14 Oct Do You Want to Buy A Business?
Do You Want to Buy a Business?
Are you thinking about owning your own business and perhaps buying an existing business? This decision can come early in your career life, middle or late. Whether you want to start your own business, buy an existing business, consider a franchise or turn your hard earned retirement money into a down payment on a business it is simply a big decision financially and emotionally.
What do you do if you feel you are at that point, that you are serious about finding an attractive business to buy?
Don’t Be Loud – Be Quiet About It.
In evaluating a business it is important to look, study, ask and use a great deal of quiet, confidential analysis in looking at new businesses to buy. Tread carefully and unemotionally. Use confidentiality as your friend and be willing to sign confidentiality agreements as you evaluate businesses or share your information with parties possibly interested in working with you to find or sell you theirs or another’s business. Current business owners often don’t want to get the word out that their business if for sale and you don’t need to advertise that you have money to buy a business. Current business owners will ask for non-disclosure agreements. Read them, have an attorney look at them but plan on signing them. Don’t ask to talk to customers too early or chat with suppliers or vendors.
Working With a Business Broker.
In some cases business brokers can be involved in the qualification of new buyers and sellers. Look for them to use strict confidentiality when working with their clients and you. You may be asked to sign a non-disclosure, reveal some financial information and interact with them so they can qualify you and do their due diligence for their sellers. This is common business practice. Expect it and work with them so they can protect their clients and help you gain valid information and confidential information in the right way. The best business brokers will walk you down this path with clear expectations and considerations. Although they represent their buyers they owe you honesty and openness in the process. The reason they need to “qualify” you is that their clients sometimes have so-called anonymous buyers wanting to find out about their clients intent to sell. Those so called anonymous clients may be their competition. Work with those business brokers.
Location Location Location.
Really location, travel, cost and what you do daily when owning a business really matters. This kind of criteria is often a lot like the criteria you may have used while evaluating your last job or employment opportunity. Use that same care and consideration here. Where is the business located? Where will I have to be to make it work? What will be the considerations of the place or zoning? For an at home Internet based business ask yourself what would happen if you grew? What would you do? Do you need space to expand? If you buy into a retail location look around at the street, the neighbors and talk to other business owners. Could you collaborate and does the space mean growth potential? If you are evaluating an existing business in a location what are the customers like, how clean is it and what is the reputation in the store and online? If you own it you will own all of those tangible things including the businesses current reputation. Look for changes you can make though because if an when you own it you can change it. Just know the location and the grounds you will start from first. Always be respectful of the current business owner and their relationships. I have know prospective buyers to blow their cover by getting too nosy. Stay quiet and confidential but be that good location and reputation detective.
Find Out About the Owner.
You don’t need to have the exact personality type of the owner but you certainly need to study theirs. If you are working with a business broker or business intermediary you may want to think about meeting with the owner. Most brokers will attend a prospective owner to current owner facilitation meeting. That is often a very good idea. Write down your questions or email them to the broker and owner’s current representative before the meeting. Take notes at the meeting and let them tell you their story about their business. Does this story and the extension of the story make sense for you? What might be the growth potential? Why are they selling? What are the challenges they see and the opportunities for the business? Of course current business want to sell but current owners often give you a real perspective too? They often want to see their business, their livelihood until a new owner continue.
Quietly and calmly evaluating a current business also involved looking closely at cash flow and other monikers. We examine those in the next segment of Business Evaluations From the Ground Up.