Helping Buyers Fulfill Their Dream
Guide to
Purchasing a Small Business
At ProBiz, we work with hundreds
of existing and potential business owners every
month. We always ask them why they want to
buy a business? As you may have guessed,
the number one response we get is that they want
to control their own destiny.
Entrepreneurship has even developed into a
career path for college students since the
universities are (FINALLY) teaching courses and
developing majors in the subject.
As you are investigating different businesses to
buy, please keep one thing in mind. You
can analyze the numbers and the industry all you
want, but you have to like the business/industry
and you have to trust your gut/instincts.
Below, we have outlined some benefits to
business ownership, helpful hints and how you
will find working with ProBiz a unique and
refreshing experience.
SECURITY
A big advantage in buying an existing business
is that you have as the new owner an immediate
CASH FLOW and an ESTABLISHED
CUSTOMER BASE. You don't have to
build a business; you simply take over an
existing successful business with the present
owner's assistance.
FINANCING
We can assist you in obtaining financing.
In some cases, banks are reluctant to finance
business purchases for a multitude of reasons.
First and foremost, most small businesses
attempt to minimize profits shown on financial
statements in order to reduce tax liability.
Most small business lack sufficient hard assets
that can be used for collateral and most first
time Buyers usually do not have proven business
track records. Over ninety percent of
business purchases are financed in some manner
by the Seller, and in doing so, demonstrates the
Seller's confidence in the business and in you.
CONFIDENTIALITY
Unlike the sale of real estate or franchises,
the sale of an ongoing business is very
confidential for both the seller and the
prospective buyer. All inquiries are held in
strict confidence. Meetings are
confidential, and we are available after hours
and on weekends.
THINGS A
BUYER SHOULD KNOW
We at ProBiz are advocates of finding a business
that you like and feel comfortable managing, and
you, like every other buyer, have a vision of
being your own boss and making your own
decisions. An old saying in the real estate
industry is..."The three most important things a
buyer should look for are location, location and
location." While location is important to
a business buyer, be aware that track record and
management are the other two essential
components of a successful business. Not all
businesses, however, are so well balanced.
You may find one that you like has a good
location, but because of poor management, does
not show a very good track record.
Purchased for the right price and terms and with
proper management, this business could become
highly successful. Also note that it is the
market, not necessarily the circumstances of the
sale that determines the price. Even
though some business may sell for considerably
less than their listed prices, good businesses
demand and get good prices, so expect to pay for
value received. Remember, buying most
often is a negotiation, so do not be afraid to
make what you may consider to be a fair offer
even if it may seem low.
THE
PROCESS OF BUYING A BUSINESS
Evaluate the basic information of businesses
that appear interesting to you. ProBiz will
provide you with a detailed write-up on the
business that generally includes some
preliminary financial data. Visit the
business, if publicly accessible, without
announcing yourself as a buyer to get a "feel"
for the business. If you are truly interested,
request your Broker to arrange a meeting with
the seller. This is your opportunity to
become acquainted with the business through
questions and discussions, however, neither the
price nor price negotiations are to be addressed
at this meeting.
From that point, request more detailed financial
data from your Broker that will support a more
in depth evaluation. If you feel that you
understand the business and its finances...make
an offer contingent on confirmation of financial
and business records, as well as other issues
you deem important. ProBiz will show you
how to write an offer to protect you as the
buyer. It is important that the Buyer and the
Seller each ensure that the resulting buy/sell
contract is personally satisfactory both legally
and financially. When an agreeable price has
been reached, documents will be prepared for the
closing. Generally, the Buyer and Seller will
each be represented by an attorney of their own
choosing and at their own expense. THEN...
Close the purchase and begin your first day as
the OWNER OF YOUR OWN BUSINESS.
CONGRATULATIONS ON ACHIEVING THE AMERICAN DREAM
OF OWNING YOUR OWN BUSINESS!!!!