Buying a Business
We understand that buying a business can seem an overwhelming undertaking. At Avail Brokers we work closely with buyers throughout the buying process to make it more rewarding. We assist you in searching for a business that will fit your needs, talents, skills and lifestyle. Our Business Brokers have many different types of businesses for you to consider; however, you will need to keep an open mind to the fact that there is no such thing as that "perfect" business.
If owning your own business is important, then equally important would be to realize that at some point you must be able to go from being a "tire-kicker" to a "real buyer." While this isn’t easy, you must be able to do it if you expect to purchase your own business, and achieve your dreams.
Below are some common questions that buyers we work with ask. Please feel free to contact us if you have any other questions we may have not answered, or if you would like to discuss having us work with you in finding a suitable business that meets your needs.
► Is buying a business better than starting one from scratch?
There are many advantages to buying a business rather than starting one up. For one, an existing business has a track record, and the failure rate in small business has largely been during the start-up stage. An existing business that has gotten past the start-up stage has demonstrated that there is a need for that product or service. In addition, an existing business has financial records, along with other information on the business, that allow you to see just what the potential is for achieving cash flow. Perhaps the most important advantage, is that many sellers will stay and train a new owner, and most will also supply some level of financing. Finding someone who will “teach you the ropes” of running a business, and who is also willing to finance the sale, can make all the difference in your long-term success.
► What should I look for in a business?
You should consider only buying a business that you would feel comfortable owning and operating, and that you would expect to make more productive and profitable - one where you feel you could do better than the present owner has. You also want to consider only those businesses that you can afford with the cash you have available to put down. In addition, the business you buy must be able to supply you with enough income to pay your bills, and allow you to make payments on any loans for the business acquisition itself. Everyone has seen examples of a business that needs improvement in order to thrive, and a new owner comes in and does just that.
► How are businesses priced?
Most sellers have some idea about what they feel their business should sell for, and this is usually taken into consideration. Most businesses are priced based on a review of the seller’s financials. After our Business Broker reviews the financial records of the business, he/she can make a recommendation of what he/she feels the market will dictate. A range is normally set with a low and high price. Typically, the more cash demanded by the seller - the lower the selling price; the smaller the cash requirements of the seller - the higher the price.
Since most business sales are in part seller-financed, the down payment and terms of the sale are very important in determining a sale price. In many cases, how the sale of the business is structured is more important than the actual selling price of the business. Too many buyers make the mistake of being overly-concerned about the full price when the terms of the sale can make the difference between success and failure.
HINT: If you could buy a business that would provide you with more net profit than you thought possible even after subtracting the debt service to the seller, and you could purchase this business with a very small down payment, would you really care what the full price of the business was?
► What happens when I find a business I want to buy?
When you find a business, we will be able to answer many of your questions immediately or will research them for you. Once you get your preliminary questions answered, the typical next step is for our Business Broker to prepare an offer based on the price and terms you feel are appropriate. This offer will generally be subject to several contingencies; including your approval of the actual books and records supporting the figures that have been supplied to you. The main purpose of the offer is to see if the seller is willing to accept the price and terms you offered.
There isn't much point in continuing if you and the seller can't get together on price and terms. The offer is then presented to the seller who can approve it, reject it, or counter it with his/her own offer. You, obviously, have the decision of accepting the counter proposal from the seller, making a new offer, or rejecting it and going on to consider other businesses.
If you and the seller agree on the price and terms, the next step is for you to do your "due diligence." The burden is on you (the buyer) and no one else to conduct your due diligence. You may choose to bring in other outside advisors or to do it on your own, the choice is yours. Once you have checked and approved those areas of concern, and removed all contingencies, the closing documents can be prepared, and your purchase of the business can be successfully closed.
► Why should I go through a Business Intermediary?
The professional Business Brokers at Avail Brokers can be helpful in many ways. We can provide you with a selection of different and, in many cases, unique businesses, including many that you would not be able to find on your own. Approximately ninety percent (90%) of those who buy businesses end up with something completely different from the business that they first inquired about. We can offer you a wide variety of businesses to look at and consider.
We are also an excellent source of information about small business and the business buying process. We are familiar with the market and can advise you about trends, pricing and what is happening locally. We also will handle all of the details of the business sale and will do everything possible to guide you in the right direction, including, if necessary, consulting other professionals who may be able to assist you.
The professional Business Brokers at Avail Brokers are the best ones to talk to about your business acquisition needs and requirements.