Help Buying A Business

Help Buying A Business

Help Buying A Business ===> https://urlgoal.com/2tCGLq

Building your own business is hard work. That's why many entrepreneurs choose to buy an existing business rather than starting from scratch. But how can you avoid sinking all your resources into a business that is sure to fail What should you look for What should you avoid

This article will help you evaluate the advantages and disadvantages of buying an existing business, as well as provide you with some tips that should help guide you as you make what is bound to be one of the most important decisions you will ever make.

There are several advantages to buying an existing business as opposed to starting your own. Most obviously, you save time. Suppose you want to start a retail business. It may take months for you to build an adequate inventory. Opening your own restaurant means creating your own recipes and menus; building a manufacturing business from scratch can take years. But when you purchase an existing business, the \"dirty work\" has already been done.

If the business you want to buy offers a product or a service, you can evaluate the operating history and better understand the demonstrated market. Are people buying the product or service What are they willing to pay What type of advertising has been most effective When you start your own business, it can take many years of trial and error to establish your market. Purchasing a business can alleviate this process.

Buying an existing business will allow you to evaluate its cash flow and operating expenses, giving you a better idea of how much investment capital you will need. When you start your own business, these numbers are much more difficult to estimate, and investors consider start-up businesses higher risk than existing ones with operating histories and proven track records.

Perhaps the biggest advantage to buying over starting a business is the existing business's potential. You may see growth opportunities the current owner doesn't, or maybe you have a superior business plan. Your enthusiasm and excitement for the business can revive it and help it to grow, and often relatively minor changes in advertising, personnel, or procedure can greatly improve profitability.

Of course, there are disadvantages to buying a business, and you must weigh them seriously against the advantages. For example, unless you plan to replace all of the existing staff, you will have employees working for you whom you did not hire and whom you do not know. They may be resistant to the changes that you make. You may find it difficult to motivate employees who have become complacent under the old management, or that there are personality conflicts between new and existing employees.

Remember, the seller may try to downplay any business problems. He or she may not be honest about operating costs or profits, and there is the possibility that the \"books are cooked.\" That is why you must have a capable financial expert explore all records thoroughly.

Additionally, make sure you understand the current customer base. Financial records indicate only the number of sales or clients, not the level of customer satisfaction. What if you inherit a dissatisfied customer base Or, conversely, what if the customer base purchases the product or uses the service simply because they have a relationship with the current owner This problem can present itself particularly if the business you purchase is a family business, a small-town business, or in many cases, both.

Then, there is the issue of lower potential for returns. Whenever you invest in anything, regardless of what it is, the general rule is less risk equals lower returns. Buying versus starting your own business is no different, and although every situation is unique, typically buying a business brings a lower return on your initial investment than starting one from scratch.

And last but not least, buying a business means you miss out on all the excitement that comes with starting a business of your own. Depending on your personality, you may want to create something unique, unlike anything the world has ever seen. When you purchase an existing business, you have to ask yourself if you are willing to take on something someone else has created. Will you be satisfied taking the reins Or do you want to buy your own horse, build your own carriage, and be in control from the get-go

Buying a franchise can be a lot like starting your own business. You will likely have construction or, at least, remodeling costs. However, unlike starting your own business, you are not on your own. You will have a parent company to instruct you through the start-up process, and later to guide you in your operating procedures. But ask yourself: are you willing to take direction and to follow procedures you did not create Oftentimes, entrepreneurs are entrepreneurs because they want to be independent and will resent not being in total control.

However, some business owners find franchises offer the best of both worlds - the independence of running your own business without jumping into the complete unknown. Frequently, the brand-name recognition and the lower wholesale purchasing costs associated with running a franchise appeal to new business owners. Just beware of multi-level marketing and pyramid-type franchises.

If you've already decided that purchasing a business is the right choice for you, you may still have questions. Namely, how do you proceed Here are some suggestions to help you start on your path to profits and success.

Make sure you disclose the transfer of ownership to all the business's creditors. If possible, try to arrange for an article to be published in the local paper. This will accomplish the two-fold task of making the transfer of ownership public and can serve as free advertising for the business itself. Inform employees of your business plan, but take time to implement major changes.

When most people think of starting a business, they think of beginning from scratch--developing your own ideas and building the company from the ground up. But starting from scratch presents some distinct disadvantages, including the difficulty of building a customer base, marketing the new business, hiring employees and establishing cash flow...all without a track record or reputation to go on.

In most cases, buying an existing business is less risky than starting from scratch. When you buy a business, you take over an operation that's already generating cash flow and profits. You have an established customer base, reputation and employees who are familiar with all aspects of the business. And you don't have to reinvent the wheel--setting up new procedures, systems and policies--since a successful formula for running the business has already been put in place.

On the downside, buying a business is often more costly than starting from scratch. However, it's easier to get financing to buy an existing business than to start a new one. Bankers and investors generally feel more comfortable dealing with a business that already has a proven track record. In addition, buying a business may give you valuable legal rights, such as patents or copyrights, which can prove very profitable. Of course, there's no such thing as a sure thing--and buying an existing business is no exception. If you're not careful, you could get stuck with obsolete inventory, uncooperative employees or outdated distribution methods. To make sure you get the best deal when buying an existing business, be sure to follow these steps.

Buying the perfect business starts with choosing the right type of business for you. The best place to start is by looking at an industry with which you're both familiar and which you understand. Think long and hard about the types of businesses you're interested in and which best match your skills and experience. Also consider the size of business you are looking for, in terms of employees, number of locations and sales. Next, pinpoint the geographical area where you want to own a business. Assess labor pool and costs of doing business in that area, including wages and taxes, to make sure they're acceptable to you. Once you've chosen a region and an industry to focus on, investigate every business in the area that meets your requirements. Start by looking in the local newspaper's classified section under \"Business Opportunities\" or \"Businesses for Sale\". You can also run your own \"Want to Buy\" ad describing what you are looking for. Remember, just because a business isn't listed doesn't mean it isn't for sale. Talk to business owners in the industry; many of them might not have their businesses up for sale but would consider selling if you made them an offer. Put your networking abilities and business contacts to use, and you're likely to hear of other businesses that might be good prospects.

Contacting a business broker is another way to find businesses for sale. Most brokers are hired by sellers to find buyers and help negotiate deals. If you hire a broker, he or she will charge you a commission--typically 5 to 10 percent of the purchase price. The assistance brokers can offer, especially for first-time buyers, is often worth the cost. However, if you are really trying to save money, consider hiring a broker only when you are near the final negotiating phase. Brokers can offer assistance in several ways.

Whether you use a broker or go it alone, you will definitely want to put together an \"acquisition team\"--your banker, accountant and attorney--to help you. These advisors are essential to what is called \"due diligence\", which means reviewing and verifying all the relevant information about the business you are considering. When due diligence is done, you will know just what you are buying and from whom. The preliminary analysis starts with some basic questions. Why is this business for sale What is the general perception of the industry and the particular business, and what is the outlook for the future Does--or can--the business control enough