5 Things You Must Do Well When Buying a Business to Not Get Burned
Are you not sure what Business to buy? Need to know what is a fair deal?
Martin Smith thought he was buying an established business with good credit and collectable accounts receivable. The day after settlement the surprises began.
Inventory could not be used because expiration dates had past. Money shown as receivable had already been collected. Vendors that were only willing to ship COD. Over $100,000 of real problems that should have been detected during the business purchase process popped up and almost shut Martin down.
Can you afford to be surprised? Of course not.
You have the power to not end up like Martin.
Owning your own business is part of the American Dream. Buying a business has many advantages over starting one from scratch if you know how. Be prepared and get all the benefits of buying an existing business.
Tangible benefits such as existing cash flow, existing customer base, existing systems, knowledgeable employees, and locations can be obtained cheaper by buying an existing business than starting from scratch.
1. Understand and Know What You do Well and Like
You must really look at the activities you like to do and find a business that allows you to do them. For instance some people want customers to come to them. A retail store may work well for them. On the other hand some owners would loose their minds staying in a store all day; perhaps something with outside sales will work for them.
Are you a people person, a thinker, a leader, or a salesperson? Do you like steady hours, flexibility etc. How much money do you have to purchase with? How much money must you make every week?
Remember the process of buying the business is not the same as running one. Do everything possible to make sure you buy one you will love running.
2. Make a Comprehensive Search for a Business
Make sure you know how to look for a business. Don't just go to one source but really check multiple reliable sources to find the business that is right for you.
Systematize your notes so you know what you looked at. Make sure you compare your strengths and weaknesses with the day-to-day tasks of running the business.
3. Understand and Value the Business Properly
Understand the basic financial techniques to value a business; it's cash flow and other assets. Know how to prepare a basic business plan in order to make projections into the future.
Understand how the business is getting its customers. Know how it delivers goods and services. Know the cash flow and how you will keep the current cash flow and then grow the cash flow.
4. Know how to structure and finance a business
Have a basic understanding of how the business valuation and related cash flow tie together. Make sure you know a number of possible ways to put a transaction together to overcome different risks.
Understand what may be financed by a conventional bank loan, a SBA loan or seller take-back. Understand how to take your outline deal and put it into a final enforceable contract.
5. Perform Due Diligence Thoroughly and Correctly
Know what to look for when investigating a company. Know how to tie accounting records into source documents. Understand inventory, equipment, vehicle titling and other problems. Understand what should occur at settlement. Make sure you are getting what you have agreed to pay for.
Recognize that the Broker almost always represents the Seller. For most small business purchases you, the buyer, will go through most of the process on your own. Make sure you know enough to get select the right business and negotiate a fair deal.
Gregory R. Caruso is an expert at helping business owners plan and execute the sale of their businesses. Greg is an inactive CPA, attorney, and business owner with 20 years experience. He can be reached at www.successfulexits.com">www.successfulexits.com.
10 Nifty Tips for Better Business Cards
Not having a business card is as bad as using an
eMail address that ends in AOL.com
It's just not professional.
Top 10 Ways to Turn Clients Into Raving Fans
Do you find great joy in being a coach? If so, you will find that your enthusiasm is contagious and will attract clients. Be sure to develop a superb and supportive community.
7 Super Ways To Drum Up More Sales
1. Use subheads throughout your ad copy.
Why Dont They Just Get It Done: 7 Performance Tactics for CEOs
Buckling under the weight of chronic corporate restructuring, and frustrated by performers who don't respond to carefully crafted strategic plans, high level executive leaders are being confronted by a growing performance gap between what needs to get done and what gets done.Sound familiar? It's a troublesome trend that is likely happening in your firm right now.
#1 Key To Select Right Business Partner
Having business partner or planning to start a business with partnership is a always a win-loose factor. Know one knows the partners inner instinct to deal business in several different circumstances and this is why we see the n number of broken partnerships.
Top Ten Reasons to Write a Sales Letter for Each Product? - Part 1
Authors/publishers are great at getting their books written. Entrepreneurs know their products.
Learn to Improve Sales - 10 Ways to Get More Business Starting Today
You need sales and you wanted them yesterday. Here are ten ideas to start those sales pouring in.
Top Ten Tips for Online Publishing Success
Use the checklist below to make sure your article, tip, or book excerpt will get published and make you a household name on the Internet.
Management, Balance & Time - 10 Tips for Managing Overwhelm in your Business
How many of us have been in a position where we have more to do than can realistically fit into one day, or week. So we spend all of our time feeling rushed, being rushed, and wondering how on earth we are going to manage.
How to Counsel Your Non-Performing Team Members - 10 Tips
Counselling non-performing team members is a tough part of any managers role. This article is full of tips to help you perform this difficult role.
Business Attire: 10 Tips to Perfect Your Look
Being appropriately dressed is essential in making good impressions in the business and corporate worlds. A polished image is important in business survival and can be an important factor in career advancement.
The Top 10 Reasons Your Staff Wants to Quit
From an employee's perspective, management often conducts itself in ways that make no sense. When the economy is slow, jobs are few and far in between or people are fearful, staff will tolerate management behaviors and policies that are nonsensical (in their eyes) or they judge are harmful.
Ten Steps To Better Listening
Talking is the least important half of any conversation. Listening is the real skill.
The 7 Keys to Business Success
Do you run a business that seems to run you? It does not have to be this way. There are 7 keys that can improve your business results and help you achieve success with much less stress.
Ten Tips to Build a Culture of Inspirational Leadership
Leadership, leadership development and leadership training are "Hot" issues in today's business world. A recent Internet search uncovered over 44 million hits on leadership, over 20 million hits on leadership development and 15.
Top Ten Things to Do to Make your Signature File Sell
Always include a powerful signature on every email you send out, even to friends. It's even more important when you send out articles to opt-in ezines (no spam) and top web sites in your field--more important than your article's message.
How To Use Bartering To Gain An Advantage Over Your Competition
If you have a business on the Internet you should be bartering goods and services with other businesses. You should always try to trade for something before you buy it.
Top 10 Steps to Build Your Professional Practice Now!
1. Examine everything in your office from the view of a new client! If necessary, spruce it up.
Ten Ways to Manage a Rapidly Growing Business
While some new business owners face the issue of not enough customers, others face the issue of too many customers/clients. Both are serious issues and must be dealt with carefully.
Managing Your Major Sales - 7 Steps That Could Change The Way You Pursue Business
Ever lost a sale you thought was in the bag? Not an unfamiliar feeling for many businesses large and small. No matter how good you think your product or service is, everything finally boils down to your ability to convince others that it is good for them.