Thinking of buying a business? There are a lot of players and moving parts to manage in the process. That means any number of things can go wrong, but not with an experienced advisor on your side. BB&C will help you find and acquire a business that’s right for you at the right price. We keep an eye on the details, because we want you to acquire a business positioned for long-term success.
Why buy a business instead of starting a new one?
When you buy a business, you are buying an on-going operation; one that is already generating cash flow. If you’re a working owner, you should be able to draw a salary from the business right away. The overall purchase price may be more than starting the same business from scratch. However, you will probably be able to finance the purchase over time. It’s much easier to get financing to buy a business than to start one.
When you start a business from scratch, you will have to put money out for months or even years before you see positive cash flow. Most likely, every penny of it will be your own money. Since most start-ups fail, it’s very difficult for them to get banks loans. That means you will typically go through your personal savings and be without any income for an indefinite period of time. You may invest more or less getting your business off the ground than you would have if you had you purchased a business.
What do I look for when buying a business?
First, you should look at your own strengths, weakness, likes, and dislikes. This will help determine the type of business that best suites you. There is no point in being your own boss, if you hate the business you’re running. Once you’ve decided on the type of business you’d like to own, you need to look at the individual business. Consider things like location, track record, and management. Ideally, you’ll want to find a business with a proven track record of profitability. However, management plays a vital part in the success of any business. So, you don’t have to rule out businesses that obviously have room for improvement in this area. If you like a particular business, its location, and it has valuable assets, better management could turn it around. Often times the right price and financing terms make this type of business profile the best opportunity for a buyer with limited capital.
How are businesses priced?
Most businesses are valued based upon a multiple of discretionary cash flow. However, there are many other factors to be considered in pricing a business. These include things like; years in business, value of the business assets, franchise rights, value of the real estate or lease, patents and intellectual properties, just to name a few. If you are thinking of buying or selling your business, contact us to learn more about business valuation.
What should I look for?
First, make sure you choose a business you can get excited about owning. Once you find one, closely examine the books and records. The ideal business will have loyal employees, a niche market or competitive edge, a long track record, and an owner with a realistic reason for selling.
What does it take to be successful?
Hard work and a passion for your business are the key ingredients to success. You cannot buy a business and expect it to run itself. Set goals, invest in relationship with your customers and employees, and always, always, be looking for the next best-way to improve your business and yourself.
Why should I go to a business broker?
Business brokers almost always work for, and are paid by, their seller client. This means that they have a fiduciary duty to the seller, but it does not mean that they cannot help you. There are many services we provide to buyers and most are free to the buyer. Here are just a few examples of the free services we provide:
- Help you identify prospective business opportunities
- Provide you with information and guidance throughout the buying process.
- Assist you with financing. The SBA loan process is very complex. We coordinate the necessary paperwork, inspections, appraisals, and work with lenders to keep the process moving forward. We are a buffer between buyer and seller in the negotiating process.
Do I need an attorney?
Buying a business is a big decision. We advise all our clients to seek legal council for advice. That being said, we make available many of the forms and contracts necessary to the process. Forms like non-disclosure and purchase agreements have been prepared and reviewed by our legal council. Buyers and sellers can use our contracts, if they choose.