price
Do your preliminary evaluation, based on the information
provided by the seller to us and yourself.
Make an offer, assuming that all of the information you have
been provided is correct, but include contingencies, which
allow you to confirm such information.
We will show you how to write an offer to protect you as
Once a sales price is agreed upon, make a closer
investigation of the business, confirming to your satisfaction
the validity of your offer.
Have documents prepared for the closing.
You may agree with the seller to share the cost of a closing
attorney. This lawyer
will not argue the position for either party, but drafts all
necessary legal documents to comply with the agreement a buyer and
seller have reached.
Close the purchase, and begin your first day as the owner of
your own business. The
seller will assist in an orderly transition because most of his
money is coming from your success.
You are part of the American Dream – You and your family
own your own business!
10 Tips for Buying the Right Business Right
a business you like. Although
profitability is important, you will risk making a terrible
mistake if you do not buy a business that you like.
Often, people who buy hastily without considering
personal satisfaction later sell their businesses at a loss.
Will you be proud to own the business?
If you are not sure, do not buy that type of business.
flexible. We advise
our clients to be open to all sorts of businesses.
Do not lock your self into a McDonald’s or a Mailboxes,
etc. Who knows, you
may surprise yourself by taking a liking t a Blimpie or Signs
Now franchise. If
you lock into only one type of business, it will take you much
longer to find a business to buy.
Examine the following categories: retail; service;
manufacturing; distribution; restaurant; lounge; coin-operated
decide if there are any categories that you do not want to be
in, then focus on the remaining categories.
not expect much financial information.
Do not expect “traditional” financial information
from the owner of a privately owned business.
The only accounting required of a privately owned
business is filing tax returns, which are prepared to report the
lowest possible tax liability.
There are other ways to verify cash flow later.
chemistry. This may
seem like an unusual recommendation, but we tell our clients to
forget about buying a business if they do not like the current
owner. The buying
process is a long and somewhat complicated one -- it is
imperative that the buyer and seller work through it together.
with owner financing. The
owner of the business should finance the purchase.
In most cases, this is the sole source of financing
available to buyers of an existing business.
With owner financing, you can feel secure in believing
the owner’s representations as to income and expenses, and you
have a remedy if there are any problems after closing.
It also gives you a “silent partner” with a personal
stake in you success.
not pay cash. You
may not want a loan over your head, but do not pay all cash for
a business – even if you have it.
You should keep a stash on hand for emergencies and
business improvements. If
you insist on paying all cash, at least place some of the
purchase price in escrow for a period of time to protect
yourself from any problems that may surface after the closing.
an offer before you have seen all of the financial and other
business records of the business.
It is simply not possible to know everything about a
business before you make the initial offer.
The offer does not commit you to the business, but it
does let the seller know you are serious.
calm. Buying a
business can be like dating.
You’ve got so many emotions going –
do you like the business, does the owner like you, is this
feasible, what does my family think, etc. – that you’re
bound to get a little flustered.
Keep your wits about you; you will need them.
Remain calm, and negotiate your offer with quite
reflection and reasoned discussions.
As you go through negotiations, always use this simple
formula: Cash Flow Available minus Annual Payments to Owner =
$$$ for you and your family.
If at any time during the negotiations this formula does
not result in enough money for you and your family, stop.
the business. Once
the owner has accepted your offer, the real work begins.
Verify cash flow and identify any hidden problems.
If you see red flags in either of these areas, change or
terminate your offer. There
should be stipulations in your offer that allow for this.
quickly. Once the
deal is made, try to close as quickly as possible.
You do not want owner to have second thoughts or news of
the sale to leak out to employees, suppliers and clients.
90% RULE: FACTS ABOUT BUYERS
of all buyers are first-time buyers.
In other words,
they have never been in business before.
of all buyers will finance the purchase of their business.
of all buyers do not know what kind of business they
want or best serves their needs.
of all buyers are terrified and/or uneducated in the
business buying process.
of all sales will be financed by the seller.
(or more) will not buy the business that was advertised
or the one that they called in on.
of Buying an Existing Business
results rather than pro-forma.
employees in place.
suppliers and credit.
customers and referral business.
licenses and permits.
by the seller.
availability of owner financing.
Advantages of Buying A Franchise
name means instant recognition.
product or service.
support means you are in business for yourself but not by
than 90% of new franchises are successful.
Operating system in
place all the mistakes have been made!
to add additional units within the franchise system.
by the seller.
availability of owner financing.