ENTREPRENEURSHIP THROUGH ACQUISITION

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Becoming a Business Owner: 7 Key Benefits of Buying a Business

Learn more about the benefits to buying a business.

When it comes to buying a business, 90% of potential buyers fall through. It's an extraordinarily high number, and there are various possible reasons.

People become obsessed with the idea that the business might fail, or find too many risks. The truth is though, no business is perfect.

However, becoming a business owner of an already established company can be far better than starting your own in many ways. Don't back out because of some trivial reasons — it's time to go for it.

If you're wondering about all of the advantages of buying a business, here they are! 

1. It's Low-Risk Compared to Starting a Business

When buying an existing business, there's generally less risk.

If you're starting your own business rather than investing your time and money in an existing business, the risk factors can be pretty huge. Many businesses fail fast and unfortunately, when starting a business, it's very hard to predict if it will be successful or not. Very promising business can flop.

An established business has already been through the risky first couple of years and made it out the other side. Presumably, they've already met a lot of their business goals and are generating a healthy profit.

By buying an existing business, you're skipping the initial risk period. 

2. There Are Established Relationships Already

Regardless of what the business offers, whether it's a service or a product, there are usually established relationships with clients or customers.

They already know the business works for them, and they're ready to use them.  

Although you'll want to continue to grow the business by going out there and finding more clients and customers to welcome into the fold, starting off with that base can be extremely helpful. There's no need to struggle for a few weeks or months as you try to find people to help — your starting base is already there. 

3. You Might Have a Solid Staff Team

There's probably a staff team already working for the business. Takeovers can be tricky in that not everyone is always happy about them, but if you put your best foot forward, it's likely to go smoothly. 

After all, this staff team is likely already invested in the business. 

The staff team will have been there for a while, which means they already know what they're doing. This can cut training and hiring costs, since if you need to hire anyone new, it'll be far fewer people than if you had started a business on your own.

New business owners developing a good relationship with an existing staff team is vital and will pay off in the long run.

4. Learning Something New

When buying a business, you might know the business and financial world well, but not the industry you're coming into.

For example, you might be entering the pet industry or the gaming world, but have no idea about either of those things.

That doesn't mean you're going to be a bad owner! It just means you're going to learn something new and gain experience in a new industry, which is invaluable.

Let the staff teach you about everything you need to know while you impart business wisdom. 

5. You Still Have Creative Freedom

One thing that scares new business owners is that they'll have no creative freedom. By coming into an established business, they assume it's set up a specific way, and they won't be able to change anything. Understandably, that can be frightening to those who like to make their own mark on things.

This, however, isn't true!

Staff and clients alike will welcome improvements. This isn't to say you should come in and change everything in one shot, but you'll be welcome to put your own stamp on the business if it improves it.

You likely already have ideas if you went ahead with buying the business, so don't be shy to do it — although it's always wise to seek feedback first. 

6. It's Less Work

In general, it's less work at the start. If you own multiple businesses or have another job, this simple fact might be what persuades you to buy an existing business. 

You can skip out on:

  • Hiring and training staff

  • Working to establish the business

  • Finding those initial clients

  • Designing the website from scratch

  • Experimenting with what works for the business

You can make changes to all of these things, of course, but the solid foundation being there will make a huge difference. 

7. It Likely Has an Established Reputation

Not only will it have a staff team and established clients, but it might also already have a reputation in that industry!

If the website is drawing in a good number of hits a month, or the client base is big, this is likely the case. No need to build the business up to be highly respected when the respect is already there — all you need to do is maintain it by carrying on with what they've been doing and putting your own mark on things. 

Becoming a Business Owner This Way Might Be the Smart Choice

Becoming a business owner can be daunting in any scenario. However, buying a business from scratch involves a risk period and a lot of time and effort investment that buying an existing business doesn't. 

If you've been afraid to buy a business, it might be time to take the leap. Don't look for the perfect business — look for the business that's well on its way to being so, so you can push it for the final few steps!

Looking to buy a business? We can help — let us match you with one today. 

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What Is Entrepreneurship Through Acquisition? Your Guide to the Benefits

Have you heard of entrepreneurship through acquisition but are unsure of what this means? Click here to answer this and to learn why this is a great choice.

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What is ETA?

Your guide to the benefits

Have you heard of entrepreneurship through acquisition but are unsure of what this means? Read through here to answer this and to learn why this is a great choice.

Entrepreneurship through acquisition

Many Americans are growing tired of working in corporate America. Here, they are spinning their wheels on a fixed salary and far too many hours. To make matters worse, their wages are barely increasing on a yearly basis.

Fed up, millions are responding to an entrepreneurial spirit and starting their own business. In fact, 27 million Americans are either starting or running a new business.

Pursuing an entrepreneurial opportunity is a wise decision. The profitability rate recently surged more than 25% in a single year.

Read on to learn about entrepreneurship through acquisition. Explore the benefits of acquiring an existing business over starting a new one.

What Are the Challenges of Starting a New Business?

Many entrepreneurs decide to start their own businesses. While some find success, this path is likely to see significant challenges.

The most obvious challenge to overcome is that you are starting from scratch. You do not enjoy the luxury of an existing brand.

There are no loyal customers or equipment to leverage off of. Also, policies and processes have yet to be developed.

You do not have existing employees or subject matter experts. Instead, an employee training program needs to be developed and provided to all new workers.  There may be significant barriers to entry in the marketplace including established competitors.

What Are the Benefits of Entrepreneurship Through Acquisition?

Entrepreneurship through acquisition occurs when buyer(s) purchase an existing business. This includes pursuing franchising opportunities.

In this scenario, an entrepreneur finds a business for sale and pays a price to acquire it. This may come in the form of a lifelong small business owner who is retiring and looking to sell.

There are many benefits to this approach because the transaction may include many different items. For example, you may be acquiring the company’s machinery and supplies. Perhaps the company has popular social media accounts that you will take control of on day one.

Perhaps the greatest benefit is that an existing business has an established revenue stream. You do not have to stress over generating profit as it will be coming in from the start.

How Do Entrepreneurs Find an Existing Business?

Once you decide to forgo starting a new business from scratch, it is time to find an existing business. However, this is easier said than done. Businesses do not typically put up a for-sale sign on the storefront.

The good news is that there are online resources to pair entrepreneurs with business owners looking to sell. There are algorithms that help match your passions with existing businesses and franchise opportunities. Once financing is secured, you can get a business appraised and make an offer.

Glance through featured businesses for sale listed recently on BizNexus Marketplace

Wrapping It Up

The American Dream is alive and well. Now is the time to seize your opportunity and become your own boss.

Instead of working uphill with a brand new business, you should consider purchasing an existing business. This way, you can inherit an established brand and revenue stream.

If you want to learn more about entrepreneurship through acquisition, you can start your search for the next business opportunity by signing up to BizNexus.

 

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BUSINESS ACQUISITION

 

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THE BIZNEXUS ROUNDUP

Quick & dirty interviews, war stories & tips from the trenches of business acquisition, growth & sale. We aim for value, efficiency & fun, so you'll walk away with something useful to take with you along the journey of buying, growing & selling a business.

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Embrace Your Entrepreneurial Spirit — Buy or Sell a Business in Boston

Entrepreneurship continues to expand in the post-Great Recession world. Businesses are being bought and sold at a rapid pace. And many entrepreneurs are using dedicated digital platforms to make it happen.

Buy or Sell a Business in Boston?

Embrace your entrepreneurial spirit

Entrepreneurship continues to expand in the post-Great Recession world. Businesses are being bought and sold at a rapid pace. And many entrepreneurs are using dedicated digital platforms to make it happen.

Getting Help with Your Goals

Specifically, entrepreneurs are working with organizations that not only have business listings for sale, but also, help them overcome their hesitancy about buying or selling. Although they have a great deal of confidence, some of these owners still have a nagging fear that things may not turn out as desired.

This can certainly be the case when selling a business. While you may want to move onto something else, you also want to get the best price possible for something in which you invested a significant amount of money and time.

The Science of Selling

While searching for a platform that offers business listings for sale in Boston, MA, you want assurances that the organization will maximize the list of potential buyers for your company. Today, much of this is done through advanced algorithms — the same ones that search engines use to produce the results you want. They use a mix of real data such as online reviews and historical transaction performance over the time you were running your business. Algorithms can also assess your unique website or blog hits as well as your interactions with customers.

Once all this data is compiled, it should result in a list of relevant brokers who can help you find the right business to buy or a buyer for the one you want to sell. This relieves a lot of pressure, so you can focus on the next stage of your life.

That’s what we do at BizNexus. Our goal is to connect you with the right people and maximize your potential to find your next profitable business or sell the one you have for a sizable profit. To learn more, visit us at Biznexus.com.

 

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THE BIZNEXUS ROUNDUP

Quick & dirty interviews, war stories & tips from the trenches of business acquisition, growth & sale. We aim for value, efficiency & fun, so you'll walk away with something useful to take with you along the journey of buying, growing & selling a business.

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Why is Buying an Existing Business Better Than Starting From Scratch?

If you want to become a business owner, it's tough to decide on whether buying an existing business or starting from scratch is better. Here's what we think.

Start a Business

Think of buying one instead

If you want to become a business owner, it's tough to decide on whether buying an existing business or starting from scratch is better. Here's what we think.

Buying an existing business

Have you been thinking about starting your own business?

Do you know buying an existing business is sometimes more profitable than starting from scratch?

Entrepreneurship through acquisition is a current business trend. It is also one of the most exciting ways to begin your business empire.

When you are buying an established business that has cash flow, your entrepreneurship dreams are only a step away. But there are important questions to ask and ways to proceed that are vital to set in motion before you buy.

The questions are vital because their answers help you decide if you should proceed with buying or walk away to the next business on your to-do list.

Buying an Existing Business

When you buy an existing business, you are selecting an establishment that has already endured good times and maybe some bad times too. But it is still in business, and that is what is important to understand.

Businesses that produce income can be steady and solid. Bankers, investors, customers are all easier to attract and keep if you redevelop the existing business with smart moves and steadying ways.

But there are some important steps you need to take before you write your check to buy the business. 

Important Steps in Buying an Existing Business

It's important to know why they are selling the business. Sometimes the owners of the existing business want to move on to the next great thing in their lives. But their answer may tell you they are having legal and financial issues.

It may even reveal a pending lawsuit.

The business owners may have problems with vendors or employees. These issues are relevant facts you need to know for your business analysis and decision.

Determining the Price of the Business for Sale

Ask the current business owner how they determined the price of their business for sale. How the business owner determined their price is important due to the following:

  1. If the business owners cannot substantiate their current asking prices through their financial records you have a decision to make. Also, you may negotiate a price reduction.

  2. If they can substantiate their asking price through their financial records, make sure you are looking at the past two to three years.

The financial records of the existing business you might think shows dull but steady growth. Perhaps the financial records reveal it is more flashy with great financial ups and downs. You need to understand what works and doesn't work before you sign the dotted line and buy the business.

Statistics and Funding for Businesses for Sale

Every year, there are more than 500,000 businesses sold and bought. The number of businesses that are listed for sale each year is expected to go up as the baby boomer generation retires.

One of the most important things you need to ask yourself is how are you going to finance your small business purchase? There are great financial options in the market, but you have to know where to look.

Entrepreneurship Through Acquisition

You now know you are going to move forward with buying an existing business. It's important to find a small business that fits your life and your skill sets. If you manage your new business right, you can keep the businesses' old customers, vendors, employees, and more.

When all your questions have been answered, and your financing obtained, all that waits is implementing your unique business skills. Your extensive research, knowledge, and business skills will help you grow and develop the business of your dreams.

Business growth can lead to a business empire if you want. Log in and let's start building your business dream together.

 

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BUSINESS ACQUISITION

 

Have you checked out our podcast?

THE BIZNEXUS ROUNDUP

Quick & dirty interviews, war stories & tips from the trenches of business acquisition, growth & sale. We aim for value, efficiency & fun, so you'll walk away with something useful to take with you along the journey of buying, growing & selling a business.

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6 Reasons to Buy a Business Instead of Starting a New One

One of the major advantages of buying a business is that financials already exists. An existing business can easily develop an accurate financial estimate or gauge future earnings.

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Do You Want To Buy A Business?

Instead of starting a new one

Startup, startup, startup. These days anybody and everybody who thinks of entrepreneurship think of starting something from scratch…. Make the pitch deck, get the funding, get the ego-stroking valuation you can tell all of your friends and family about inside and outside of startup land…

A recent study, showed nearly 20% of small businesses fail in their first year, 30% fail in their second year and about 50% of small businesses fail after five years in business. Statistics like this make starting a new business a scary proposition.

On the other hand, you have an improved chance of succeeding when you buy an existing business. Here are some reasons to consider buying an existing business instead of starting a new one.

Financials Already Exist

One of the major advantages of buying a business is that financials already exists. An existing business can easily develop an accurate financial estimate or gauge future earnings. However, new businesses have to rely on pro forma budgets where they forecast revenues, cash flow, taxes, and expenses in advance.

 Cash Flow is Predictable

Furthermore, existing businesses have immediate and anticipated cash flow. When you buy an existing business, you have estimated revenue for the payroll, operations, taxes, and debt service to rely upon. However, if you start your business from scratch, you have to wait for several months before you have the adequate cash flow to cover these costs.

Established Suppliers and Credit Lines

In addition, existing businesses have established suppliers and credit lines. You can easily get a loan or line of credit. However, if you start your business from scratch, it will take quite some time before you establish a relationship with any supplier. Also, you will find it hard to secure loans or supplier credit.

 Established Customer Base

As a new business, you need to find customers for your new startup. You have to run a series of promos, discounts, referrals, and offers. Besides, it also takes time to build a loyal customer base. On the other hand, existing businesses have an established customer base. Once you buy the business, you only need to focus on the existing customer base, deliver quality services, and improve customer experience.

 Licenses and Permits

Before you can operate as a business, you need to be granted licenses and permits by the body overseeing your sector. This may take quite some time, weeks or even months. In fact, you may even be denied a license to sell your products if you fail to meet certain criteria. However, existing businesses already have all the required licenses and permits. Once you purchase the business, all licenses and permits will be transferred to you.

 Ease of Finance

Finally, an existing business already has a history, mode of operation, as well as a proven track record. If you need business financing, you can base your lending decision on actual results and not just estimates and calculated guesses. Thus, making it easier to secure business financing from banks and lenders.

To Recap it all for you

6 reasons to buy an existing business instead of starting one. There are several risks involved in becoming your own boss. When you buy an already existing business, you are taking a calculated risk which eliminates several pitfalls and failure potentials that come with starting your business from scratch.

 Planning to buy a business? 

Buying a business is a huge decision. You need to ensure that you get it right. Contact us today to know more about BizNexus. Our expert team will be available to speak with you and discuss the options available to you. A fantastic experience awaits you.

 

BizNexus -Learn More From Our YouTube Playlist:

BUSINESS ACQUISITION

 

Have you checked out our podcast?

THE BIZNEXUS ROUNDUP

Quick & dirty interviews, war stories & tips from the trenches of business acquisition, growth & sale. We aim for value, efficiency & fun, so you'll walk away with something useful to take with you along the journey of buying, growing & selling a business.

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How to Buy a Business | Four Vital Questions to Ask

It can take a lot of time and effort to develop a business from scratch. This is why people savvy enough to tap into available public and private resources decide to buy an existing business. However, going forward with the purchase is not an easy decision to make. Here are four important questions to ask during the process of buying a business.

How To ACQUIRE A Business

Four Important Questions to Ask

It can take a lot of time and effort to develop a business from scratch. This is why people savvy enough to tap into available public and private resources decide to buy an existing business. However, going forward with the purchase is not an easy decision to make. Here are four important questions to ask during the process of buying a business.

Where to Find A Business to Buy?

The initial step is to find a place where you can buy a business. Many people go to brokers seeking help to identify the right business for them. Others check industry publications, newspaper advertisements, or various online business for sale platforms.

Online marketplaces can be a great way to find a business to buy, especially if you’re looking to focus on digital business and e-commerce startups that are increasingly putting themselves up for sale.

Is That Business the Right Fit for Me?

Here are three key questions every entrepreneur like you should ask themselves when vetting an acquisition:

  1. What are my skills and interests? – You would be more motivated to succeed with a business in a niche that you are passionate about. Needless to say, you want to make sure you know the industry enough to take over the business effortlessly.

  2. What is my budget? – The price tag of the business needs to fit your pro forma budget. Furthermore, the business should generate monthly sales to cover the cost of operations with the potential of making a profit. If you need additional capital, you can consider getting a business loan from a financial institution like your local bank.

  3. Do I have time and resources? – There is no point in buying a business if you are going to neglect it. You need to have enough time, effort, and energy to ensure that your business has the right allocated resources to become a profitable investment.

What Will You Get for the Price OF THE BUSINESS?

The chances are you will have some wiggle room when negotiating the purchasing price, but before you do that, ask the business seller exactly what assets will transfer for that price? Yes, you will become the owner of the business & manager of the team in place, but will you also get its inventory, social media accounts, a functioning website, and other relevant items?

Do You Have Accurate Historical Financial Reports?

The general rule of thumb is to stick to buying businesses that generate profits for at least a couple of years. The current business owner needs to be ready to provide financial statements and reports for at least that period. This includes a detailed overview of revenues, expenses, and debts. Also, it would be great if they include a projected financial statement.

Learn More About Business Management

While you should have general knowledge about managing a business, we are talking about the day-to-day operations of the business you are acquiring. For example, you may need permits and licenses to continue operating the business. There may also be operating procedures that you can adopt as that can make you a better manager.

Here are some more general questions related to the business operations:

  • If the business that you are buying is digital, the product or service will be sold through a subscription model, or use one-time payments?

  • Are there any employees whose salary you are expected to pay?

  • Are there any contracts with vendors or other suppliers or providers? How long do they last, and is there an extension option?

Are you an entrepreneur?

An Austrian economist defined entrepreneurship as the “competitive behavior that drives the market process”.Thus it creates value for both market and society. Entrepreneurship is the process of creating something new of value by devoting the necessary time and effort, assuming the accompanying financial, psychological, and social risks, and receiving the resulting rewards of monetary and personal satisfaction and independence.

What problems can small businesses face in terms of entrepreneurship?

America's small business owners' optimism took a modest downturn in June, according to the NFIB Small Business Optimism Index, slipping 1.7 points to 103.3. While optimism remains at historically high levels, the June figure reverses the gain posted in May, with six components falling, three improving, and one unchanged.

Fifty-four percent reported capital outlays, down 10 points.

The net percent of owners reporting inventory increases fell two points to a net-zero percent, indicating no further building in inventory stocks in June.

The net percent of owners expecting higher real sales volumes fell six points to a net 17 percent of owners.

Twenty-seven percent of those reporting weaker profits blamed sales (down three points), 12 percent blamed labor costs (up five points), 11 percent cited materials costs, and nine percent cited lower selling prices (down two points).

Final Take On Buying A Business

As you can see, purchasing a business is both challenging and fun! You want to ensure that you pick the right business, which is why you should carefully evaluate all the details related to the purchase. Take as much time as necessary to ensure you are making the right decision as this can be the difference between success and failure down the road.

 

BizNexus -Learn More From Our YouTube Playlist:

BUSINESS ACQUISITION

 

Have you checked out our podcast?

THE BIZNEXUS ROUNDUP

Quick & dirty interviews, war stories & tips from the trenches of business acquisition, growth & sale. We aim for value, efficiency & fun, so you'll walk away with something useful to take with you along the journey of buying, growing & selling a business.

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Tips on How to Buy a Business and Entrepreneurship Through Acquisition

Generally speaking, buying an established business is considered less risky than setting up your own business from scratch. As an entrepreneur, you won’t necessarily need to come up with a unique business idea, sell investors on an unproven concept or incur the costs & risks of building a business up from the ground level. This practice of acquiring an already established business is known as entrepreneurship through acquisition.

Generally speaking, buying an established business is considered less risky than setting up your own business from scratch. As an entrepreneur, you won’t necessarily need to come up with a unique business idea, sell investors on an unproven concept, or incur the costs & risks of building a business up from the ground level. This practice of acquiring an already established business is known as entrepreneurship through acquisition.

 

It’s Still Risky To Buy a Business

buying something that is already stable, and profitable doesn’t mean risk won’t still be a huge issue as with any form of business ownership and entrepreneurship. The large majority of businesses out there publicly listed for sale are riddled with issues you’ll have to find, fix and tweak to grow the business and determine the right price to buy a business. In 2019, we’ve seen a huge surplus of small business owners out there hoping to sell under-performing or unprofitable businesses, or businesses that have not yet been optimized for sale and to encourage new ownership. This can be a great opportunity to acquire and grow an existing business, but as an investment, the operational risk is absolutely still there.

So how do you buy a business? To avoid getting married to a bad deal, you need to investigate thoroughly the business opportunities you’re thinking of pursuing. And a well-thought-out approach is necessary for you to find and secure a good business. To help you buy a profitable, well-managed business at the right price, think through the following steps.

Identify What Interests You

Entrepreneurs hoping to buy a business typically focus on existing financials and current cash flow, but it’s equally important to align yourself with a target company’s culture & lifestyle goals. You’ll be considerably happier if you purchase a business that’s already aligned with your ideal work culture, and in an industry with which you care about and already have experience. The more informed and fluent you are with the model of a particular business, industry trends, products, or services, the more inventive and successful your expansion plans will be. Ultimately, it boils down to embracing your passions, skills, experience, and interests, and throwing yourself in head-first the moment transfer of ownership occurs.

Determine Whether It Will Succeed or Not

Other than money, you’ll be spending time, energy, and hair follicles. Take into account the time and energy requirements you intend to take on for the day-to-day management of your new business. Some managers would rather be “grinding” all time, with their employees, but most investment-focused buyers will favor delegation and putting a capable management team in place, while they can focus on oversight and growth through acquisition. The number of resources you’ll need to invest will be influenced by the people and procedures already in place on the ground, and your prior understanding of the industry & relevant players.

Think of Why the Owner Is Selling the Business

If you’re about to purchase an enterprise, you’ll need to know precisely why the business is no longer working for its recent owner. There are many reasons why a company owner might want to sell a business. And you must get an honest outlook of how the operation is doing—without the seller’s influence.

Keep an eye on the existing business debts, condition of the equipment, competition, location problems, inventory problems, and any brand problems. Also, ensure you are updated on the current business’s achievements, failures, future opportunities, and possible challenges. Apart from speaking to the current owner about these issues, also engage employees, existing customers, neighboring companies, residents, and any relevant person you can think of.

Find a Business That Meets Your Budget and Personal Needs

Strategies to find the right business on the market that fits your needs include classified newspaper ads, online business-for-sale websites, and working with a business broker. Bear in mind that business brokers representing existing businesses for sale lawfully represent the seller. For this reason, be careful about passing on sensitive, potentially compromising information to them. Nevertheless, a business broker can help you decide on the kind of business you need, screen companies to eliminate businesses that are unlikely to sell, and assist you with the paperwork and help with negotiations to get a deal done.

Take into account that, if you involve a broker, a commission of 8%-15% will typically be required (paid by the seller), which can be well worth it for a business broker who works hard to facilitate an optimal, pain-free transaction… As a buyer, you’ll want to hire a good accountant to appraise business financials and make sure the cash flow number you are negotiating is accurate.  It’s also critical to have a competent business transaction, M&A-focused lawyer to represent you in negotiations and keep you informed about how the transaction will be executed, and how the delivery of the purchase price will be paid out over time.

 

Do Your Due Diligence

Assemble as much data as you can before buying an enterprise. This is one of the most critical steps on your way to becoming a business owner. In this period, work with your lawyer and accountant to guarantee you get all the facts and figures you need before proceeding.  This will help you ascertain that the business owner isn’t out to sell a startup for the price of a well-established business with a track record of reliable profits, revenues, and paying customers. Be aware; the seller will most likely require you to sign a non-disclosure agreement. This safeguards the seller should you decide not to buy the business after reviewing the documents. Below is a buy a business checklist of the materials that the seller should have prepared for you:

  • Contracts and leases

  • Business permits and licenses

  • Business Financials

  • Environmental regulations

  • Zoning laws

  • Certificate of good standing

  • Condition of the inventories

  • Organizational chart

  • Letter of intent

  • Code

 

Signing the Sales Agreement

After due diligence, comes the final verdict; whether to buy the business or not. In case you decide to go ahead with the purchase, the sales agreement is the “strap” that binds it all together. The agreement will spell out the final buying price, and every item you are buying, including intellectual property, tangible assets, intangible assets, and customer lists. Make sure you have a good legal representative to help you piece this list together.

 

Value the Business 

Whether you do it yourself or hire a professional accountant or certified valuation analyst (CVA), being aware of how businesses are valued is important for any buyer. Note that, before a business is transferred to the buyer, both the seller and the buyer have to settle on an agreed-upon price based on revenues & cash flows of the business. Often, buyers and sellers have their own unique processes for zeroing in an agreed-upon financial value, and this forms the basis of their negotiations. Some of the most common models of valuation for an existing business include the market approach, asset approach, and earnings approach.

 

Raise Funding Needed to Buy the Company

As soon as you’ve settled on a price, the next phase is to get the money. There are numerous distinct channels through which you can access the cash you need to buy the business. Are you aware of the different means of financing a new business acquisition? Some common financing options to business buyers include:

·         Personal financing

·         Debt financing

·         Search fund

·         Seller financing

 

Closing the Deal

It doesn’t matter you’ve reached an agreement on the terms of sale and price; the transaction could still be torpedoed based on terms, and how compensation will be distributed over time. A buyer can walk away from a negotiation at any time if a deal isn’t working for all parties, or if a seller decides to get greedy or back-track on previously agreed upon negotiation items.

 

Transitioning the Acquired Business

Typically, the seller will help you for a period of time as a consultant while you get up to speed with the day-to-day requirements of running the business. Make sure you clearly outline the responsibilities of each party in a written contract, and how the training will be conducted. Transitioning to new ownership can be a rough time for existing employees, and you want that to go as smoothly as possible. As a new owner, put mechanisms in place to make sure the business transition goes smoothly for all parties involved. Create time and speak to key personnel, suppliers, and customers before assuming day-to-day leadership. Let them know your plans for the company’s future, and pay close attention to existing stakeholders’ feedback and opinions as you move forward with the business and make incremental changes to the model, processes, and team.

 

BizNexus -Learn More From Our YouTube Playlist:

BUSINESS ACQUISITION

 

Have you checked out our podcast?

THE BIZNEXUS ROUNDUP

Quick & dirty interviews, war stories & tips from the trenches of business acquisition, growth & sale. We aim for value, efficiency & fun, so you'll walk away with something useful to take with you along the journey of buying, growing & selling a business.

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Why 2019 might be the best time in history to buy a new business

So if you’re considering a jump into entrepreneurship, -buying an existing small business is absolutely an option you should consider. In his article for business.com, Looking Ahead: Buying a Business in 2017, Bruce Hakutizwi states:

buy a small business 2019

Buy A new business

Here is Why 2019 Might Be The Best Time

As we mentioned elsewhere, 2019 looks like it might shake out to be the best year in a decade to buy a business in the United States. There are a few big reasons for this:

So if you’re considering a jump into entrepreneurship, -buying an existing small business is absolutely an option you should consider. In his article for business.comLooking Ahead: Buying a Business in 2017, Bruce Hakutizwi states:

Depending on your business strategy, industry, location, and other factors, there are more reliable and willing funding opportunities available to entrepreneurs right now than ever before. Between low-interest traditional business loans, government grants and loans, and a striking volume of venture capital available from individual angel investors, large corporations, and established VC funds, it’s easier and faster than ever before to fund a promising new startup or the expansion of an existing business.

As opposed to the relative risk of a brand new startup, obtaining funds to purchase an already established and successful business is even easier. This is doubly true if you’re purchasing another business that naturally extends or expands your own existing company or expertise since you can likely prove to the lender you’re up to the task of making the acquisition profitable. -Bruce Hakutizwi.

Buying a new business can be an exciting, rewarding, and potentially life-changing experience for you and your family. Do your research before you choose any professional to help you with the process, and make sure you’re clear on expectations and compensation from the outset. And as always, we recommend you check the BizNexus Marketplace to help vet financial services professionals, and for any helpful reviews, ratings, or relevant content to help guide your way.

A few useful links if you’d like to dig deeper on the topic:

  1. Buying Existing Businesses. -SBA

  2. How to Buy an Existing Website: A Step-by-Step Guide. -Will Lipovsky

  3. How to Find a Business Broker. -Entrepreneur

 

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