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Why buy instead of starting new?

For some people, buying an existing business is a better option than starting one from scratch. Why? Because someone else has done much of the legwork for you, such as establishing a customer base, hiring employees, and negotiating a lease. Still, you'll need to do some thorough research to make sure that what you see is what you'll get.

What should I look for?

Obviously, you want to consider only those businesses that you would feel comfortable owning and operating. “Pride of Ownership” is an important ingredient for success. You also want to consider only those businesses that you can afford with the cash you have available. In addition, the business you buy must be able to supply you with enough income – after making payments on it – to pay your bills. However, you should look at a business with an eye toward what you can do with it – how you can improve it and make it more productive and profitable. There is an old adage advising that you shouldn’t buy a business unless you feel you can do better than the present owner. Everyone has seen examples of a business that needs improvement in order to thrive, and a new owner comes in and does just that. Conversely, there are also cases where a new owner takes over a very successful business and not soon after, it either closes or is sold. It all depends on you!

What Type of Business Should You Buy?

Look for a business that has some connection to types of work you've done in the past, classes you've taken, or perhaps skills you've developed through a hobby. It's almost always a mistake to buy a business you know little about, no matter how good it looks. For one thing, your lack of knowledge about the industry might cause you to overpay. And if you do buy the business, you'll have to struggle up a steep learning curve afterward. But do try to choose a business that you're excited by. It's easier to succeed in business when you enjoy the work you're doing.

How do I find the right business for me?

The first steps to finding the right business to buy are to outline your requirements (revenue, net income, location, type of business, etc.), determine how much you can invest in a business, and then develop search criteria to identify potential opportunities. We will work with you with the objective of matching you to the best business opportunity available, at each step in the process. A key factor to your success as a business owner will be finding a business that you can develop a passion for – something you will want to work hard for – not only to make money but to enjoy doing it. People do better when they love what they do!

Before you seriously consider buying a particular business, find out as much as you can about it. Thoroughly review copies of the business's certified financial records, including cash flow statements, balance sheets, accounts payable and receivable, employee files including benefits and any employee contracts, and major contracts and leases, as well as any past lawsuits and other relevant information.

This review (lawyers call it "due diligence") will not only help you understand how the company ticks, but will alert you to potential problems. For instance, if a major contract like a lease prohibits you from taking it over without the landlord or other party's permission, you won't want to finalize the deal without getting that permission.

Where do I come up with the money? Is financing available?

The most common ways to finance the purchase of a business include equity credit, owner financing and SBA financing. The method you use will depend on the size of the business, the quality of the documented historic earnings and the owner’s willingness to provide financing. There are some niche sources catering to qualified buyer who meet certain criterion

How do I know the business’s financial results are accurately represented?

Once you determine that a business fits your requirements and you have negotiated a contingent purchase contract you will have the opportunity to conduct a due diligence review of the business. During due diligence, you will have the opportunity, yourself or with a CPA, to review the detailed financial records, invoices, bank statements, contracts, leases, etc. that will help you to determine the accuracy of the business records. Generally, any significant discrepancies between the financial results as presented and the underlying proof documents is reason for you to either revise or cancel the purchase contract with return of your initial deposit.

How can Eagle Business & Real Estate Brokers help?

Buying your own business is the best way to build wealth and control your own destiny. Finding a business you have a passion for - something that will make you want to get up in the morning and go straight to work is our goal. Matching you to the business opportunity that best fits your needs is what being a business broker all is about. Buying a business is more than just looking through internet ads. We will work with you every step of the way. We can help you by:

  • Meeting with you to review your skills and business experience, your interests, and your finances to determine the best types of businesses to focus on for our search.
  • Working with you to explore promising buying opportunities. Often this includes reviewing financials, meetings with the business seller, etc.
  • Helping you to structure a contingent offer and negotiate with the business seller to get to a purchase contract, when we have found the right business opportunity

How do I complete the sale?

After you have outlined the terms on which you and the seller agree, you'll need to create a written sales agreement and possibly have a lawyer review it before you sign on the dotted line. Once you have a purchase contract in place, there are a number of key activities necessary to assure you are getting the right business for you. Due diligence, lease negotiations, licenses, financing, etc. all need to be successfully completed before you go to the closing table. If you've thoroughly investigated a company and wish to go ahead with a purchase, there are a few more steps you'll have to take. First, you and the owner will have to agree on a fair purchase price. A good way to do this is to hire an experienced appraiser. Next, you and the business owner will agree on which assets you'll buy (such as a building and equipment) and the terms of payment. Most often, businesses are purchased on an installment plan, with a sizable down payment.

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