Tuesday, June 30, 2009
how to buy a business- Basic steps in the business buying and business selling process
"How to buy a business"- Preparing yourself with the proper knowledge
Before you even consider “buying a business”, you need to arm yourself with the proper knowledge and information via very thorough research and through proper training from qualified and experienced business brokers and consultants. Preparation, research, planning , and executing are all major parts of any solid business plan and is a must for anyone considering “buying a business”.
Think about it this way- you are going to be dealing with thousands , if not millions of dollars in your money or someone elses, why would you not want to arm yourself with the proper knowledge and training beforehand.
. "How to buy a business"- Choosing the right business
After you have conducted very thorough and rigorous research ,training, and practicing, you are now ready to start brainstorming for ideas of what types of businesses you might like to buy. You can call around to local business brokers or even check out some of these websites to get an idea for what types of business are out there for sale.
"How to buy a business"- meeting a business broker
While calling around and investigating what types of business you might like to buy, I am sure you have come across some great listings by some very prestigious business brokerage firms. As I believe in smaller more private business brokerage firms, you should consider meeting face to face with an actual broker so you can get your feet wet and practice some of your knowledge and training. While meeting with the business broker, make sure to ask as many questions as you can , but come prepared as I am sure the business broker is very busy. Meeting with the business broker should help clear up a lot of questions and also help steer you in the right direction of what type of business you should buy.
Utilize the business broker as much as possible, they will help guide you through these tough, stressful, and very emotional decisions. Prepare yourself with the most knowledge and experience as possible so you do not end up making a very costly and very stupid mistake.
"How to buy a business"- “due diligence”
After meeting with the business broker and doing your proper research and training, you should now have made a few decisions on what type of business you are going to buy. Now comes the long, tedious, time consuming, and very complex processes of ”due diligence”.
Due diligence is the act of gathering all data, P & L reports, tax returns, assets, competitions data, demographics, stock reports, etc, etc and ultimately crunching all of the numbers and variables together to come up with the most likely future projected path of the business . There is a lot of research, data collecting, crunching of numbers, etc, involved in this process and I would suggest seeking professional guidance to at least review the numbers and data you come up with.
"How to buy a business"- Meeting with business broker, lawyers, and accountants?
Throughout the entire process of buying or selling a business, you should always have an open line of communication between your dynamic legal trio and counsel. All of these professional s need to be in constant contact with the you and the other members of the deal.
After getting the information together on the businesses you want to buy, you should then have a meeting with all the members of your team and evaluate the entire proposed business venture.
After careful review and critique, you should be able to hone in on which business is going to be the best fit for you and your lifestyle.
Now you can let your team do there part by drawing up proper legal documents, filling out documents, running worksheets, crunching more numbers, and ultimately coming up with a rough draft proposal for the business venture at hand.
"How to buy a business"-Presenting your first offer
Now comes the exciting part of presenting your first proposal for the business you are trying to purchase. Do not get to antsy as this part can sometimes drag on for months and months , while going back and forth with offers and counter offers. Just be prepared for an emotional ride but seek solace in your professional advisors and your knowledge and training.
Always be open minded to creative financing, extra training from owner, earnouts, etc, etc. These little twists and tweaks of business buying and selling deals can only safeguard your future success.
"How to buy a business"- Closing the deal
After going through the very emotional and stressful negotiating processes, you should now have some kind of formal agreement ,if not a legal binding contract for the business venture at hand.
Now is the time consuming process of waiting for all the legal forms and documents to be filled out and processed through the proper channels. This process , depending on the situation, can some times drag on for months as well. This is where your training , preparation, communication, and legal team all come into play.
After all due processes have been conducted and completed, you should now be the proud new owner of a successful business.
You see it ll comes full circle.
"How to buy a business"- Keeping in touch with owner and previous management
After the deal is sealed, depending on the uniqueness of your particular sale, you should always keep in contact with previous owner and management(if not still there). You may already have this end worked out in your deal , but it always helps to keep a type of friendship open so you can always pick the prior owners brains for ideas and advice , which in turn ,might give you some great ideas.
Rinse ,wash ,repeat- it can be just that easy. Everything in life is work, there are no easy streets.
“Easy come, Easy go” –
How true , just look at how many people win millions on the lottery and are broke a year or less later.
Arm yourself with knowledge and experience from actual business brokers of 30 years,
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