| People wishing to buy a business are often put off by | | | | business gets his downpayment back in profits that |
| concerns about financing. They don't have the bucks | | | | first year and can then spread out the balance for the |
| to pay cash, SBA loans are no longer as available as | | | | next two years. |
| water at their favorite restaurant, the banks aren't too | | | | Read my lips: You don't have to offer either the price |
| friendly in the lending department, the equity in their | | | | or the terms the seller of the business requests. You |
| home has evaporated, and there no rich uncles around | | | | maybe want to offer $120K for this enterprise, at |
| to bankroll their dream purchase. | | | | $60K down and the rest over 36 months. All things |
| Guess what? People who want to sell their | | | | being equal, it is likely a motivated buyer would accept |
| businesses understand that. In fact, a good business | | | | that offer to buy her business. |
| broker will explain that very common buyer's limitation | | | | But what if the buyer wants all cash? If the price is |
| upfront to his seller, before he even lists that business. | | | | low-under $100k-it may not be much of a problem for |
| The business broker will encourage the seller to offer | | | | most buyers. But even here, you will find business |
| terms-in short, to carry a note for part of the | | | | sellers willing to carry small notes. |
| purchase. | | | | Whatever you do when buying a business, do not be |
| And most of them will. I am a business broker in Las | | | | put off by an all-cash request. If that business has |
| Vegas and the thumping majority of my listings have | | | | been perched on the listing system for awhile getting |
| sellers willing to lug some paper on the back end of a | | | | limited interest, the seller of the business may well |
| sale. | | | | swallow hard and accept a sale with terms. |
| The key to a successful deal is often the nature of | | | | Business buyers listen up: Don't be put off by selling |
| the agreement--more particularly, the downpayment | | | | prices and fears over rustling up the money. That is |
| and the terms--rather than the selling price. Most | | | | not the place to start. First, find a business that you find |
| people looking to buy a business want to get their | | | | attractive-financially and otherwise. Just look for |
| downpayment back out of the first year's profits. | | | | something that catches your eye. Once you hit it, then |
| Conversely, most people selling their businesses want | | | | look at price and terms. It may be affordable right |
| a downpayment large enough (often around 50%) that | | | | there. In any case, if you have a broker of any value |
| the buyer has sunk sufficient cash into the sale to | | | | representing you, talk it over with him as frankly as you |
| insure that he will do everything possible to keep the | | | | would present a matter to your lawyer. He may well |
| business successful enough to pay off the balance. | | | | be able to help you put together a reasonable offer. It |
| Most deals in which paper is carried accomplish that. | | | | might be conventional or even rather creative. It |
| Let's use an example. Say a service business does a | | | | doesn't matter. After perhaps a little dickering back and |
| gross of a $140K a year, with a net profit at around | | | | forth, you may get a deal. |
| $70K. And the seller of the business wants $135K for | | | | And if you do, that's all that matters. You have taken |
| it. Often the published terms (those stated by the seller | | | | the first step toward realizing the dream of owning |
| in the listing) will go like this: $70K down, remaining over | | | | your own business. |
| 24 months at 8% interest. Get it? The buyer of the | | | | |