5 Factors to Consider When Purchasing an Existing Business

Purchasing an existing business

Here are 5 factors to consider

You want a business that has a blueprint for success. Here are five critical factors to look for when purchasing an existing business.

Purchasing an existing business

Starting a business from scratch is one of the most stressful things that a person will ever do. The stress associated with doing it can be too much for some people to take.

It's why many people with an entrepreneurial spirit prefer purchasing an existing business and working to perfect it over starting a business from the ground up. There will obviously still be some stress involved, but it won't always be quite as overwhelming.

Are you interested in potentially purchasing an existing business and taking it to the next level? Here are five important factors you should consider before you do.

1. Is the Existing Business the Right Type of Business for You?

Whether you start a business from scratch or buy an existing business, the business that you own needs to be something you feel passionate about. You should be excited to jump out of bed every morning to get to work on your business.

If you don't feel this way about a business that you're thinking about buying, it's not going to be a great fit for you. Even if there is a lot of money to be made with the business, what good will it be if you don't enjoy doing everything it'll take to make it?

2. Does It Have a Business Model That Seems to Be Working?

One of the best parts about purchasing an existing business rather than starting a new one is that it'll come with almost everything you need to run it from day one. It'll have:

• A name and an established brand

• A team of employees

• A loyal customer base

• A lot of inventory

But in addition to having these things, you should make sure that the business also has a business model that is working. This business model should be set up to continue working well into the future.

If you have to come in and start making wholesale changes to a company's business model, it could end up costing you more than it would have to start a business from scratch.

3. Do You See Areas in Which You Can Improve the Business?

You want a business that you buy to have a business model that is working. But you also want to have the opportunity to improve the business in different areas.

For example, you might know for a fact that you can use your current business connections to get the materials used to make a company's products for cheaper than they're making them for now. By using these materials and improving the production process as a whole, you can make a business that you buy more profitable right away.

Check out this video if you are looking to buy a website, eCommerce, an app, or SaaS Company

4. Are You Confident in the Business' Ability to Grow?

By improving small things about an existing business, you should be able to generate more money and make purchasing the business one of the best decisions you ever made. You should also be able to get the business to grow into something larger than it is now.

Are you prepared to take on that challenge? And furthermore, is the business you're considering buying scalable enough to make it worth your while?

You need to have confidence in the business's ability to grow and expand over time. Otherwise, it might not be a great investment on your part over the long run.

5. Can You Afford to Buy the Business?

One drawback often associated with purchasing an existing business is that it can cost more than starting a new business. You're paying a premium to get your hands on a finished product.

But the good news is that most lenders are more willing to lend money to someone buying an existing business as opposed to starting a new one. They see helping someone buy an existing business as a less risky move.

There are also lots of ways to finance a business purchase if you want to do it. Still, you should carefully consider whether or not a business fits within your budget before you even think about buying it.

Get the Help You Need When Purchasing an Existing Business

Purchasing an existing business can be a daunting experience if you've never done it before. You need someone by your side to guide you in the right direction.

We have a large selection of businesses for sale and can help you pick out one that's a good fit. It'll make the entire experience more manageable for you.

Check out some of the existing businesses for sale through us today.

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Buying a Business: How to Value a Small Business That's for Sale

Buying a business

How to value a small business for sale?

Buying an existing business can yield big rewards. The more market value a business has the better.

Discover how to value a small business that's for sale.

Starting a business from the ground up is a major undertaking without any guaranteed success after all that hard work. In fact, once opened, only about 20% of businesses survive their first year. This statistic is both staggering and disheartening.

Instead of swinging for the fences and shedding blood, sweat, and tears in the hopes of getting a business to profitability, you can ensure success and profitability by purchasing a business instead of starting one.

You might be wondering how to go about putting a dollar value on an active, profitable business.... There are certain ways you can go about that and make sure that you're investing your money in the right places.

Keep reading to learn how to value a small business that's for sale.

1. Assess the Business Market Value

If you want to know how to evaluate a business, one reliable method is to assess the business market value.

Business value is determined by the market itself. With this in mind, you can compare the type of business you want to buy with the same types of businesses that have already sold.

If a business you want to buy is way above the determined market value, then you might be getting ripped off. However, the market value isn't the only factor to consider.

2. Calculate Assets and Liabilities

Another way to get an accurate idea of how much a business is worth is by determining the difference between assets and liabilities. That number will be a reliable indicator of whether or not you should invest.

Remember that assets are a bunch of smaller chunks of a business that can add up to much more value than what might first meet the eye.

Liabilities, on the other hand, are debts that the small businesses still need to pay off, which takes away from value, of course. With that in mind, too many liabilities can be a red flag when thinking about buying a business.

Check out this video if you are looking to buy a website, eCommerce, an app or SaaS Company

3. Check the Income History

Yet another way to assess the value of a small business is by looking at its income history.

This is a great way to figure out whether your investment will be profitable at the get-go. You can also figure out if you're looking at a low-maintenance business or one that will need more work put into it.

By adding up the net profits of the business from the past and getting the average, you can have an idea of what to expect after you buy the business.

From there, you can use a purpose-driven model to grow that business even further if you're up to the task.

You Know How to Value a Small Business

Now that you know how to value a small business that's for sale, you can start thinking about taking your first steps towards finding an actual business to approach.

Whether you want to buy a business that's for sale or put your business on the market through a business broker, BizNexus can help you get matched.

To get started, sign up and set your acquisition preferences, and start getting matched with businesses for sale and business brokers who can help you. Try it at www.biznexus.com

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The Top 5 Ways to Finance Buying an Existing Business

Buying a business

Here are five ways to financing your acquisition

Are you looking for innovative ways to finance buying an existing business? Read on to learn more.

Finance buying an existing business

In a lot of ways, running your own business is the ultimate fulfillment of the American dream. You set your own hours, act as your own boss, and get to spend your days doing something you love. But how can you become a business owner without all the risk that comes along with starting something from scratch?

What do you do if you want to finance buying an existing business?

There are a number of ways to approach business financing. From making arrangements with the seller to getting a standard loan, you can choose the option that works best for you. Read on to learn about some common ways to finance buying an existing business.

1. Seller Financing

Depending on who you’re buying your business from, you may be able to get the seller to finance the sale of the business. Like with a loan, you pay an agreed-upon amount every month for a certain period of time until you’ve paid for the business in full. This gives the business owner a guaranteed source of income for the life of the loan, and it allows you to avoid the initial up-front expense of buying them out.

Sell your business, buy a business, or buy a franchise with BizNexus. BizNexus matches business owners with the best intermediaries to help sell your business on the best terms. We leverage data science & verified reviews to confidentially connect entrepreneurs with business intermediaries who can help them buy or sell a business.

2. Partnership

If your seller won’t finance your purchase but you want to avoid a traditional loan, you may be able to go into business with a partner. Each of you would pay for a portion of the business, and you would run it together. This effectively doubles the amount of capital you have to invest in this business and gives you some help in running it.

3. Sell Stock To Employees

If you plan on having a number of employees, another financing option may be to sell stock to your employees. You’ll have to organize the business as an S-Corp or a C-Corp, and we would recommend selling non-voting stock so you retain ownership. But this option can get you a huge discount – possibly as much as 90 percent – on the business price.

4. Lease The Business

As with many other large purchases, one of your options with buying a business is to lease it. This will require cooperation with your seller since you will take over running the business and pay them a fee each month, while they still retain ownership. But it gives you time to build up capital in the business before you make the big purchase.

5. Get A Loan 

And, of course, a very popular option for financing buying a business is getting a loan. You can get a term loan, a Small Business Administration loan, or asset-based financing, depending on your situation. You can also use a combination of the three to get the right solution you need to buy your new business.

Learn How to Finance Buying an Existing Business

Starting a business is challenging enough, but knowing how to finance buying an existing business is a whole different ball game. There are a number of different approaches that will work, depending on your needs. Talk to your seller and your bank and see which option will work best for you.

If you’d like to learn more about entrepreneurship through acquisition, check out the rest of our site at BizNexus. We have tools to help you buy or sell a business or franchise. Check out our posts about buying a business to start planning your entrepreneurial success today.

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5 Biggest Myths When Taking Out a Business Loan

5 Biggest Myths

When Taking Out a Business Loan

Are you thinking about taking out a business loan but you're worried you might be misinformed? Read this article to figure out what you need to know.

Taking out a business loan

Do you ever think that you’d like to start a business someday if only you had the money? Business loans are great for people looking to start huge corporations, but what about if you just want to buy a small business?

Loans like that aren’t available to people in your situation, right? Wrong, In fact, there are so many business loan options these days that anyone can find a loan to suit their needs. But there are still a lot of misconceptions about these loans floating around.

Read on to learn more about some of the biggest myths about taking out a business loan.

1. Go Big or Go Home

One of the biggest myths about business loans is that you have to take out a large amount of money. Many banks do prefer larger loans, but there are lots of microloan financing options available. The Small Business Association will even offer loans as small as $500 if you need some cash quickly.

2. Perfection Is Crucial

Having good credit does help improve your chances of getting a loan with good terms. But if your credit history isn’t flawless, you can still get a business loan. Smaller loans, in particular, tend to work well for people working on building a bad credit score back up.

3. It Takes Forever

In the old days, you’d have to spend days or weeks putting together a loan application and another few weeks or months to get the money. But today’s world moves faster, and business loans are no exception. You may be able to complete a loan in as little as an hour and get the money as soon as a few days later.

4. Collateral Is Important

Trying to offer collateral when you’re trying to start or grow a small business can be tricky. The whole idea is that you don’t have a lot of capital, to begin with. But there are some loan options today that don’t require any sort of collateral if you don’t have much you want to offer.

5. You Don’t Have Options

Many small business owners have the idea that when they go in to get a loan, there are fixed terms they’ll have to deal with. But lenders know that not every business is the same, and not every borrower’s needs are the same. They can adjust the terms of their loan to suit your business needs (within reason, of course).

Learn More About Taking out a Business Loan

Taking out a business loan can be a great way to give your business a boost when you need it. And in today’s financial world, you don’t have to settle for huge loans that require perfect credit and a ton of collateral. There are a ton of options open to you, so shop around and find the solution that works best for your business.

If you’d like to get help buying or selling a business, get in touch with us at BizNexus. We are here to help you manage entrepreneurship through acquisition. Explore our financing options for buying a business, and get started on your new venture today.

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THE BIZNEXUS ROUNDUP

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How to Finance a Business Purchase With Fair to Poor Credit

Finance a Business Purchase

With Fair to Poor Credit

Do you want to finance a business but you've had some credit challenges? Read this article to learn how to finance a business purchase with fair to poor credit.

How to finance a business purchase

There are 30.2 million small businesses in the US. Many folks prefer to own businesses because it gives them the creativity and profitability they have always dreamed of.

If you have student loan debt or a business venture that failed in the past, you may have poor credit.

You may also, however, find yourself with the opportunity to purchase a business that would be a great fit for your skills and experience.

If you are wondering how to finance a business purchase with fair or poor credit, you are not without options. Here are some ways to finance the purchase of the successful business you have always hoped to own.

1. Check Over Your Credit Report

Your own credit may not be as bad as you think. There may be payments that were not recorded, so you can contact companies with proof of payments.

You can also get your score back up by paying down some debt gradually. This may involve getting a second job for a little while, or finding another way to supplement your income.

2. Meet With A Small Business Administration Counselor

You can make an appointment to present your entire plan to a Small Business Administration (SBA) counselor.

They can give you tips on how to improve your plan so it better suits what lenders are seeking. The lender will also already have existing relationships with SBA lenders.

When you visit your counselor, it is important to make your plan look as professional as possible. Demonstrate how your business has been profitable and why you are capable of running it. Highlight the profitability of the business you want to buy, as well as its future growth potential.

When applying for a loan from anywhere, you must fill out an application. Bringing supporting documentation and dressing professionally will also help you.

3. Get A Microloan

If you can't get a loan from a bank, look for investors within your network, as well as micro-lenders.

Microloans are specifically designed for those who can't get loans elsewhere, and the SBA guarantees them. The downside is that interest and fees are higher. There is also a credit limit of $50,000.

4. Get A Bad Credit Loan

Many banks give out bad credit loans. While they initially come with a higher interest rate and fees, many lenders will renegotiate if you are making your payments on time.

5. Borrow Against Your Home

If you are certain that the business you wish to purchase will be successful, you may be able to get a loan from a bank by using your house as collateral. Take out a second mortgage or take out a home equity line of credit.

6. Who You Know

Your family and friends won't ask to see your credit report if you can convince them your business will be successful. You can ask them for funding and talk about their involvement in the future of your business.

7. Government Financing

Some federal and state government programs will finance your business if you meet certain criteria. You may be a veteran or involved in certain types of research. Depending upon your business and situation, they may not even require repayment.

How to Finance A Business Purchase With Fair to Poor Credit

If you have found the company of your dreams, you may be wondering how to finance a business purchase even if your credit isn't great. With a little homework and the right connections, you might find yourself the owner of a profitable business in no time.

For more information on investing in businesses, read our blog today.

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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.

5 Effective Ways for Financing a Business Purchase

Financing a Business Purchase

5 Effective Ways

Financing a business purchase can be challenging, but there are some options to help you make this purchase. Keep reading to learn what these options are.

Financing a business purchase

In the third quarter of 2015, the median sales price for a business sold was $185,000. Most people don't have that much cash on hand. 

This means financing a business purchase is the only option. But there are several ways to find finance to buy a business. 

Which one you choose often depends on your current financial situation and the type of business you're looking to buy. We want to help you make the right decision on how to make a successful small business acquisition. 

Keep reading as we list five effective ways to acquire financing to buy a business. 

1. Financing a Business Purchase With a Bank Loan

If you want to buy a business and are thinking of making the purchase with a bank loan, make sure the existing company has substantial assets. Also, you'll need to prove you have good credit and a proven track record in the industry.

Expect that trying to obtain a bank loan to be very difficult and time-consuming. 

2. SBA Loans

The Small Business Administration (SBA) also provides loans. The best option to buy a business is to apply for an SBA 7A loan. 

If approved, you can get a loan of up to $5 million dollars. However, to qualify for the loan you must have the following:

• Good credit

• Provide three years of tax information

• Provide personal finance information

• Show prior experience in the industry

You must also prove you can put 20% down. However, you can also find that extra 20% through seller financing. 

3. Seller Financing

Seller financing is another option. With this option, you ask the seller to provide financing in the form of a loan. 

Typically this loan is amortized of a period of time and you pay the loan back using the proceeds of the business. This is an easier method to obtain than traditional financing methods such as a bank. 

More Transparent

It's more flexible, can often be cheaper, and since the seller wants to be paid back, they will be more inclined to provide you with accurate financial documentation. 

However, don't expect a seller to finance more than anywhere between 30% to 60% of the business unless you come armed with additional assets and can make a large down-payment. 

4. A Leveraged Buyout

A leveraged buyout happens when the buyer acquires a company using a significant amount of borrowed money to buy the company. Often the assets of the company being bought are used as collateral for the loans such as:

• Equipment

• Real estate

• Inventory

The assets of the acquiring company can also be used. 

However, if things don't go as planned, it may have a largely negative impact on your rate of return. Your losses may also be maximized. 

5. Get Financing Online

You have options when it comes to finding an online source to get a loan. You can choose a business loan, personal loan, and even a HELOC (home equity line of credit). 

Shop around for the best interest rates. Also, not all lenders are willing to give money to buy a business. 

We Help With Financing

Financing a business purchase isn't always easy because not every lender wants to deal with the risk. We're different.

We want to help entrepreneurs buy and sell their businesses with as little effort as possible. And we can help you with financing. Click here to learn how. 

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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.

The Pros and Cons of Buying an Existing Business

Buying an Existing Business

Here are the Pros and Cons

Are you thinking about buying a business? Learn about the pros and cons of buying an existing business before you move forward.

Buying existing businesses

A record number of businesses were sold in 2019. That number continues to trend upward from previous years as baby boomers seek to retire and millennials begin to realize there might be limited exit options for their would-be unicorns in a public market focused on profit….

The economy is still doing well. Most businesses that sell are financially healthy, with cash flow to pay off the acquisition price.

While buying an existing business definitely has its advantages, there are also a few downsides anyone looking to buy should be aware of. The more you understand the nuances of buying an existing business, the more successful you'll be. 

We want to help you understand the pros and cons of purchasing an existing business. Keep reading to learn more. 

Advantages of Buying an Existing Business

It's not easy to start your own business. Statistically speaking, most startup businesses shut their doors within five years. 

Which makes buying an already established business that's proven to be financially successful a smart move. The hard work has already taken place to get past liftoff and into the atmosphere of profitability.

Access to a Network of People

When you buy an existing business, you get access to an existing network of people who can help guide you and your business including:

• Loyal customers

• Vendors

• Suppliers

• Employees

Also, if the existing owner has established relationships with banks, printers, advertisers, and insurance companies, it's much easier than trying to embark on those relationships from scratch. 

Established Brand

Branding is an essential part of marketing. Without loyal customers, there is no viable business. 

Buying a small business with a well-established brand name makes it easier for you to reach out to attract new business. 

Fewer Financial Surprises

There's a lot of risks a new business owner takes. But when the seller already has everything in place, that means the business is already operating and pricing has already been established. 

There's less of a chance you'll get caught in a money pit because the seller should already have provided you with the financial documents. 

Also, the sale is structured so you can cover all your expenses including the debt service and your salary. 

The Disadvantages of Buying an Established Business

While the business may already be well-established, that doesn't mean a few changes may be necessary. It's also difficult to fully comprehend what changes are needed until you've already purchased the business. 

However, here are a few red flags to look out for:

• High employee turnover

• Outdated or unreliable equipment

• Unreliable suppliers

A business that carries existing debt or has cash flow issues also will mean there's hard work ahead of you to get back into the black. And it's not always easy to walk into an already established business and try to change the rules. 

The Brand May Be Established But Suffer from PR Issues

While it's great to buy a business with an already established brand name, if the company suffers from PR (public relations) issues, you're inheriting a potential disaster that is now your job to clean up. 

Even a new owner may not be enough to change the minds of unhappy former patrons. Make sure you buy a business with a positive reputation. 

A Cheap Business Isn't Necessarily a Good Thing

If a business seems inexpensive it's usually not a good thing. An expensive business means it's doing financially well and has a good reputation. 

A cheap business may mean it has a bad reputation or a good or service isn't performing well in the market. Always ask yourself if it's worth the money and the work you'll need to put in to ensure a company stays successful after you've bought it. 

Start Getting Matched With Acquisitions and Make Some Inquiries

The best way to get going on buying your first business is to start looking at opportunities and reach out to connect with the seller or the seller’s business broker if you’re serious about any specific opportunity. As a buyer, at no cost to you, you can set up your profile and acquisition preferences today on BizNexus and we’ll start showing you opportunities from our $1 billioin+ inventory platform that makes sense for you.

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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.

5 Tips on Financing the Purchase of an Existing Business

Purchasing an Existing Business?

Here are 5 tips to help you finance the acquisition

There are a number of methods you can use when financing the purchase of an existing business. Here are a few that we suggest you try.

Financing the purchase of an existing business

More businesses are being sold than ever before. In fact, a record number of small business owners are selling their companies. According to this data, the number of business listings increased by 8 percent from the prior quarter. 

In a world awash with excess capital and with demand for reliable cash flow returns on the rise, prices for existing businesses & assets have been on the rise.

Popular acquisition targets typically have reliable, recurring revenue and cash flow, with an established brand and loyal customer base. With prices continuing to trend up, you’ll need to have your ducks in a row before you decide on the best way to finance an acquisition.

Read on for a guide to financing the purchase of an existing business. Explore 5 tips for purchasing a business that is highly effective.

1. Apply for an SBA Loan

The United States Small Business Administration (SBA) is a great resource for entrepreneurs. They work with lenders across the nation to guarantee loans against default.

Lenders are willing to take on more financial risk due to the government’s backing. SBA loans offer more favorable terms and rates than conventional funding sources.

There are a number of different loan programs to apply for. The most popular are the 7(a), 504, and microloan programs.

2. Consider Seller Financing

In some deals, the seller is willing to finance a portion or all of the deal. The benefit to the seller is that they can turn a greater profit.

There are also a number of advantages to the buyer. Perhaps most important is the ease of access to capital.

Also, another benefit is the speed of the financing deal. Seller financing is proven to be a faster alternative than conventional loans.

3. Make a Sizable Down Payment

A significant down payment is an effective method for reducing company risk. Like purchasing any asset, a down payment improves your financial position in the company. It reduces the amount of interest that you will pay over the life of the loan.

For business acquisitions, a large down payment is required. While mortgages require 20 percent, a business purchase usually takes even more.

The more cash you bring to the table the better. Many small business owners use personal funds for a down payment. For larger acquisitions, the down payment may require multiple investors pooling their resources together.

4. Angel Investors

There are increasingly common scenarios today where wealthy investors, feeling flush after 10 years of public market gains and looking to diversify into something reliable & attractive going forward, are interested in financing entrepreneurship through acquisition (ETA) as a viable investment vehicle. If you can sell those types of investors on your personal “why” story and your credentials to run a business, this can be a great option if you can get access.

5. Getting Creative

To finalize a business purchase, sometimes you have to get creative. These cases may call for a leveraged buyout or assumption of debt.

In a leveraged buyout, you trade-off existing assets in lieu of capital. An assumption of debt means that you are acquiring the company’s liabilities as well as their assets.

A Recap of Financing the Purchase of an Existing Business

Starting a business from scratch is hard work and risky. Many entrepreneurs choose to purchase an existing business instead and fund their entrepreneurial efforts from the existing cash flows of an operational business.

This option allows an entrepreneur to acquire a proven business model. Entrepreneurs turn to methods like SBA or seller financing to close a deal. If you want to learn more about financing the purchase of an existing business, Login to get matched.

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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.

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

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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Top Considerations When Buying a Business in Boston

Buying a Business in Boston?

Here are top considerations you don’t want to miss

Many people like the idea of owning their own business, but not everyone is cut out for starting one from the ground up. If this sounds like you, you may want to consider buying an existing business in the Boston area.

There are several perks to this particular option. The business will already have a customer base, you will have actual numbers to work with rather than estimates, and you may be able to obtain certain patents related to the business. Get started by considering the following issues.

Location

Think about whether you want a business that is in your community or if you are willing to move. You could also look into a business that isn't tied down to one specific location. The location where you choose to conduct your business will impact many variables, such as taxes, labor costs, and other financial points that could affect your bottom line.

Size

Would you like to own a large enterprise or would a small family business be more your style? When looking for local businesses for sale in Boston, be realistic. Large companies make more profits, but they also come at a higher cost and involve more stress.

Industry

Don’t choose an industry simply because you like the sound of it. Choose a business that deals with an industry you already have experience with. The industry you choose will determine factors such as how many hours you will work.

Once you know what size business you want, what type of industry you are looking for, and where you want it to be located, it is time to start shopping. A business broker can prescreen possible business options and help you find in Boston that are within your area of interest. Login to BizNexus by visiting its website at https://biznexus.com/ for help finding these local businesses for sale that are just right for you.

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BUSINESS ACQUISITION

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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.

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

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.

BizNexus -Learn More From Our YouTube Playlist:

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.

How to Buy a Franchise: 5 Best Practices for Buying a New Franchise Opportunity

How to Buy a Franchise?

5 best practices for buying a new franchise opportunity

There's a lot that goes into investing in a new franchise. If you want to learn how to buy a franchise, check out some of these best practices.

How to buy a franchise

Wondering how to buy a franchise?

Trying to decide if a new franchise opportunity is a good choice for you?

If you're starting a new business, buying a franchise is one of the best options available. It can be less risky than starting completely from scratch.

As opposed to buying an established franchise opportunity, becoming a part of a new franchise can be even better in some ways. However, there are a lot of things you'll need to think about to ensure you're making the right choice.

Below we'll tell you about the 5 best practices for how to buy a franchise.

1. Research the Franchisor Extensively

When you're thinking about buying a new franchise opportunity, it's important that you do plenty of research on the franchisor to make sure they're worth your time, effort, and money.

You should find out everything you can about the franchisor's history and track record as well as the people behind the scenes. You should also find out what you can about the franchisor's financial well-being to ensure that they'll have enough capital to help with your growth.

You should do some digging online to find out more about a franchisor. You may also want to speak to some of the current franchise owners as well.

2. Ask Questions

When thinking about buying a franchise opportunity it's important that you feel open to ask questions. If you have any concerns, bring them up.

You'll want to speak plainly with the franchisor to find out exactly what you can expect from working with them. Ask as many questions as necessary to find out what you can about marketing methods, training tools, technology, operations, and provided support going forward.

3. Be Ready For Legalese

When thinking about joining a franchise, you should also be fully prepared for looking over the franchise disclosure document. You'll want to review it carefully to ensure that you understand exactly what your legal responsibilities and rights are.

If dissecting legal documents isn't your strong suit, you may want to hire a franchise attorney to help you look over it. While it will cost you to hire an attorney, it will be well worth it and can help you avoid big problems later on down the line.

4. Know Your Worth

One of the best practices for buying a new franchise opportunity is to remember that you have value. New franchisors don't hold all the chips and chances are that they need you just as much as you need them.

Because of this, you may have a bit more wiggle room when it comes to negotiating a franchise agreement and getting a deal that is right for you. New franchisors may be willing to work with you a bit more than an established franchise will, as long as they can still maintain the consistency of their franchise brand.

5. Understand Your Market

In addition to knowing everything you can about the franchisor, you also need to think carefully about the market at large.

Look at the trends locally and nationally and be realistic about whether you believe the franchise truly has a place in the marketplace. Look at your community as well as the economy and consider what your community's interests and needs are.

You need to be sure that the franchise you're considering will be appreciated. Don't just rely on wishful thinking or your own personal preferences when deciding to buy a new franchise.

How to Buy a Franchise With These Best Practices

If you're ready to be a business owner, buying a franchise can be a great place to start. However, while learning how to buy a franchise isn't hard, making a profitable choice is much more difficult. It's important that you remember these tips if you want to be confident that you're making the right decision with your purchase.

Ready to get started with buying a franchise? Click here to start looking for a new franchise opportunity now.

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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.

Most Profitable Business Industries in Demand

Most Profitable Business Industries in Demand

From the tech sector to pet care and beyond

From the tech sector to pet care and beyond, the exponential profit growth predicted makes these top business industries the highest in demand.

Are you interested in starting your own business? Forbes reported in October 2018 that 80% of small businesses fail within the first year. Don’t let this quash your entrepreneurial spirit.

One option to consider is buying an established business. This allows you to explore business industries and tap into a successful opportunity.

Continue reading to learn more about making a profitable business investment.

Considerations When Buying a Business

When considering buying a business, it’s important to ask questions. Why is the business for sale? Are industry outlooks rising or falling?

It’s important to know about the business’s debt. Debts can include liens, writing off bad debts, and past due accounts. Are there any lawsuits historically or ongoing?

Does the company have current contracts, and does it only operate through contracts? Is there zoning or other industries regulations you should know about?

Look into the business’s target market. Is this location providing a stable, growing, or shrinking buyer pool? Does the company have a diverse customer base or only a few key clients?

If the company owns the intellectual property, proprietary methods, or exclusive products, will the ownership transfer? Can you assume any leases or mortgages held by the company? How many employees currently work for the company and are they unionized?

An attorney and accountant can provide an in-depth investigation before you buy.

Profitable Business Industries to Explore

Buying a profitable business allows you to reap the benefits of the previous owner’s work in starting the company. Here are some industries with positive growth outlooks.

Pet Care Market

The Pet Care Market Report shows a predicted positive market growth. The compound annual growth rate (CAGR) is expected to be 5.4% between 2019 and 2025 worldwide.

This comprehensive study looked at market drivers and restraints, opportunities, and product demands. It also examined the market size, forecasts, and trends.

Identified market drivers include:

• Customer’s humanization of pets

• Increasing pet adoption rates

• Increased e-commerce for pet care products and service sites

The high price for pet care merchandise and services turns some customers away. This may be a market restraint in low-income areas.

Many customers now want “natural” pet products. Many people feel overextended with work and family commitments. They're showing more interest in pet care services and represent a market opportunity.

Remodeling Industry

The global remodeling market was valued at 3 trillion US dollars in 2017. The CAGR is expected to increase by 4% between 2018 and 2024.

The heightened focus on energy efficiency has driven the development of new technology. Consumers are remodeling to become more energy-efficient and decrease long-term costs.

Individuals also remodel for trendy designs, more durable materials, and increased security. Many customers have suffered a loss due to natural disasters. Employing new technologies that make homes and businesses more disaster-resistant makes customers feel secure.

Tech Industry

Technology is now part of our work and home life. New innovations and solutions will continue in this growing industry.

When considering the global economic trends in tech spending, Forrester reported mixed reviews. The weakening global economy leads economists to predicted a fall from 5% to 3.8% in tech spending by 2020.

However, positive trends are forecast for the U.S. tech industry’s growth. Forrester states that more than 2/5 of tech dollars worldwide go to U.S. companies.

The Forrester report projects consumer spending to reach $1.46 trillion in 2019. This represents a growth rate of 6.3% compared to the global rate of 3.3%.

Are You Interested in Buying a Business?

If you are ready to invest in established business industries, we have the resources you need. Our company provides a list of businesses for sale.

Before placing a business on our list, it must be fully vetted. Professional intermediaries examine each company to ensure we are offering valuable investments.

Our purchase price for listed businesses is comparable to other similar companies on the market. Professional business brokers or accountants provide the price range for each listing.

Continue looking through our site today for businesses or franchises that interest you.

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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.

Spend Money to Make It: Financing Options for Buying a Business

Want To Buy A Business?

Financing Options For Buying A Business

If you've found the business you want to purchase, but aren't sure how to pay for it then this guide is for you. Keep reading to get the money you need.

Financing options for buying a business:

It doesn't matter if you're a solopreneur or a budding business owner who will employ hundreds. Starting a business requires capital. 

On average in the United States, it costs a whopping $30,000 to start a small business from scratch. That's averaging out the big guys with the little guys. You can imagine how much some entrepreneurs might be risking on their startups.

If you're unsure how much it will cost to start your business, you can check the estimated cost of your startup with Entrepreneur.com's calculator tool. There's more to consider than you might think.

Once you know how much you need, how are you going to get the money? Like dad says, "money doesn't grow on trees." Let's explore some financing options for buying a business and get you on your way to success.

Angel Investors

If you can snag an angel investor, you're in great hands. These guys know the risk of a budding startup and are willing to take it. They typically own more than $1M in assets which affords wriggle room for more risky investments.

The biggest downside to an angel investor is their need for even more detailed plans. You need to convince them of your credibility. Just because they are willing to take risks doesn't mean they're wanting to throw their money in a hole.

Do your research. Gather competition analysis, create detailed sales and marketing plans. Essentially, show your expertise in your market. 

Your idea needs longevity. If you're just sniffing out a trend but don't know how your product or service will fare in the long run, you won't attract an angel investor.

Lastly, be passionate. If you truly believe in your vision, that's infectious. If you've done your research and your idea has a long half-life, go all-in. Your ardent enthusiasm will help lubricate their pockets.

Micro-lending

If you've ruined your credit on previous passion projects, you may not be able to get a traditional loan. If you really think your business will take off, you might try a microloan. 

Micro-lenders are another group of risk-takers. But the return on their risk is higher. They charge a higher interest than a typical loan. 

How much higher? You could see APR as high as 30% in some cases, although that's rare. No need for collateral either which balances out the high interest rates.

One such example of micro-lending is peer-to-peer lending. Cutting out the gatekeepers gives more people access to small business funds than traditional means provide. 

A few examples of P2P lending companies: 

• Upstart: a group of ex-Googlers started a platform that judges borrowers not on FICO score but on education, academic performance, and work history.

• Funding Circle: After the founder's loan was rejected for the 96th time, they created Funding Circle for U.S. and U.K. small business owners.

• Prosper Marketplace, Inc.: This is the original U.S. P2P marketplace. It now serves over 800,000 people.

A Few Other Financing Options for Buying a Business

There are a few more financing options for buying a business outside of traditional loans from either the government or the bank. Self-funding is one of them. Tap into your 401ks, use a credit card if you have a large credit reserve, or start a crowdfunding campaign (that last needs a previously existing fan base or really great marketing). 

If you're ready to get financed, let us know. We'll show you how it's done. 

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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.

5 Reasons Why Buying an Existing Business is Better Than Starting One

Do You Want To Buy an Existing Business?

5 Reasons Why It is Better Than Starting One

There are a few reasons why buying an existing business is better than starting one. Use these tips to choose what's best for you.

Purchasing an existing business is one of the best entrepreneurship opportunities available for you to build wealth.

It already has employees who understand how to run the business. Also, your employees are everything because they're the ones that keep your business afloat.

Simply put, your risk isn't as great when you opt to buy an existing franchise as opposed to building a business from the ground up.

Take heed to these tips so that you're able to build your business portfolio.

Branding is everything, and franchise opportunities are ripe for the picking today.

You can grow your wealth by buying an existing business, and it may have advantages that are greater than you'll enjoy by starting from scratch. If you're thinking about buying a company and want to know the benefits, consider the points below. 

1. You're Taking Over a Company That Already Has Cashflow 

Purchasing an existing business is one of the best entrepreneurship opportunities available for you to build wealth. 

Generating income is always a process, and it can take years for a brand new company to become profitable. By stepping in and getting cash flow on the front end, you can strategize on how to grow the company, rather than just trying to how to make it survive. 

2. Getting Your Hands on Financing is Much Easier

Lenders don't like risk. 

When you buy a company that is already established, you dramatically reduce risk, and this makes you more attractive to financial institutions. You'll be able to get a loan with interest rate terms that are fair and affordable. 

3. You Don't Have to Get it off the Ground to Begin Bringing in Income

When you're just launching a business, you'll have to spend a great deal of money on equipment, licenses, permits, branding, legal fees, and so much more. 

Since you don't have to handle these sorts of expenditures, it frees up more money than you can re-invest into the business. This way you're focused on growth, rather than just trying to break even. 

4. The Core Customers are Already in Place

You'll also have established customers to serve and market to when you buy a franchise. 

It's much easier to expand on an established base that you have data on than trying to start from scratch. You're doing business with people that already trust your track record and understand the brand. 

You'll also inherit all of the trademarks that the company has in place, along with all of the brand equity that comes with it. 

5. It Already Has Employees Who Understand How to Run the Business

Your employees are everything because they're the ones that keep your business afloat. 

When you buy a franchise, you're also getting access to employees that are used to running the business on a day-to-day basis, and they understand the policies. It's easier to add your own influence and add new policies, rather than building from the ground up. 

Simply put, your risk isn't as great when you opt to buy an existing franchise as opposed to building a business from the ground up. This lets you begin generating money on your terms. 

Consider These Points When Buying an Existing Business

So there you have it. Buying a business can help you out in so many ways. Take heed to these tips so that you're able to build your business portfolio. 

Consider these tips when buying an existing business, and don't hesitate to check out more of our posts on taking advantage of franchise opportunities. 

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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.

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

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.

Top 10 Entrepreneurs Tips & Ideas for Buying an Existing Business

How to Take a ‘Sprouting Seed’ and Make It Grow

Ideas for buying an existing business for sale

One thing that differentiates entrepreneurs from other people is the ability to see opportunities and take them. Opportunities exist in different forms and buying a business is one of the uncommon ones. There are people that erroneously assume that for a business owner to desire to sell, something must be wrong with a particular business. However, real entrepreneurs do not reason that way.

There are myriad reasons founders may like to sell their businesses. Some may just be bored of the business and are looking for new challenges. Others are particular about getting ideas off the ground and moving into the next idea in their heads. There are businesses that are in the form of ‘sprouting seeds’ with real potentials to grow into great companies. An entrepreneur may decide to buy such an existing business instead of starting a new one from scratch.

Actually, there are several advantages of buying an existing business. The chances of failing with an existing business are slimmer than the chances of failing with a new startup business. This means it is less risky and can be extremely rewarding when handled the right way. Before buying an existing business; however, it is important that a true entrepreneur performs his/her homework. There are so many things to know about an existing business before buying it.

From the time you decide to buy a particular business till the first few months of running it, you have to get so many things right in order to succeed. It may be a little less risky than starting a business from ground zero, but a single wrong move can lead to failures too. Here, we will discuss some tips that can be helpful in setting you and your ‘sprouting seed’ up for success:

 Understand Why the Business Owner Really Wants To Sell

This may sound a little disconnected from the picture we painted above about why some founders may want to sell their businesses. We will be living in denial if we don’t point out that there are businesses for sale that are actually not in great shape. There are instances where business owners want to sell because their businesses are going down or are facing some legal or licensing issues. Take your time to understand exactly why the business you want to buy has been listed for sale. This will save you from buying a business that is bound to fail.

 Be Sure the Business Is What You Really Want

Before setting out to buy an existing business, it is important that you define what you want in a business. You also need to make sure that a particular business you are interested in meets your requirements before considering it. The most important factors to consider include the location of the business, the size, the industry, and its suitability to your lifestyle and aspirations. It is important that the business you are considering buying meets the majority of these important factors. This will help you to buy a business that you will enjoy running. You should also consider your short-term and long-term goals. 

Consider Working With a Business Broker

No matter how experienced you are in business, it is not advisable to go on the road alone when it comes to buying an existing business. In fact, it is impossible to do that. There are a number of people you will need to complete the transaction. It is not compulsory to have a business broker as part of your team but it is very important. There are so many things a business broker can do for you: a reputable one will help you avoid pitfalls while buying an existing business. A business broker can even help you find a business for sale that meets your requirements. He/she will also stand by you to ensure that the process is completed smoothly.

 Ensure You Have a Strong Acquisition Team

Asides from your business broker, there are several other professionals that you need to complete your due diligence and buy the right business that you can grow to an organization you will be proud of. You need to assemble a strong acquisition team with members you trust. You will need an acquisitions attorney, a professional accountant, as well as an independent business valuation team. You don’t need to leave anything to chance, have the right professionals by your side to make the entire process smooth.  

 Take Business Valuation Seriously

There is a mention of an independent business valuation team in the tip above. The point is only stressed here to give you an idea of how important it is. Even if you are very conversant with financials, there are things that can confuse you when you are looking at the records of an entirely strange business. When you have an independent team that is focused on business valuation looking at a business you intend to buy, you will have a better understanding of the business standings and make a better decision. Hiring an independent valuation team will give everyone the impression that you are serious. Take a step further by stressing to the team you’ve hired what you really need.

 Consider the Reputation of the Business Seriously

Asides from the financials of the business and its true value, you also need to consider the reputation of the business you are buying. How is the image of the business in the eyes of customers and suppliers? Do not assume that once you take ownership, people’s opinions about the business will change. There is no need to gamble with a business that has a shattered image. To know more about the reputation of the business you are trying to buy contact such important stakeholders as customers, suppliers, and banks. Steer clear if the image is severely damaged.

 Consider Current Employees and Organizational Chart

While knowing everything about the financials of a company is very important, the human factors behind the figures are also important. The current employees of a business can be its biggest asset in some instances. There is also the possibility that the employees of a business and the organizational structure is the reason behind its poor performance. Look at the organizational chart, consider the current management practices and the management-employee contracts besides union agreements. Make sure you understand all legal contracts with the employees in time.

 Have a Clear Vision of What You Want For the Business

Identifying a good business with potentials is never enough. If you are truly taking ownership of any particular business organization, you must have a clear vision of how to take it forward. There are instances where entrepreneurs that have prepared their businesses for sale will offer a growth plan in their marketing package; you can consider this a bonus. It is important, however, that you have your own vision of how to transform what you have at hand into what you are hoping to achieve in the future.

 Sort Out Your Funding Options from the Beginning

Unless you are independently wealthy or have a very wealthy financial backer, there will be a need to sort out your funding options when trying to buy an existing business. You won’t get any good business that is in great shape cheap. Any business, irrespective of size, that has real potentials for growth will be considerably expensive and you must figure out how you will meet the price. It will be necessary to do your math and sort out your funding options before agreeing on a fair price for any existing business you truly want to buy.

 Pay Attention to the Sales Agreement

Drafting the sales agreement may be the most emotionally charged aspect of buying an existing business, but you need to set your emotions aside and approach it as an entrepreneur. If you have considered all the factors that matter to you most and have decided to buy a particular business for a certain price, you need to make sure that the agreement is well drafted to avoid any surprises. This is one of the reasons you need an acquisitions attorney as part of your team. If there is any aspect of the agreement you don’t understand fully, speak up until you are sure of what you are signing. Do not leave even a single ambiguity as it could lead to issues at closing or even after the acquisition has been concluded.

 As an entrepreneur, you must realize that buying an existing business can offer several benefits. You also need to understand that there are several things involved in it and you need to take all of them seriously. The tips discussed here can be very helpful in taking that ‘sprouting seed’ and making it grow.

Are you finding it hard to decide if buying an existing business is actually worth it? Log in today at BizNexus. Our trusted experts are always available to speak with you and provide suitable answers to your questions and concerns. A fantastic experience awaits you.

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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.

How to Buy a Business: Best Practices for Buying a New Franchise Opportunity

How to Buy a Franchise

Best practice guide

How to buy a franchise business: Are you interested in buying into a franchise? With the system and procedures, it seems challenging. Business owners prefer franchising because you are inheriting an established brand. Moreover, a franchise has a proven business model. Like any business, it is important to select a franchise that you are passionate about.

Franchise opportunities under consideration should mesh with your past business experience and acquired skills. It is not cheap to buy a franchise and significant capital is required. This leaves prospective franchise owners searching for financing options. Buying a franchise is not particularly easy and sometimes professional assistance is required. Business owners are able to quickly leverage off the franchise's brand and product line.

Here is how to buy a franchise:

Franchising remains a great business opportunity in 2019. In fact, there are nearly 760,000 franchise establishments in the United States.

Business owners prefer franchising because you are inheriting an established brand. Moreover, a franchise has a proven business model. You can review actual sales and profit data to verify that the concept is growing rapidly.

Read on to learn how to buy a business. Explore this comprehensive guide on buying franchises including topics such as financing, research, and getting a good deal.

Find a Franchise Opportunity You Are Passionate About

The first step in buying a franchise is identifying the right opportunity. Like any business, it is important to select a franchise that you are passionate about.

Start off by considering industries that you are familiar with and understand how they operate. Also, franchise opportunities under consideration should mesh with your past business experience and acquired skills.

Franchise Analysis

Before you invest in a franchise, substantial analysis is required. Of course, you want to look at sales data and what profit margin is realized. There are many other business indicators to evaluate.

What are the startup costs and franchise fee? What type of operating expenses does the franchise have? Are there any additional fees such as royalties or advertising costs?

This all falls into the category of performing a comprehensive cost-benefit analysis. There are other factors to consider in a franchise analysis.

Perhaps one of the most important factors is the location of your prospective franchise. This is so critical because not all locations are considered equal.

Each geographic location comes with its own set of state and local taxes. There are also state wage laws to consider, as well as rent and population density.

Financing Options

It is not cheap to buy a franchise and significant capital is required. On average, initial franchise fees range from $20,000 to $35,000. Depending on the brand, it could cost upwards of $100,000.

Not many entrepreneurs have that type of cash lying around. This leaves prospective franchise owners searching for financing options.

Some opt to apply for a bank or Small Business Administration (SBA) loan. Others use their retirement savings using a mechanism called a rollover for business startups (ROBS).

ROBS allows you to withdraw retirement savings from your 401k, IRA, etc. without penalties or taxes. Lastly, some franchisor offer financing options.

Professional Assistance

At this point, you may be feeling overwhelmed. Buying a franchise is not particularly easy and sometimes professional assistance is required.

There are subject matter experts available for franchising placement and finding the right opportunities. They perform in-depth analysis such as reviewing the franchise’s financial health. Among many other services, they also evaluate the Financial Disclosure Document (FDD) and Franchise Agreement.

A Recap of How to Buy a Business

There are many reasons why entrepreneurs choose to buy a franchise. Business owners are able to quickly leverage off the franchise’s brand and product line.

However, the franchise acquisition process is littered with landmines and complexities. A professional service company can ensure that you make a sound investment. If you want to learn more about how to buy a business, log in today.

6 Critical Questions to Ask Sellers before Buying a Business

6 vital questions to ask sellers when buying a business

Are you buying a business?

Buying a Business? Here are six critical questions to ask sellers

Buying a business or an established business operation that is already generating cash flow is a great way to fast-track your way into business ownership and CEO creds. If you do it right, you’ll also be buying into contracts or relationships with productive, loyal customers and veteran employees who already know the ins and outs of the business.

If you have found a business that you think you might want to buy, the next step is to ask the seller some important vetting questions before you make any final decision. This helps ensure you’re making the right move to acquire the business or run for the hills, -fast.

Here is a list of six questions that you should consider when talking to a potential seller:

 Ask for three years covering the business financial records

Get a feel for profitability, for margins… Ask the seller to provide you with the financial statements going back to three or five years . A reputable firm should audit the financial records for larger deals. If a seller doesn’t have organized financials, that’s probably a red flag for other mismanaged Easter Eggs bound to pop up down the road.

 What are the high-potential prospects?

No entrepreneur wants to invest in a business with a stagnating or declining top-line. Ask the seller to provide you with a realistic, explainable projected sales analysis, and a list of their potential clients or customers that they intend to sell. This will give you an idea if there are workable client accounts or whether you have a real shot at accelerating growth.

 Why are they selling their business?

Selling a business due to retirement or because an owner is investing her time and money into another venture, are common reasons a business owner might want to sell or exit their current business. Careful, -a business owner could be selling their business because it’s not turning a profit or they don’t like wants coming down the road with the macro economy. Make sure that you understand well why the business has been put up for sale. Accessing the financial statements and the sales records will ensure you a better understanding of the business and its potential. 

 What happens to outstanding contracts?

After exchange of business ownership, contracts that have been in place may cease to exist or transferred to the new owner. There are no guarantees that the current clients will want to continue working with the new owner. It is important to make sure that the current contracts or projects of these long-term clients won't become void after you acquire the business.

 What are the challenges?

Every business comes with challenges and most of them are hard to deal with at best. Some business owners will absolutely try to hide any negative information that could depress a selling price, complicate terms or flat-out 86 the deal. It is your responsibility to conduct proper due diligence, so be forewarned.

 Buying a business that is profitable and fits your potential can be life changing. 

Follow these tips and you’ll be on your way (a first step anyway). You can also seek assistance from a business broker or accountant to ensure your getting a profitable business.

Buying an Established Business: Why It's Better Than Starting a Business

Starting A Business

Better to buy one than startup

There are so many small businesses today and they come with many risks. Buying an established business is a better option.

For this reason, many entrepreneurs choose to buy an established business instead.

There are many advantages to buying an established business and, in many cases, it's a better option than starting one.

With an existing business, the company's financial documents serve as a road-map for optimizing the business moving forward.

However, purchasing an existing business gives you a head start.

There are different ways to start a business. Many savvy business owners prefer to buy an established business over a startup.

Here's why:

Starting a new business is not easy. Did you know that 50 percent of small businesses fail in the first 5 years?

For this reason, many entrepreneurs choose to buy an established business instead. Franchise opportunities, for example, end in failure only 17 percent of the time.

There are many advantages to buying an established business and, in many cases, it's a better option than starting one. Read on as we explore the top reasons why purchasing an existing business is a great investment.

Existing Cash Flow and Customer Base

The hardest part of starting a new business is establishing a customer base. Without a steady stream of customers, your cash on hand is minimal.

By purchasing an existing business, you can leverage the prior owner’s hard work. The company has already established itself in the marketplace and there is brand recognition from day #1.

There are processes and procedures in place for servicing customers and delivering a product. Perhaps most important is lessons learned from existing employees and customers. You can learn from the previous owner's failures and so you won't be likely to repeat their mistakes.

Using Historical Financial & Performance Data

Another advantage is inheriting years of financial & performance data. In a startup, you're jumping head-first into the unknown with little existing data to guide you. Everything is a "first," and you just need to make fast, repeat decisions with your gut and hopefully a really, really smart management team. But that cannot ever replace experience.

With an existing business, a the company’s financial documents serve as a road-map for optimizing the business moving forward. You have a baseline and existing trajectory to work off with improvements, and you can evaluate the company’s operating expenses to reduce waste and increase the profit margin.

This financial snapshot serves many other purposes. With less uncertainty, your business is more likely to secure loans, and you may be able to attract other investors with an updated business plan.

Purchase at a Discount

If you're buying at a multiple of inefficient cash flow level, you are likely to acquire business assets at a significant discount. This is especially true for startups that are overpaying too many employees, or purchased a lot of capital equipment.

Social Media Footprint

Nearly every business in the United States has a social media footprint. It is not easy to acquire a robust following or steady web traffic on a blog.

However, purchasing an existing business gives you a head start. Now, you can leverage off of the prior owner’s Facebook or Instagram account.

In addition, there are e-mail marketing lists to inherit. You can start running digital promotions immediately after acquisition. For a startup, prospective customer information has to be collected the hard way, from scratch.

A Recap of Buying an Established Business

There are different ways to start a business. Many savvy business owners prefer to buy an established business over a startup.

The primary reason is taking advantage of all the time and money the prior owner put in. Acquiring business data like financials and e-mail marketing lists go a long way.