A Closer Look at 3 Major Factors to Consider When You Buy a Business

The simple but undeniable fact is buying a business is one of the single greatest financial decisions a person can make.  Buying a business can lead to great financial success or great financial failure.  This fact helps to underscore why it is so important to work with an experienced broker who can help guide you through the often labyrinthian process of buying a business. In a July 2019 article from Smallbusiness.co.uk, author Kyle Carins explores three key factors that everyone should consider before they buy a business.  The first factor covered in Carins’ article, “3 Things to Consider When Buying a Business,” is appeal vs. viability.  Appeal Vs. Viability Not surprising, the most important variable for most prospective owners is that the business is indeed viable.  Not being able to differentiate between an appealing business and one that is viable can lead to financial disaster.  As Carins points out, “Do you want to make money or do you want to fulfill a dream?”  Sometimes … [Read more...]

Business Buyers Can Leverage SBA Lending

Finding the money to start your own small business can be a challenge.  Over the decades, countless people have turned to the Small Business Administration (SBA) for help.  A recent Inc. Magazine article, “Kickstart Your Business Dreams with SBA Lending,” by BizBuySell President, Bob House, explored how SBA lending can be used to the buyer’s advantage. The article covers the basics of an SBA loan and who should try to get one.  House notes that the SBA doesn’t provide loans itself, but instead facilitates lending and even micro-lending with a range of partners.  The loans are backed by the government, which means that lenders are more willing to offer a loan to an entrepreneur who might not typically qualify for one.  The fact is that the SBA will cover 75% of a lender’s loss if the loan goes into default.  Entrepreneurs can benefit tremendously from this program.  In some cases, an SBA loan even means skipping the need for collateral.  SBA loans can be used for those looking to open a … [Read more...]

How Employees Factor into the Success of Your Business

Quality employees are essential for the long-term success and growth of any business.  Many entrepreneurs learn this simple fact far too late.  Regardless of what kind of business you own, a handful of key employees can either make or break you.  Sadly, businesses have been destroyed by employees that don’t care, or even worse, are actually working to undermine the business that employs them.  In short, the more you evaluate your employees, the better off you and your business will be. Forbes’ article “Identifying Key Employees When Buying a Business”, from Richard Parker does a fine job in encouraging entrepreneurs to think more about how their employees impact their businesses and the importance of factoring in employees when considering the purchase of a business.  As Parker states, “One of the most important components when evaluating a business for sale is investigating its employees.”  This statement does not only apply to buyers.  Of course, with this fact in mind, sellers … [Read more...]

5 M&A Myths and How to Deal with Them

Where your money is concerned, myths can do damage.  A recent Divestopedia article from Tammie Miller entitled, Crazy M&A Myths You Need to Stop Believing Now, Miller explores 5 big M&A myths that can get you in trouble.  Miller points out that many of these myths are believed by CEOs, but that they have zero basis in reality. Myth 1 The first major myth Miller explores is the idea that the “negotiating is over once you sign the LOI.”  The letter of intention is, of course, important. However, this is by no means the end of the negotiations and it is potentially dangerous to think otherwise.  The negotiations are not concluded until there is a purchasing agreement in place. As Miller points out, there is a great deal that can go wrong during the due diligence process.  For this reason, it is important to not see the LOI as the “end of the road.” Myth 2 Another myth that Miller wants you to be aware of is that you don’t have to take a company’s debt as part of the purchase price.  Many … [Read more...]

10 Questions Everyone Should Ask Before Signing on the Dotted Line

Before buying any business, a seller must ask questions, lots of questions.  If there is ever a time where one should not be shy, it is when buying a business.  In a recent article from Entrepreneur magazine entitled, “10 Questions You Must Ask Before Buying a Business”, author Jan Porter explores 10 of the single most important questions prospective buyers should be asking before signing on the dotted line.   She points out to remember that “there are no stupid questions.” The first question highlighted in this article is “What are your biggest challenges right now?”  The fact is this is one of the single most prudent questions one could ask.  If you want to reduce potential surprises, then ask this question. “What would you have done differently?” is another question that can lead to great insights.  Every business owner should be an expert regarding his or her own business.  It only makes sense to tap into that expertise when one has the opportunity.  The answers to this question … [Read more...]

A Step by Step Overview of the First Time Buyer Process

A recent article on Businessbroker.net entitled, First Time Buyer Processes by business broker Pat Jones explores the process of buying a business in a precise step-by-step fashion.  Jones notes that there are many reasons that people buy businesses including the desire to be one’s own boss.  However, he is also quick to point out that buyers should refrain from buying a business that they simply don’t like.  In the quest for profits, many prospective owners may opt to do this, but it could ultimately lead to failure. Step One – Information Gathering For Jones, there are seven steps in the business buying process.  At the top of the list is to gather information on businesses so that one has an idea of what kind of businesses are appealing. Step Two – Your Broker The second key step is to begin working with a business broker.  This point makes tremendous sense; after all, those new to the business buying process will benefit greatly from working with a guide with so much experience. … [Read more...]

What Do Buyers Really Want to Know?

Before answering the question, it makes sense to first ask why people want to be in business for themselves. What are their motives? There have been many surveys addressing this question. The words may be different, but the idea behind them and the order in which they are listed are almost always the same. Want to do their own thing; to control their own destiny, so to speak. Do not want to work for anyone else. Want to make better use of their skills and abilities. Want to make money. These surveys indicate that by far the biggest reason people want to be in business for themselves is to be their own boss. The first three reasons listed revolve around this theme. Some may be frustrated in their current job or position. Others may not like their current boss or employer, while still others feel that their abilities are not being used properly or sufficiently. The important item to note is that money is reason number four. Although making money is certainly important and … [Read more...]

Questions to Consider for the Serious Buyer

A serious buyer should have the answers to the following questions: Why are you considering the purchase of a business at this time? What is your time frame to find a suitable business? Are you open-minded about different opportunities, or are you looking for a specific business? Have you set aside an amount of capital that you are willing to invest? Do you really want to be in business for yourself? Are you currently employed or unemployed? Are you the decision maker, or are there others involved? The real key to being a serious buyer, however, is whether the individual can make that “leap of faith” so necessary to the purchase of a business. No matter how much due diligence a buyer performs, no matter how many advisors there are to advise the buyer, at some point, the buyer has to make a leap of faith to purchase the business. There are no “sure things” and there are no guarantees. If a buyer is not comfortable being in business, he or she should not even … [Read more...]

Advantages of Buying an Existing Business

1. Established. An existing business is a known entity. It has an established and historical track record. It has a customer or client base, established vendors, and suppliers. … [Read more...]