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Advantages of Buying
an Existing Business
* Why Business Investment Network
Secrets to Purchasing a Business
* Financing your Business
Work with a professional Business Broker: This can literally save you thousands of dollars in costly mistakes, and countless hours of work. Our years of experience has made us knowledgeable in all aspect of the business purchasing process, and we will guide you every step of the way. Our company earns it's fee from the proceeds of the sale, and there is no additional cost to the Buyer.
Share Information: The more information you share with your Business Broker, the more he/she will be able to identify your needs/wants and help you obtain the best business possible. The more you share with the Seller, the more likely your chances of obtaining favorable terms and a good relationship which will survive the sale.
Know your Comfort Zone: It is important to identify the type of business you will feel comfortable with owning and operating. In determining your comfort zone, some of the things to consider are your interests, hobbies, past work experience, your personal family situation, how many hours you are willing to devote to working, and your financial requirements.
Focus on Terms, not Price: Concern yourself with the down payment and the cash flow of the business. If these two items are favorable, the price is not as important.
What Does the Seller Want? Is the Seller "cash motivated" - wants more money up front, or "price motivated" - wants a higher price for his business, not as concerned with the down payment. If they are providing owner financing, are they more interested in the interest rate or the length of the loan? Try to understand what the Seller really wants from the transaction, this will help you structure an offer to achieve your goals while satisfying his.
Buy a Business you can Improve: It is important to feel that you can improve the business you are purchasing. Look for ways YOU can improve it, whether it be through more aggressive marketing, reducing certain expenses or better management. Not all businesses are sold because of problems, but all businesses have them. Identify the problems and determine if they are correctable or manageable.
Deal Killers: Don't let your lawyer or accountant KILL A GOOD DEAL. It is much easier and LESS RISKY for the lawyer or accountant to say "No" rather than "Yes". Although their opinions and suggestions can be helpful, do as much investigation and analysis on your own as possible. This will save you on legal/accounting fees while giving you a firm knowledge of the operation.
Avoid Being Overly Cautious: Being too cautious may cause you to pass up a good business. So, do your homework, then MAKE A DECISION. If you wait too long someone else may buy the business. If you have certain concerns, make your offer subject to these issues being resolved.
A very important key to a successful business acquisition is your ability to obtain and secure appropriate financing. There are several sources to consider and it is important that you explore all of your options before making a decision.
Personal Savings: Most businesses are purchased with the primary source of capital coming from personal savings and other forms of personal resources.
Seller Financing: Many sellers are willing to Seller-Finance the sale of their business, usually with 30%-50% down payment and favorable terms.
Friends and Relatives: Many entrepreneurs look to private sources such as friends an family when buying a business. Money may be loaned at no interest, or with low interest, which can be beneficial when getting started.
SBA Financing: SBA financing can be obtained through some local banks. The SBA offers a variety of financing options for small businesses. However, it rarely makes a direct loan to an individual or company. The agency is primarily a guarantor - it guarantees loans made by banks and other private lenders to small business clients.
Providing you have a sound record of credit worthiness, sufficient experience and training to operate a successful business, and the business you are purchasing has good books and records and a cash flow which will support the monthly payment of the loan, then there is a good chance you can obtain SBA financing. Your Business Broker can assist you with more information on lenders and qualifications.
questions, please e-mail our office using the link below:
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