Tips On Buying
Individual buyers face exciting but sometimes overwhelming challenges as they move toward business ownership. Here are some important preparations to make:
- Check your motivation. Are you and your family prepared for the demands of owning your own business?
- Prepare a net worth statement to qualify with brokers to see businesses, secure loan financing and obtain credit from suppliers.
- Decide how much income you need to generate.
- Decide how much money you are willing to invest.
- Examine your strengths. What kind of work environment and tasks do you prefer?
- Look for emotional fit. A new business requires commitment, so it must be something you enjoy.
- Determine value. A company is priced right when its earnings pay you a good salary, service the debt and provide a cushion in case the business does not perform as well as expected.
- Be prepared for a lengthy search. Buying a business can take a year or more. It can be more difficult than finding a job, so make sure you’re committed to the idea of owning your own business.
- Tell everyone you are looking for a business to buy. Opportunities can surface almost anywhere.
- Consider only business brokers who belong to state and national professional organizations.
- Use professional advisors. Typically, brokers can recommend accountants and attorneys familiar with the process of purchasing a business.
- Corporate buyers have equally important tasks to perform before taking over another business. Among them:
- Develop an acquisitions strategy. Are you looking for complementary products or services? Do you want to enter a new geographic area? How will you manage an acquisition? What minimum and maximum size company will you consider? Can you manage the process internally or should you hire a broker to help?
- Package yourself. Buying a good business is highly competitive and you must convince sellers you’re worth doing business with. Money, although important, does not distinguish you from other qualified buyers. Consider preparing materials (even a brochure) that describe your company and entice a seller to sell to you.
- Make sure management is in place to run the new business.
- Arrange financing.
- Line up legal advisors.