| There are two questions you should ask yourself | | | | Buying a business outside of your experience or |
| before purchasing any business. Why do I want to buy | | | | knowledge |
| a business and what kind of business would fit in with | | | | If the business is one where you will need training to |
| your personal experience. The “why” is in many | | | | learn the business, make sure you have a timely |
| cases more important than the “what” when | | | | agreement with the old owner for their help for a |
| answering these two questions? You need to know | | | | period of time. You would also be well advised to have |
| why you want to own a business and are you ready | | | | the owner introduce you to the important clients that |
| both financially and emotionally. After you answer this | | | | have made the company successful. This introduction |
| question you can look into what kind of business you | | | | could be the difference in keeping the client and losing |
| think you should own. | | | | them to a competitor. |
| | | | Learn as much as you can about the competition. |
| Why do you want a business? | | | | These are the people who can move in on a new |
| Why you want to take on the responsibility of a | | | | owner. Make sure they have not suddenly developed |
| business is important. Owning and running a business is | | | | a product that is superior to what you will be selling. |
| a challenge to do successfully. If you want to be your | | | | Also find out if you can who they sell to and why the |
| own boss that is OK as long as you realize that your | | | | old owner could not make any headway with the |
| future earnings will be in your hands and not those | | | | competitor’s clients. |
| who run the business where you are working now. | | | | |
| You must have sufficient money to get the business | | | | Price negotiation |
| up and running and still pay your monthly bills that you | | | | With the exchange of information out of the way, the |
| currently have. You cannot count on taking any money | | | | hardest part of any purchase comes into play. The |
| out of the business for several months to a year. Your | | | | price that the business will sell for is usually a |
| own business does mean some freedom, but it also | | | | negotiated sum. There are many ways to come up |
| means you are the owner seven days a week and | | | | with the selling price. The owner will have a price in |
| with little time off. You also need to figure if the | | | | mind and you will have an offering price you will start |
| business you are thinking of getting into is one that you | | | | the bargaining with. Another price can be obtained |
| can run without many extra people or is it one where | | | | from a third party who is certified to set prices for |
| you will need help. This is important for several | | | | businesses that are put up for sell. The certified |
| reasons. More people means the business has to | | | | brokers have passed a series of tests that qualify |
| generate more income. There are also rules that need | | | | them to come up with an unbiased value for the |
| to be complied with as far as employees are | | | | business being sold. This price is fair to both the buyer |
| concerned. Let’s assume you are financially and | | | | and the seller, because it is arrived at by standard |
| emotionally ready to take this big step. What kind of a | | | | business evaluation principles. This expert price is the |
| business are you going to buy? | | | | result of hard work and careful analysis of the |
| | | | business both current and future prospects. |
| Which type of business would be a match? | | | | |
| The type of business depends on your interest and | | | | Terms of the deal |
| knowledge. If you have an area of expertise, then this | | | | Once a price is set, the terms of the deal can be |
| area should be looked into very seriously. Are you a | | | | negotiated. There is always a cash price and a price, |
| people person, then a business with a retail or | | | | which involves terms. Most owners are willing to carry |
| business-to-business element would make sense. | | | | back some of the purchase price in order to expedite |
| People businesses need a front person to capture the | | | | the sale. This is an area that usually can be dealt with |
| clientele. If this is your forte, then this business area | | | | by reasonable bargaining and private negotiating. |
| should be looked into with a serious intent. One of the | | | | Banks can be a source of funds for some buyers if |
| ways to find out which types of businesses are | | | | they have assets and very good credit. Sometimes a |
| available is to look into a business broker and see | | | | person can arrange for private financing among |
| what they have listed. Another way to find a business | | | | friends of relatives. The seller is always a potential |
| that may not be listed is to ask bankers you know or | | | | lender for the buyer if they have a big enough deposit. |
| other business owners. Accountants could be another | | | | Some times the seller’s asking price is too high, but |
| source of businesses that are not listed for sale. | | | | the buyers counter offer can be “I will meet your |
| Business brokers list most of the businesses for sale in | | | | price, but you will need to give me very good |
| the market online. Listings by private owners and | | | | terms”. This is all part of the buy-sell negotiating. |
| Business Brokers online are available at the Buy a | | | | Simple rules should be in play during the negotiating. |
| Business Section of If you do not have the patience to | | | | Remember the seller wants to sell and if you make |
| browse each of them by state or category,Search | | | | reasonable counteroffers, there is a good chance that |
| the business you are looking for with a keyword or | | | | one of them will be accepted. Do not try to win by just |
| location | | | | being stubborn. Compromise is the way to make the |
| With these two questions answered or at least a | | | | sell happen for the buyer and the seller. |
| tentative decision made, the buyer needs to look at | | | | |
| each business that meets the criteria that has been | | | | Conclusions |
| set. Formal meetings that allow for full disclosure of the | | | | Keep the old owner on your side, as you never know |
| business’s situation both current and future are an | | | | when you may need them for something that comes |
| important step in finding out more about the business. | | | | up after you have made the purchase. The problem |
| How the business has done in the past is useful for | | | | may have happened to them in the past and they |
| predicting the future. This meeting is also the time to | | | | may know the perfect solution. |
| find out if there are any problems coming up or like | | | | The final advice for buying a business, is do your |
| building code changes or possible lawsuits. Are there | | | | homework and do not believe that all will just go |
| any obligations, which will be assumed that can be | | | | smoothly during the first year. There will be problems, |
| brought forward in time as to payment? Are key | | | | and since you are the owner, you will have to resolve |
| employees going to stay with the business and if not | | | | them in a timely manner. If you have to employ others, |
| can they be easily replaced. Is there a way to quickly | | | | treat them with respect and if they know the business, |
| add to the business or change some of its functions to | | | | ask them what they would do if they were in your |
| add to the sales? Are the prices being charged at a | | | | shoes. Knowledge is power and respect will help you |
| fair level? The real reason for these meetings is to | | | | gain the employees willingness to share with you. |
| exchange information. Win-win deals can only be | | | | Firm and fair are the traits of a good employer. |
| made when both parties are equally informed. | | | | |