Top 10 Tips for Buyers

Tip # 1
Be committed to buying a business at a price and terms consistent with the marketplace.

Tip # 2
Understand your own personal goals, objectives, and financial requirements. Be realistic about your expectations and financial resources.

Tip # 3
Look for a business that you will enjoy owning.

Tip # 4
Look for a business that you can grow, especially if you have specific experience or expertise that can be brought to bear.

Tip # 5
Businesses with a long track record of success, ones that fill a non-discretionary need, and those that are not easily duplicated are highly desirable. You have a higher probability of success in these businesses, and should anticipate paying more to acquire one.

Tip # 6
You should expect the seller to offer some training.  The length of the training period and time that each business actually requires to bring about a smooth transition will vary. Look for Sellers who offer a hands-on training period followed by a period of phone support.

Tip # 7
Business are valued and financed based on their historical earnings – but your creditworthiness and business experience are also considered by lenders.  Check your credit reports and clean up any errors before you begin looking for a business.

Tip # 8
When you enter the negotiation stage, don’t think of it as battle you need to win.  When both buyer and seller make reasonable demands and concessions it helps to insure the future success of the business.  Keep everything in perspective and think about what your concessions or demands will cost long-term.

Tip # 9
It is sometimes possible to borrow working capital as well as the capital required for acquisition.

Tip # 10
Most small to mid-market business acquisitions are funded with SBA insured loans. There are specific lending requirements and ratios that the business must meet to be eligible for these loans. Find a broker who is familiar with lending practices and willing to help you obtain financing.