| Despite an economic downturn, poor sales, extensive | | | | expenses for marketing, advertising and payroll by |
| unemployment and a banking emergency, this actually | | | | doing an item-by-item comparison over several periods |
| may be an excellent time to think about buying a | | | | and comparing the number to sales or income. |
| business. The reason is really very simple: it's currently | | | | Furthermore, a review of the balance sheet will show |
| a buyer's market, which means the time is perfect for | | | | whether inventory has been cut or if shareholders or |
| buying a business. | | | | owners contributed their own money to improve the |
| Buy business trends are on the upswing, with sellers | | | | company's bottom line. |
| relaxing their purchase business terms because there | | | | 3. Review The Customer Base. When purchasing a |
| are fewer qualified buyers, third-party financing | | | | business, a thorough understanding of the current |
| becoming near impossible, and opportunities to | | | | customer base is crucial. Although a business may be |
| negotiate a really good deal for a business for sale | | | | performing well, sales might show problems. If you |
| aplenty. | | | | decide to buy a business where sales are declining, |
| However, the receptive climate for purchasing a | | | | make sure that you modify the purchase price |
| business doesn't mean that you should advance | | | | accordingly and establish a new sales and marketing |
| without having key buy business essentials in place. It's | | | | plan. |
| very easy for enthusiastic, yet inexperienced buyers, | | | | 4. Negotiate Earnouts. These are purchase business |
| to pay too much for a business for sale that has no | | | | terms based on performance. Linked to the purchase |
| chance for survival, even in good times. | | | | price, earnouts are assurances that the business for |
| First and foremost, it's important to know the purchase | | | | sale can survive in the current economic climate and |
| business climate before even considering whether to | | | | grow in the near future. Once you've completed a |
| own a business. Currently, the buying a business | | | | thorough analysis of the books, set an asking price |
| market is being crippled by the economy and there is | | | | that's directly related to the present performance of |
| a lack of small business lending. Consumer confidence | | | | the business and its sustainability for possible future |
| that the economy will turn around anytime soon is very | | | | declines. It is critical to negotiate a performance-based |
| low and many businesses are seeing multi-month | | | | deal, especially if the purchase business evaluation |
| declines. For these reasons, it's necessary when | | | | indicates a loss or no recent stability or growth. With |
| considering a business for sale to negotiate a deal that | | | | an earnout structure, the seller receives the balance of |
| will protect you now and in the future if the economy | | | | the purchase price when certain targets are met in the |
| doesn't improve in the near-term. | | | | future. Earnouts can be based on profitability, sales, or |
| Before deciding whether to own a business during | | | | retention of customers. |
| these tumultuous times, there are six basic buy | | | | 5. Insist on Seller Financing. As far as lenders are |
| business steps to follow. By following smart purchase | | | | concerned, this is not a buy business climate. So |
| business philosophies, you will position your new | | | | chances of you receiving financing for buying a |
| business to succeed regardless of the economic | | | | business are slim, especially if you have little collateral |
| climate. | | | | or no business ownership experience. As such, it's |
| Here is a look at the six important steps to buying a | | | | important that the seller finance the entire purchase |
| business: | | | | business price or a large portion of it. |
| 1. Request Several Previous 12-Month Profit & | | | | 6. Don't Be Intimidated By Business Brokers. They |
| Loss Statements. Normally, a seller would provide | | | | represent the seller, so it's their job to present a |
| year-end financial statements, any interim statements | | | | positive buy business environment. As such, you need |
| and tax returns for buy business inquiries. But | | | | to take control of the deal. |
| considering the current economic conditions, you need | | | | When buying a business, it is essential to obtain all the |
| to see the business for sale financials from the current | | | | key financial and performance data related to the |
| date and back to the past 12 months, as well as | | | | business for sale. This information is your bargaining |
| financials from the prior 12 months and the 12-month | | | | tool when meeting with the seller. You can own a |
| period before that. This will give you a better picture of | | | | business and be successful at it if you make well |
| the overall health of the business for sale. | | | | informed purchase business deals with the seller to limit |
| 2. Be On The Lookout For Hidden Expense Cuts. With | | | | your risk. Despite the present business climate, it's |
| a business for sale, many sellers try to make the | | | | exhilarating to own a business and there isn't anything |
| company look better by making cuts to enhance | | | | that should get in your way of realizing your dream. |
| profits. When reviewing the financials, look at | | | | |