Tweet

What do I want to know when buying a business?

Guest post by: Andrew Rogerson

Article Overview: Before the seller of a business and a new buyer come together for the first time, there are a few things that should be considered. The buyer has a few steps to go through first: learning and understanding the buying process and understanding how much personal capital to invest. Following these and other steps ensures that the buyer is on the right track to owning their new business.

What do I want to know when buying a business?

When working through the process of buying a business, the transaction will go through different stages. The first active stage is obviously when the buyer and seller come together for their first meeting. However, before that happens there are many other things that need to happen before that first meeting which, if it goes well, will lead to a series of follow up meetings. For the buyer, their first step needs to be learning and understanding the buying process. This means becoming as familiar as possible with the language of buying and selling a business as well as the jargon that’s part of the industry the business you are looking to acquire is in. Next step is to understand how much of your personal capital you are willing to invest in a venture. A lot of buyers have seen the value in their homes decline. As a result, the equity is not available to pull from the house and use as a down payment. Other options are available such as using 401(k) retirement money but this is not a quick process and requires the buyer researching and understanding how this process works. A key component is the buyer understanding and supporting their business and management experience. The best and easiest way to do this is with a limited resume. It doesn’t require a detailed breakdown of your employment history but it does require showing management and industry strength especially if the buyer wants the seller to carry a note or they wish to apply to a third party lender for a loan. Some businesses have either professional or industry license requirements. For example, attorneys, accountants, chiropractors, physical therapists and others require a specialized license while electricians, plumbers, truck drivers and others require an industry license. If a license is required, for example, to run a preschool, do some research to understand the license requirements, the cost and length of time it takes to acquire and if you can run the business while you get that license. Buying and owning a business changes a person’s lifestyle. The time they spend with friends may have to be put on hold while the business gets attention. Be prepared to understand the lifestyle changes that affect all entrepreneurs. The next step is to define a geographic area that the buyer wishes to find a business. Most people don’t enjoy traveling anymore than 30 minutes one way to work or a business. Relocating to buy a business in a new location is an option but care needs to be taken not to try and take on too much. With the above worked out, now it’s time to find a business of interest to you. There are different critical decisions to make. For example, retail, wholesale/manufacturing, home office. Next is business category with food, automotive, residential or business services or children’s services. Next is the role of the owner – involved in day to day, willing to hire and train managers or prefers to run absentee. There is no shortage of questions and information to gather when buying a business. What’s important though is to put the process in the right order otherwise you will burn out and give up on your dream of owning and operating your business; and end up working for somebody who did. Andrew Rogerson is a 5 time business owner who specializes in business transfer transactions. For business owners that wish to sell their business, Andrew partners with them to value their business, understand tax issues, market the business to potential buyers and handle all parts of the transaction including third-party lending, due diligence and escrow. For entrepreneurs thinking of business ownership, Andrew partners with them to determine their best option – buy an existing business, buy the rights to a franchise or start their business from scratch. He is the author of four books on business ownership called Successfully Start Your Business, Successfully Buy Your Business, Successfully Buy Your Franchise and Successfully Sell Your Business. For more information including immediate download, go to google and type in business transaction books.

Related Articles
  How to Say Your Price Without Choking
  Buying a Business FAQs
  Market First, Sell Second to Increase Sales in 2011
  Lease Equipment
  Buying Text Links
  Should you buy or start a business?
  Still wondering if search engines really matter in YOUR business?
  Buying A Franchise
  The Definition Game: name that concept
  Buy An Existent Business or Start Up Your Own Business
  Financing A Boat Trailer
  Who’s in the meeting – and who’s not?
  How to Make it Easy for Prospective Clients to Say Yes
  Why People Buy
  Things to Watch Out for When Buying a Franchise
  Answer Your Buyers’ Key Questions & Make Your Sales Messaging Great
  Solution Selection: do we know how buyers choose one solution over another?
  The Five Buying Motivators: How to Convert a Prospect Every Time
  Buying a Business
  The \"Canned Sales Pitch\" Myth

Article Tags: Andrew Rogerson, business, Business broker Sacramento, business escrow, business for sale, business opportunity, business plan, Buy a business, buy a franchise, due diligence, franchise, Murphy Business and Financial Sacramento, Sacramento business brokers, Sacramento business ownership, sell a business, start a business



Related Forum Posts
Re: Is it worth buying a Dell computer with financing? - what you should know is that whenever you are buying any item and apying monthly you are definitely paying at least 50% more than if you buy it cash. I beleive on the long run it is worth buying the computer with finance if you are using it for business. My rules about buying things on credit is basically for business and nothing else.
Re: Buying Text Links - Can You Do It? - Hi, Google will not ignore the fact that you are buying/selling links. If they find out your website or network is heavily involved in buying links they can lower your PR and rankings organically. I guess the point I was trying to make (1) they do not say you technically can't (2) there are ways on buying links/sponsors/advertising legitimately around being noticed. What do others think? Jeff
Sure its right - I guess it depends on how insecure the guy is. MOST men love to be the one doing the buying when you go out. When you're married it changes things as you start buying houses, having kids, etc. J
Re: What would you do with $500,000 or less? - You buy traffic to you websites in many ways. PPC is one of them, buying impressions and media buying are others. and advertising on people blogs and forum are others.
Try with non-franchisee - If you are disillusioned with franchises why not look for a non-franchised business for sale. As you have found out a franchise is not guaranteed to succeed and like any other business, needs to have a lot of due diligence done on them before you consider buying one.


Share this article with your friends. Fund someone's dream.

Leave a comment below or share on the left and you'll help support entrepreneurs in Africa through our partnership with Kiva. Over $50,000 raised and counting - Please keep sharing! Learn more.

Newsletter

Get advice & tips from famous business
owners, new articles by entrepreneur
experts, my latest website updates, &
special sneak peaks at what's to come!

Name:
Email:

Popular Articles

When Your Smiling

Purchasing Real Estate using the SBA 504 Loan

SEO Gurus, Software and Ebooks

Suggestions

Email us your ideas on how to make our
website more valuable! Thank you Sharon
from Toronto Salsa Lessons / Classes for
your suggestions to make the newsletter
look like the website and profile younger
entrepreneurs like Jennifer Lopez.