Guide to Buying an Existing Business

Guide to Buying an Existing Business

The purchase of a business that is already established can be an adventure much less risky and more profitable in the short term to start your own business from scratch. However, it is completely free of risk and success will depend largely on the business you choose correctly. Use this guide to evaluate the purchase of an existing business.

Identify your interests: Research carefully the item you are considering to decide if it is really a business with which you can commit. There are plenty of companies to buy. If you have no idea what kind of business in which you want to invest, start by cross off your list businesses that are NOT of interest. Attend industry meetings, talk to existing business owners, spend time at typical businesses and visit competitive locations to determine if your conclusions are shared by those who are already involved in the industry.

Consider your talents: It is always advisable to be something you already have experience to make you more familiar with the operation and meet all these “tricks” that make the difference between a well run business and one misguided. At this point come into play your work experience and your interests, so you achieve meet all or most of your needs and enjoy the work you do. Be honest about your skills and experience can help eliminate unrealistic business to conduct. You need to be the driving force behind your business and the expert when it comes to product and / or service offered by your company.

Lists the working conditions: Defines whether you will buy the business to get a full time job or if you are making the purchase as a part-time investment. Do you plan to be available seven days a week? Want to be in a particular place? If the company has a condition that does not suit you, can you change?

Quantify your investment: investment sets a price based on your actual economic potential, in comparison with other similar businesses and in the ROI. How much can you invest in the business? Can you afford to buy this business? Find affordable profitable business can be difficult, as business owners often have an exaggerated idea of ​​the market value of your business.

Find out why the business is for sale: Check with an accountant and a lawyer (not the seller) to analyze financial statements and business tax records. Other important research points include:
Reason for sale
Intangible assets that do not stay with the business (current owner contacts, skills and knowledge, relationships with suppliers, etc..)
Changes anticipated or known factors that may affect the future of the business (zoning, regulation of industry, construction, taxes, lease, technological changes, etc..)
Past and current financial state of the business (loans, commercial credit, pending contracts, accounting records, lawsuits, etc..)

  • Additional cost to renovate / remodel, etc..
  • Business relationships with current customers
  • Actual value of the tangible and intangible

Be aware of what you’re purchasing with purchase (both: tangible and intangible) and its current value before setting the purchase price and close the sale. A professional business appraiser can help you determine the value of the assets acquired.

Get advice about funding sources:
Usually, the seller of an existing business and provide part of the financing will be your best source of financing. Businesses are sold by motivated sellers. In many cases, the seller will take some cash and allow you to pay the remainder of the proceeds for a specified period.
The Small Business Administration (SBA offers loan guarantee programs through commercial lenders. In most cases, these additional assets should ensure.
Equipment suppliers often have financing programs for new business development.
The venture capital firms, commercial banks and other sources are family.

You see, to buy an existing business means to complete the task from the beginning. Do not dazzle with the first business that you like, find him all the flaws you can find, consultation with experts and if even after recognizing their deficiencies you profitable, forward! You’re the one who will be putting their time, effort and heart into the business of luck!

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