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Finding great business for sale can be a tough task. But when done right, you gain the opportunity to be an entrepreneur without going through the process of building on from scratch. Because buying a helps you to skip the pain of building one from scratch, it has become popular among entrepreneurs. But the process of finding buyers for businesses to heading over to the new buyer can be complicated. So here are some things to do when buying a business. Figure out the type of business you are interested in, by narrowing down to your skills, passion, experience, and interests. Use business brokers like Pacific Inter Consulting to search for businesses that want to sell. There are reasons why someone would want to sell their business; you need to find out why the company is for sale. Look out for the business evaluation using the market or earning approach.
Whether you plan to be a hands-on owner or hire managers to do the bulk of the work, most entrepreneurs need a business that suits their skills, knowledge, interests, and personality. Otherwise, the business may not be successful.
Do not put contracts, loan agreements, or the lease in your name ( where possible). You need to have or set up a corporation or LLC to buy the business, since you don’t want to subject your personal assets to the risks of the business.
Just because a business appears to be successful, and even shows a profit, does not mean that it is not without problems. You need to find out exactly what is owned, borrowed, leased, and owed. You don’t want to get saddled with a pile of bills, unpaid vendors, rent due, and other outstanding debt.
A business owner may simply say that he’s retiring. However, he may know that a competitive superstore has purchased the property across the street. Determine why the business is up for sale and what the business environment will be like once you take over.
Most businesses have established an image or a brand over the years. Customers are familiar with this and changing it quickly can be self-defeating, since this image may be integral to the value of the business.
Not unlike buying a home, you will need to negotiate details regarding the acquisition. From physical concerns regarding the property, to assets, intellectual property such as trademarks, stock, and outstanding bills, you need to define in the contract who is responsible in each area and exactly when and how the responsibility shifts from the seller to you as the buyer. It would be wise to consult an experienced corporate lawyer.
A common mistake is going into serious debt when buying a business. You are better off either waiting until you have sufficient funds to purchase without significant debt or putting together a buying team.
The time in which it takes to train a new staff member can cost you money and drain your reserves. Often, the current employees are the most familiar with the internal workings of the company.
It is a big mistake to assume that since the business is already established that it will simply promote itself. Even if the business has a solid base of steady customers, you need to immediately establish a comprehensive advertising and marketing plan.
Buyers have to do a detailed financial analysis of the business to determine the appropriate price to pay. This includes reviewing income and loss statements, balance sheets, key assets, contingent and actual liabilities, and cash flow statements. You may find that it is more cost-effective to start from the ground floor with a brand new business.
If your business has been a success, you’ve probably had to pour most of your time, energy, and money into it for what may seem like forever. You may see your company as an extension of yourself, and it may be hard to even imagine life without it. In some cases your entire family may have depended on the business, discussed it endlessly around the dinner table, used it as an education and a proving ground for the children, and practically made it into another family member! On the other hand, your business may have been only marginally successful, and something you can’t wait to get rid of. Or, perhaps you entered into the business with the idea that it would be a short-term opportunity and that you’d sell out whenever you got a decent offer.
Whatever your situation, selling your business will be one of the most important things you’ll ever do, because unlike virtually every other business decision you’ve made over the years, you’ll only do this once. You get a single chance to put a price tag on possibly years and years of effort — and once you sign the sales documents, it’s over.
You’ll come out way ahead, both financially and personally, if you make an effort to understand the steps in selling. Formulate your plan carefully with the help of your professional advisors and when the time comes, take the time to negotiate a price and terms that satisfy your reasons for getting out of the business.
Even if you think you’re many years away from selling out, you should consider what your heirs or successors would have to do if anything unfortunate happened to you. If you don’t have a workable exit strategy in place, you (or your heirs) may have no choice but to liquidate the business and sell off the assets piecemeal, getting nothing for the goodwill you’ve built up over the course of the years.
I want to sell my business. Have you heard that before? That is one thing the most business owner wants to do. There are several things to consider when trying to sell a business. Without those considerations selling a business can be a complicated venture. So to make a smart decision, let’s review something you have to consider in other to make a solid plan and negotiate successfully.
Step 1: Find out what your business is worth.
Step 2: In other to sell your business fast, you need to have your financials prepared by your accountant.
Step 3: Get yourself a business broker. This is very important because you will likely get a higher valuation is you have a broker on your corner.
Step 4: To help your buyers make the right decision, you have to develop a document that outlines the frequently asked questions. This will make selling your business a success.
An understanding of what buyers focus on, and how it impacts the value is important.
Many business owners belive the value of their company is based on total revenue (Sales). In fact, Net Income and EBITDA (earnings before interest, taxes, depreciation and amortization) are the primary driving force for determining the value.
Also know that it’s not just financial data, Buyers look for infrastructure, management, Sales dependency on the owner, customer concentration, and growth capacity.
Market Value reports have their place, but it’s not in the sale of most businesses. They attempt to give a hypothetical value based on a hypothetical buyer.
What you really need, is to understand the different value points that will be assigned to your business–under multiple scenarios and by multiple types of buyers. (Customer retention, employee retention, supplier retention, Growth possibilities, customer concentration, Amount of inventory, Business age, owners role, ……… specifically in the context of a sale.
The Offering Package is the presentation of your business. Be sure to have an Offering Package that contains a detail presentation of your operations, products/services, management, senior staff, important accomplishments, complete financial data and Future outlook.
Business owners who focus only on the purchase price would be out-negotiated. If you ignore deal structure, tax responsibilities, Other financial consideration, then you will be leaving money on the table and create more after sale expenses.
The fast respond, High transparency, and clear disclosers make the buyers feel comfortable and confident on their decision. That gets deals closed and reduces your risk.