Tips on buying a business include some basic pointers derived from our experience. These tips apply as well to online home businesses.
The most important of tips on buying a business is to be sure you have a genuine interest in the actual business you intend to purchase. Don’t just find it interesting because it does make money or can make money. It also helps for you to have a background, education or experience that directly applies to this business. For example, if you have technical experience, it will be easier to operate a technical business. Imagine how hands-on air conditioning experience would help in operating an AC troubleshooting and parts sales site. Or consider how advertising experience would help you operate an online advertising agency.
Other tips on buying a business include:
Match your search for a business to the price of the business. If you can afford to spend, for example, $5,000 on a business, then you should limit your search to businesses offered at something around, say $10,000 max (a number that you ought to decide yourself). You need to expect that all offering prices can be negotiated down somewhat.
Many small businesses cost around 2 times the owner’s net (or owner’s discretionary funds). Try to pay less. Insist to yourself on getting a great deal. Some good businesses will sell for less because of owner problems and other reasons. Plan to identify and take advantage of these weaknesses and negotiate yourself a better deal.
Consider employing a business broker. This may help you find compatible businesses that you alone could miss. An experienced broker will get you through the purchasing paperwork, can help you notice many aspects of a business, and is likely to be more successful in negotiating a good deal.
Try all avenues to find a business that is a great match for you. This includes viewing web sites that offer businesses for sale, the web sites of business brokers and talking with the business brokers themselves, Google and other search engine searching, newspaper and magazine classified ads, and calling on the owners of interesting businesses.
Verify all numbers. That includes sales revenue, gross, net and all other dollar amounts claimed by the seller. Examine the accounting books, take an inventory and ask for professional help if you need it.
Assure yourself that you can initially operate this business using the same methods as the seller does. You are paying for a working business. You should learn how the seller operates it first (after purchase) and later make modifications and innovations.
Assure yourself that the seller is prepared and able to teach you anything necessary about how to operate this business.
Make sure that in the sale you are receiving all the assets and benefits that the seller uses to operate the business. If a vehicle is involved and the seller does not include it in the sale, will you have another vehicle to use?
After a purchase agreement is signed, do a physical inventory of any assets that are included. Make a video or take multiple camera shots of your walk-through.
Keep a journal of your progress with the purchase. Make note of any questions that you have and get answers from the seller.
I hope that these tips on buying a business help you overcome any difficulties that you may encounter in a business purchase.
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