Best Practices for Getting Your Business Ready for Sale

Selling Your Business?

Best Practices for Getting Your Business Ready for Sale

Use this guide to help you in getting your business ready for sale.

There are many reasons why people sell businesses, from cutting your losses to cashing out and growing your wealth. Whatever your reason is, you'll need to understand the art and science of getting your business ready for sale.

Having an up-to-date valuation for your business is essential if you're planning to make a sale.

Getting your business ready for sale requires a diligent, scientific approach. 

Learning how to sell a business includes making sure you're handling everything on the legal front while also maximizing your profits in the sale. 

Not sure you're quite ready? No problem! Keep reading for seven tips that will have you feeling like a pro in no time. 

1. Get a Professional Valuation For Your Business

Having an up-to-date valuation for your business is essential if you're planning to make a sale. 

During a business valuation, a credible third party will break down everything from your marketplace value, cash flow potential, and how much you can expect to make in a sale, to an in-depth look into your strengths and weaknesses. 

Accountants or investment bankers will make your valuation as accurate as possible. 

2. Shore Up Any Red Flags and Make Improvements

The last thing you'd want is to give a prospective buyer any reason to balk at buying your business. Be sure that you audit your business for any red flags before moving forward with the sale. 

This means getting rid of any liens or tax issues, and ensuring that ownership is crystal clear. Settle any outstanding balances and legal issues so that they don't bleed into the sale. 

3. Be Clear on Your Intentions For Selling and What You Hope to Gain

Everyone has different reasons for selling their business. Never move forward with the process unless you're clear on your intentions and goals. 

For instance, you might sell the business to retire, dissolve the business during a dispute, or get an influx of cash flow. When you know your goals on the front end, you'll be able to get the results you're looking for. 

4. Analyze and Clean Up Your Books

Without question, your books need to be in order if you're going to sell your business. 

If you don't have clear financial records, no credible buyer will take the chance of purchasing your company. You'll need to have up-to-date books from the past three years, in addition to tax records. 

Piece together your reports and have copies available to buyers. 

5. Put Together a Financial and Legal Team to Facilitate the Sale

In order to get the best from your business sale, you'll need the backing of financial and legal professionals every step of the way. 

Make sure that they specialize in mergers and acquisitions, and that you use M&A analytics tools for due diligence. In the meantime, ensure that you're staying on top of your business matters so that your company doesn't falter while you wait for the sale. 

Follow These Tips When Getting Your Business Ready For Sale

Getting your business ready for sale requires a diligent, scientific approach. 

Using the strategies listed above will help get the end result you desire.

Looking for more professional help? Reach out to learn more about how to get your business ready for sale on your terms. 

BizNexus -Learn More From Our YouTube Playlist:

PREPARING TO EXIT YOUR COMPANY

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.

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. 

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.

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.

Mistakes to Avoid When Selling Your Business

Mistakes to Avoid When Selling Your Business

To ensure a successful transaction

Are you selling your business? If so, make sure you avoid the mistakes listed here to ensure a successful and profitable transaction.

Selling your business?

In 2018 there were 30.2 million small businesses in America. In 2015 small businesses employed 47.5% of the private workforce in the U.S.

But there comes a time in every entrepreneur's life when they are ready to move on and sell their business. While the reasons for selling your business may vary, the goal is to walk away with a tidy profit. 

You have to know what you're doing to ensure you sell your business for the most money. And there are tons of mistakes you can make. 

If you're looking to sell your business, keep reading. We're sharing with you the biggest mistakes entrepreneurs make when selling a company. 

Always Be Prepared Before Selling Your Business

Just like a well-thought-out business plan can help you grow your business, you need to do the same with your exit strategy. It's hard to get exactly what you want when you don't know what that is. 

Collect Your Documentation

You'll need to gather a few key pieces of information in order to sell your business successfully such as:

• Financial documents

• Sustainable profitability projections

• Identify and address lease issues

• Identify and address staffing problems

No one wants to buy a business that isn't well run and well organized. This information will also help you set the price for your business that's on par with the current marketplace. 

Plan Ahead and Start the Process Early 

If you really want to be prepared to sell your business, begin the preparation process at least two years before you list it for sale. 

Qualify Your Buyers

Another common mistake is not properly pre-qualifying prospective buyers. While you may think that qualifying a buyer too soon will scare them off, usually the opposite is true. 

Instead, the pre-qualification process helps draw those buyers deeper into the sale. If you're worried about giving buyers access to sensitive information, have them sign documents such as a confidentiality agreement and financial background information. 

This process will help you attract only serious buyers which means you won't waste your time wooing the wrong buyers. 

Hire the Right Team 

While it may seem like a good idea to try to save some money when selling your business by not hiring professional help, it's usually not. There's just too much at stake. 

An investment broker and/or business broker can help you present your company in the best light. 

How a Broker Can Help

They know exactly which databases to advertise your business on. They also know how to do the following tasks:

• Preparing documents

• Identifying buyers

• Generating interest

• Soliciting offers

They'll also help close the deal as quickly as possible.

How Other Professionals Can Help

But you may also want a transactional attorney to help with the following tasks:

• Preparing an asset purchase agreement

• Negotiating an asset purchase agreement

• Handling documentation such as bills of sale and officer certificates

An accountant can help you structure your deal and help you plan ahead of potential taxes you'll have to pay. And a business appraiser can help you evaluate your business so you know what it's really worth. 

Work With Us

Selling a company is a difficult process. It's important to surround yourself with the right team to help you save time, money, and prevent potential problems from arising. 

We can help. Our team of knowledgeable experts can help make selling your business easy. Click here to learn how. 

BizNexus -Learn More From Our YouTube Playlist:

PREPARING TO EXIT YOUR COMPANY

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.

Preparing Your Business for Sale: 6 Tips to Attract the Best Buyers and Make a Great First Impression

Attract The Best Business Buyer

Here are 6 tips to prepare your business for sale

While there are entrepreneurs that stick to a particular business till retirement, there are several others that sell their businesses at one point and go after other ventures. Whatever your reason for deciding to sell a business, it is important that you attract the best buyers and make a great first impression. Wondering how to make that happen? We will discuss six tips that can help you make the best out of your exit from your business:

 Prepare Your Key Employees for the Move

One of the first things to do to ensure that you sell your business smoothly is to give incentives to your key employees and prepare them for the imminent change. They can create a serious conflict of interest when you go about trying to sell the business behind their backs. Consult with them early and make sure they are part of the process.

 Put yourself in the Potential Buyer’s Shoes

One of the ways to attract the right buyers for your business is to put yourself in their position. Doing this will help you to make some changes that help you and the potential buyer. Furthermore, you can identify areas to improve on and make a great first impression.

 Get Help in Areas You Need It

It is unlikely that you currently understand everything about selling a business. Even if you have completed similar deals in the past, it can always be helpful to get external help. Some business brokers in your area who understand your industry can provide insights and help you reach out to genuine potential buyers.

 Interested to sell a business

Get Your Numbers into Shape

One aspect of your business that needs to be super perfect before you make contact with any potential buyers is your financials. Your financial statements will generally determine the value of your company. The way they are prepared and presented will give your potential buyers an idea about how your business is running. When they are less credible, Potential buyers will be discouraged. It may be necessary to have your financial statements audited or, at least, have them reviewed by a reputable accounting firm.

 Create a Growth Plan for the Business

Though you are ready to exit the business, there is nothing wrong with having a growth plan for it. In fact, it can help you attract the right buyers and make a great first impression. Make a viable plan that shows that the business you are trying to sell has opportunities ahead of it. If you can credibly show three years of meaningful growth, most buyers will be impressed.

 Plan Your Information and Sales Package

There is some very important information you will need to successfully convince your potential buyers to take up ownership of your business. Your marketing materials will need to be unique and it is helpful having a business broker by your side to help you through the process. Plan ahead and prepare an information and sales package that will convince the right buyer.

 Selling a business is an act you should never take for granted. You need to approach it the right way in order to get the business well prepared and attractive. The six tips discussed above will also help you make a great impression when the right potential buyers come knocking.

 Are you preparing your business for sale? Log in today at BizNexus. Our trusted experts are always available to guide you through the entire process and ensure that you get the best buyer for your business. An amazing experience awaits you.

BizNexus -Learn More From Our YouTube Playlist:

PREPARING TO EXIT YOUR COMPANY

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.

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.

11 Critical Things to Grasp Before Purchasing a Franchise

Buy a Franchise?

Must know 11 vital points before you purchase a franchise

When you own a franchise, you can get into business for yourself and not by yourself. An owner of a franchise will operate by selling services or products that are established and those that have significant brand recognition.  Apart from the trademark, service, and product, a franchise also comprises a complete method of conducting the business-like operation manuals and marketing plan. Managing a franchise will increase the chances of being successful in your business since you will be leveraging a business model that is proven and benefits from the available customer base that can take years to grow using your idea.

Most people are known to make the mistake of thinking that franchises are a small business in a box and they do falsely believe that most of the franchises do have a much lower failure rate when compared to other types of companies which is never right. Just like the different types of businesses, up to 60% of franchises will most likely be out of business in the next two years.

Hence, if you do not have plans for purchasing a franchise, you will have to prepare yourself. While such business types are known to offer one with everything that you need to get started together with training yourself and your team, running them has never been easy.  You will have to obtain the right amount of cash reserve to get started, especially when you want to venture into the food franchise. For instance, you will need to have up to 2 million in liquidity for you to apply in becoming a franchisee of any significant food franchise like Qdoba Grill or McDonald’s. The majority of the franchises will be required to give a specific amount to help in the advertisement.

 Things to Consider Before Purchasing a Franchise

Putting aside some of the risks, purchasing a franchise can be an excellent way of owning your own business and enjoying all the perks that come with it. Provided you do it in a smart and calculated way. 

 1.      Ensure You Do Thorough Homework

You will have to educate yourself. It is essential that you know about the business and industry you want to get. Take your time and interview the franchisor thoroughly. In most cases, they will always introduce you to the individuals who will be of help when you want to sell a business.   Feel free to ask questions concerning the pre-opening support, construction, design, training, financing, site selection, license boundaries, and grand opening program.

 2.      Assess your strength and Style of Work

You need to ask yourself how you feel when you carry out the same task every time.  Are you on good terms with other people? What’s your feeling when you perform business-to-business sales?  If you have a negative attitude towards purchases, you will always have trouble managing any business. However, if you are not on good terms with other people, you will always require a partner to help you handle the business side. Ensure you are still honest with yourself concerning your weaknesses and strengths.  Choose approximately three individuals whom you trust and ask them about your weaknesses and strengths. It is advisable that you go for a business which you have some experience. Never buy a business franchise just because you like eating. Purchase a restaurant because you do have lots of experience in the management and servicing of food.

 3.      Check the Fees

Apart from the initial franchise fee, most franchise opportunities will always be forced to pay for advertising and royalties fees.  We also have the opening day expenses which occur when the headquarters need you to give away the free stuff and carry out special promotions. 

It is vital that Franchisees be very careful to balance the restrictions/ requirements with their capability of managing a business.  Having a system-wide scandal can make your franchise fail to perform well.

 4.      Search for the Dirt

Consider taking advantage of sites like Sean Kelly’s Unhappy Franchise and look for the negatives about the franchise you are about to buy. For instance, Kelly did run exposes on NY Bagel Cafe by listing down the high closure rate of the stores.

However, one store consultant Richard Taggert does disagree with a report by Kelly and instead says that the company only had some small closings in the past decade.

 5.      Ensure You Immediately Get Your Money

Starting a franchise and running it does involve vast sums of money, including the equipment cost and buy-in fee, fit-up construction and the location of the retail businesses, and upfront market costs.

You will require a minimum of one year operating with the capital before the business picks up not to mention the monies you will have used to help in building up the business. Even some of the most popular brands like Dunking required some time to pick on a new location.

 6.      Ensure you carefully read through the FDD Disclosure statement

The FDD, Franchise Disclosure Document refers to a document that offers information concerning the franchise system and the franchisor to the requirements of the franchise. No franchise is independent. Most franchisees are known to operate their businesses about the restrictions and procedures that have been set in the franchise agreement.  The limits do comprise of services and products offered the geographical boundary and pricing. The agreement also makes requirements on the total amount of working capital the franchise will require. The Franchise Disclosure Document is considered to be one of the most barriers for many people to becoming a franchise as they have no control over the person that can buy a franchise in their region.

 7.      Make use of the Franchise Lawyer

Not all business lawyers are in a position of negotiating a franchise agreement. You will require a professional. The Franchise license agreement refers to a contract that helps in describing the relationship between the franchisee and the franchisor, including the use of fees, trademarks, control, and support.

It is a written legal contract between the franchisee and the franchisor that informs each part on what they are required to do.

 8.      Keep Your Eyes on Franchise Consultants

The majority of the franchise consultants are known to be paid sale individuals for franchise owners. The consultants will always put on a tough sell to ensure you get signed to a franchise deal as fast as possible. It is because they will still receive some commission from the initial franchise fee. Always ask them to make their agreements clear before you sign so that they do not lie to you.

 9.      Franchise Work

It is essential that you always learn by doing. Before you sell a start-up or get into any business or purchase a franchise, it is crucial that you first consider working for one or search fund. After you have become an employee, you can see how things are working out for you and the amount of support you are getting from the franchisor. It can be compared to being an undercover boss, and it can quickly provide you with some valuable information. You need to work for a minimum of six months to get a real impression of how things work.

 10.  Seek Professional Support

As it had already been mentioned in hiring a franchise lawyer, it is also essential that you get an accountant to help you in running the numbers. You will always require a detailed analysis to help you understand what your cash outlays in a month.  Getting seasoned insurance can also be of great help.

 11.  Contact Other Franchisees

It is advisable that you reach out to other franchisees to help hear their story and see what pros and cons the business will encounter. One of the most important questions you will have to ask any franchise owner is the amount of support they will be able to get from the headquarters. You will also be interested in asking them if they will invest in the business again. It is vital that you target at least 12 franchises since most of the small business owners are very proud of them and will never admit if they did struggle financially.

Depending on the type of entrepreneurship through acquisition you go for, you will always invest between $150,000 and $1 million before you even start your business. Always do yourself a favor by trying to get any franchises that are not happy online before you commit yourself to any franchise agreement.

It is also essential for you to know if there is any discord on your franchisor. Always take advantage of the regional and national advertisement, training, operational assistance, operating procedures, management support, ongoing supervision, and access to bulk buying. Another valuable resource you will need to check before purchasing any franchise is the international Franchising Association guide.

Despite running a franchise being an excellent idea to help start your business, it is crucial you understand what you are about to get into, whom you are about to start it with, and your plans on how you will ensure it is successful.

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.

How to Buy a New Franchise When You Want to Own a Business

Want to Own a Business

Buy a Franchise

You don't have to struggle to buy a new franchise. You can use this guide to choose and purchase the best franchise for you. If you're trying to buy a new franchise, you'll need to seriously do some homework; it starts by doing your preliminary research into it to see if it's a viable option. Checking into the best location for a business is a necessity, especially if you are opening a franchise.

Buy a New Franchise on Your Terms

The potential for growth is abundant since you're getting the keys to a business that already has an established brand to piggyback on. However, you'll need to make sure you're handling this franchise purchase with some intact strategy. 

Consider these points so you handle the deal accordingly. 

1. Thoroughly Research the Franchise and Its Viability

If you're trying to buy a new franchise, it starts by doing your preliminary research into it to see if it's a viable option. 

Since your individual franchise is a micro success of the larger company, you'll need to research the brand as a whole. Pre-screen the franchise and figure out how lucrative this purchase can be, and how much you should be paying for the opportunity. 

2. Scope Out the Best Location

Checking into the best location for a business is a necessity, especially if you are opening a franchise. 

You'll want to open the franchise in a thriving city with room for growth, while also choosing a location that is in a neighborhood or district that gets plenty of traffic. In addition to researching the demographics of different locations, check with the local Chamber of Commerce for more resources and advice. 

3. Be Sure You Pass the Prerequisite Requirements

Buying a franchise requires you to apply with the company selling it. This means understanding their prerequisite requirements, such as credit score, business plan, net worth, and business experience. 

Having these details in line upfront will help you keep your application on track. 

4. Hire a Legal Team to Assist With Negotiation and Preliminary Paperwork

You owe it to yourself to put together a team of pros that can assist you with securing the business. Start with talking to some accountants and lawyers. 

A business lawyer can cost you about $150 per hour and will be worth it when it comes to negotiating and handling preliminary matters. 

This way, you'll have resources at your disposal to make sure your application is handled properly and will comb through your finances to ensure that you're making the best decision. 

5. Handle the Application, Understand the Agreement and Get Financing

Finally, take your time and go through the process of filling out your application. 

As your application rolls along, start to keep copies of everything from purchase agreements to rezoning permits. You'll also need to reach out to finance companies that can help you with a loan when you need it. That way you're able to complete the purchase of the franchise as soon as the application is approved. 

Buy a New Franchise on Your Terms

If you are trying to buy a new franchise, these are the five tips that you'll need to bear in mind. This can be a lucrative enterprise that helps you round out your portfolio with a strong earner. 

Check out this guide for buying a new franchise and don't hesitate to reach out to us for further help. 

BizNexus -Learn More From Our YouTube Playlist:

BUSINESS ACQUISITION

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.

Financing the Purchase of an Existing Business: Different Financing Methods to Know

Buy A Business Through Financing

Have A Look At Different Financing Methods

Do you want to purchase a business but don't have the money for business acquisition? Here's all about financing the purchase of an existing business. As such, you'll need to learn the ins and outs of financing the purchase of an existing business on your terms. If you are looking into buying a business on your terms, you'll need to explore all options in front of you. If you have been building your retirement money over the years, this can be a great outlet for acquiring a business. Financing the purchase of an existing business is a strategic move that you need to carefully consider.

It's important that you take the proper steps when you are looking to acquire a business. 

As such, you'll need to learn the ins and outs of financing the purchase of an existing business on your terms. Thankfully, there are lots of ways you can go about it. 

Follow these tips to see which form of financing suits you. 

1. Ramp Up Your Own Funds to Allocate

When someone is looking to sell a business, there are countless arrangements that come into play. 

The best thing you can do for yourself is to put up your own money if you have it. This way, you call the shots and aren't worrying about crazy interest rates or strict terms. 

It's always best to have a nest egg set aside, and you can use this nest egg to your benefit when you decide to allocate some of your own money to acquire a business. 

2. Find a Traditional Bank Loan

If you are looking into buying a business on your terms, you'll need to explore all options in front of you. 

Getting a traditional bank loan is still an incredible option. Reach out to either a big bank, community bank or credit union to see what sort of loan options you can explore. 

Make sure that they are feasible for your budget and that the terms are beneficial to your needs. 

3. Talk to the Small Business Association

Be sure that you look into the Small Business Association (SBA) as an outlet when you'd like to get some lending. 

These organizations are allies for small businesses such as your own and can help you get your hands on the funding that makes the most sense.

They'll give you access to the financing options that are most conducive to growth so that you are able to expand your business.

4. Use Your 401k to Roll Money Over

You can use your 401k as a tool to fund a business. 

If you have been building your retirement money over the years, this can be a great outlet for acquiring a business. The benefit of using a 401k is that you'll be able to do so without the same early withdrawal penalties that you would experience when taking the money out for other reasons. 

5. Get Financing Through the Seller

Finally, it also pays to seek financing from the seller. 

A number of sellers will offer you ongoing financing at a great rate, which can expedite the sale of the business. Be sure to thoroughly read through the terms to know what you are getting. 

Financing the Purchase of an Existing Business: Use These Tips

Financing the purchase of an existing business is a strategic move that you need to carefully consider. If you're in the market for buying a new business, let these tips guide you. 

Our company can help you out so that you can find the assistance that you need. 

For more information on buying a business on your terms, stay tuned and get in touch with us for more help. 

The Best Exit Strategies for Your Business

Top 4 Tips To Exit Your Business

Best exit strategies for your business

Is it coming to the time when you can no longer run your business? It's important to have exit strategies planned. Whether you're looking to retire, get out of an industry, split with partners or just don't want to run your business anymore, proper exit strategies are a must. Getting the help of a business mediator can be an incredible value-add if you're looking to exit a business where that may get sticky with existing partners.

Subsequent comprehensive studies can cost you upwards of $35,000 depending on the size of your business and what type of player you intend to sell your business to (private equity or family office, for example). Consider How You're Going to Sell, Transfer, or Liquidate the Business and your Ownership Interest. Many people seek exit strategies not just to get rid of a business, but to start a new professional and personal lifestyle.

Exit strategies are absolutely necessary when you're making a transition with any business.

By finding the strategy to help you in this regard, you'll create a clean transition that is beneficial for whatever your step is. Let's take a look at a few strategies that'll help you out. 

1. Explore Mediation if You Have Partners and Want Out

Getting the help of a business mediator can be an incredible value-add if you're looking to exit a business where that may get sticky with existing partners.

They'll work with you and the other parties in your business to be sure that you're able to leave the company and dissolve your ownership in a way that works. This can include facilitating settlements, scheduling meetings, and conference calls, and helping to maintain privacy and cooperating during mergers and acquisitions. 

By touching base with some third-party mediators, you'll be able to engineer the best agreement for your company's needs.

2. Have Your Business Properly Valued

There are an exponential number of candidates out there who could be ready and willing to buy your business if you can produce accurate historical and financial information. 

You'll need to get a proper valuation as a first step towards this to know where your company stands and how you can ensure a positive return on your investment come selling time.

A proper preliminary analysis of your business should cost you between $3,000 and $10,000 in most cases. Subsequent comprehensive studies can cost you upwards of $35,000 depending on the size of your business and what type of player you intend to sell your business to (private equity or family office, for example).

By starting with this type of professional analysis, you'll learn how much your company is worth, what sort of sales price you can expect in today's marketplace, what strengths and weaknesses your business currently has, and so much more. 

3. Consider How You're Going to Sell, Transfer, or Liquidate the Business and your Ownership Interest.

What's the end result you're shooting for?

When you can answer this, you can reverse engineer and decide your best course of action to take today to start moving towards that.

For instance, if you are just trying to cut your losses and get a nice check for your troubles, selling out might be best. If this is more of retirement and you'd like to pass the business on to your family, it'll involve facilitating a transfer. 

If your business has a lot of assets, liquidation could be best.

Get the advice that'll steer you in the right direction. Above all, be sure you know what your next "pivot" is. 

Many people seek exit strategies not just to get rid of a business, but to start a new professional and personal lifestyle. It's easier to get through to the other side when you are honest about what you want next. 

4. Get the Help of a Business Lawyer

Finally, you'll always need another set of eyes for the legal end of things. 

This way, you're able to protect the sale or transfer and can weigh every potential downstream implication of negotiating points as they come. Research some business attorneys early in the process so you can get the assistance you require. 

Consider These Exit Strategies

Exit strategies are absolutely necessary when you're making a transition with any business. Use these four tips and you'll be taken care of.

If you're looking to sell your business or explore other options, let these points guide you. 

3 Tips on How Not to Sell Your Small Business

3 TIPS ON HOW NOT TO SELL YOUR SMALL BUSINESS

Successful planning will have you laughing all the way to the bank.

If you are going to sell your business, here are three tips on how not to sell your business. Successful planning when selling a business can have you laughing all the way to the bank.

For an entrepreneur thinking about selling their business, it’s important to know the reasons why it’s sellable, and more importantly why it is not. Just recently, SCORE identified 3 main reasons on how not to sell your business:

First reason why not to sell your business

Don’t sell your business if you still love what you’re doing: If you still love your work and feel fulfilled every day, there isn’t a reason to step away from your business. Generally, business owners should look to sell because they want to make a lifestyle or professional change.

Second reason why not to sell your business

Don’t sell when the market is in a downturn: The value of your business is correlated to the market within which it operates – therefore, you should look to sell when business is good, not bad. There’s a caveat to not selling during a downtown-- the downturn must be temporary. If you anticipate growth in the future, hold for the rebound.

Third reason why not to sell your business

Don’t sell to the wrong person: Not all buyers are created equal. If you care about the long-term success of your business after the sale, you should do your due diligence for any potential buyer.

Make sure you’re selling for the right reasons if you really want to exit your business. 

With the recent upward economic trend and low interest rates, many small businesses are now attracting interest from potential buyers.  In fact, BizBuySell Insight Report found that a record number of small businesses were sold in 2018 for the third straight year.

Buying a business is one of the best ways for companies to enter a new market or increase market share. 

The best way to determine your business's actual worth is to hire a third-party accountant or business broker to conduct a business valuation. A business valuation typically starts by assessing the value of your company's current and long-term assets, income statements and receivables, short-term and long-term liabilities, and other metrics that show the financial health of your business.

If you are in the market to sell your business, you need to sell it for the right reasons and at the right time. Otherwise you will be seeing someone else laughing to the bank and it will not be you. 

How to use seller financing to buy a business in 2019

There are various ways to go about funding the purchase of a business. A strategic option would be to negotiate seller financing with the business seller to alleviate the burden of paying full price for the business upfront. Jessica Fialkovich, President of Transworld Business Advisers - Rocky Mountain explains how this works, particularly for small businesses.

In the U.S., about 60-90% of business sales involve seller financing. Before going through with the purchase, you need to thoroughly vet the business. Because owners rarely finance 100% of the purchase price, you might also need to find other sources of funding, such as a bank loan.

Once your business is up and running successfully, you might want to refinance so you are free and clear of the seller.

You can get up to $5,000,000 with an SBA loan, but you'll need a good credit score (680 or better), collateral, and at least a 10% down payment.

If you default, the owner might want to retain the power to take back the business within 60 days of you missing payment.

Helpful Resources:

1. Types Of SBA Loans

2. Business Appraises

3. Rollover for Business Startups (ROBS)

4. How To Finance A Business

Helpful Business Sites:

1. Small Business Administration

2. American Society of Appraisers

How to choose the right business broker to help you buy a new business in 2019

Top Guide On How To Find a Great Business Broker in 2019

Find Your Soulmate Business Broker

A business broker is typically working with multiple buyers and sellers of businesses at any given time, and communication can slip through the cracks if you’re not linked up with a proactive, smart and organized intermediary. Buying or selling a business can be a very long, tough process, and having the right business broker at your side to offer guidance and insight into market conditions, negotiations, and buyer and seller options can be a game-changing solution if you can find the right fit.

Find a business broker to help buy a business

An often overlooked option to help begin the journey towards buying your own business is to simply reach out to a business broker for guidance before you begin your search. If you can identify a quality business broker this can be a way to help jump-start your search and increase the chances of finding a successful acquisition. Brokers typically represent multiple deals within their category of expertise simultaneously, and if you’re able to establish a relationship with a productive broker you gain access to a continuous stream of deal-flow. The trick is to identify that standout broker.. The one who’s knowledgeable, productive, and won’t waste your time pitching you sub-par, low probability deals for sale.

Speak directly with recent references.

Don’t even bother with a business broker if you can’t verify if they’ve historically done well by their clients on both the “buy” and “sell” sides of the transaction. Ask to speak with owners of businesses the professional recently helped buy or sell, and check for relevant reviews online. If you’re researching the professional’s profile online on his or her company site, LinkedIn, or Biznexus definitely prioritize DEAL experience over education, listed skills, or any other potentially biased information manufactured by the professional him or herself.

Make sure the professional keeps working for you

Set communication expectations from the outset. A business broker is typically working with multiple buyers and sellers of businesses at one time, and communication can slip through the cracks. Set up a recurring weekly, or monthly meeting with the broker to review his or her listed deals. Even better, as you develop your relationship with the broker over the course of regular calls you position yourself in the front of the line to hear about the deals the broker may be working on, but hasn’t officially listed… Getting first crack at an unlisted deal is a great way to get a head-start on developing a relationship with the seller, and to potentially avoid a bidding war with competing buyers if you can negotiate terms before the competition gets wind.

Buying a business can be a very long, tough process, and having the right business broker there to help feed you potential deals, offer guidance and insight into market conditions can be a great help. Do your homework before you choose any professional to help you with the process, and make sure you’re clear on expectations and compensation from the outset. Standard shameless plug: We recommend you check the BizNexus directory before making contact with a potential business broker for any helpful reviews, ratings or content that could provide guidance.

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

1. What you Should Know About Working with a Business Broker. -Inc.

2. How to Find a Business Broker. -Entrepreneur

How to Buy or Acquire an E-Commerce Website for Sale

How to Buy a Digital Business?

E-Commerce Website for Sale

Buy an E-Commerce Website for Sale

Want to own and run your own online digital business? You basically have two options:

1. Establish a new company and start from scratch.

2. Skip the startup cluster consider acquiring an existing e-commerce website business already on a clear upward trajectory, and apply your creative entrepreneurial pivots and experiments while enjoying the benefits of “cash flow” (something startups were expected to think about prior way back in the dark ages of the early 21st century).

In this guide, we are focusing on how to buy an e-commerce website business that’s for sale. We will go through the entire process so that you can make the most out of the purchase and set yourself up for success.

What Type of Business Do You Want and Can You Buy?

If you are planning to buy an e-commerce business, it is important to sit down and think about two things – your lifestyle goals and financial needs. Your goal here is to analyze your current situation and try to stay true to your budget, day to day operational involvement interests, and values, -all keys to successful entrepreneurship over the long-term.

What Are Your Future Objectives?

You should never stop dreaming big, but when it comes to setting the objectives, it is important that they remain realistic. Ask yourself, why are you buying an e-commerce business? This will help you to stay focused with realistic objectives that will shape up your business model.

If you are a beginner, you may be purchasing a company to learn all the tricks of the trade before you engage in starting a business from scratch. In this case, you may want a helpful and experienced e-commerce entrepreneur that wants to sell their e-commerce website who is willing to share essential details about how they made the e-commerce venture that you are consider buying into a profitable business.

You may also think that you have the necessary resources and skills, which is why you want to save time and buy a company that has already positioned itself in the market. This way, you can invest improving resources, and scale the business to the next level.

It is also vital to consider how much time you can dedicate to the business that you are buying. If you plan for this to be your full-time job, that’s great. But if you consider e-commerce business as an additional income, it is important that it won’t take you more than a couple of hours in a day to operate the e-commerce website.

What is Your Passion Aligned with Your Skills?

When choosing the market in which you will purchase an e-commerce business, it is vital to consider two areas – your passions and skills.

We all have our favorite market segments within an industry – some of us are crazy about clothes, others are health freaks that care about staying in shape, or you may be into tech products and gadgets. It would be great if you could buy a business in one of the market niches that you are passionate about. This way operating the e-commerce business won’t be merely a job, but it is aligned with your passion as well.

It is also important to consider your knowledge and skills. If you have graduated from an art university, you may consider selling homemade art or crafts and other related products.

It can also be very helpful if you have tech-related knowledge. Knowing more about website optimization and SEO can help you with search engine page ranking. Being a good writer can be of great importance in preparing unique content to promote brand awareness and increase conversion rates.

The crucial thing is to ensure that you have the right skill set to run the business. If it's necessary, consider hiring someone else but make sure that you can incorporate that expense into your budget.

Think About the Resources You Have

Yes, you need to consider financial capital, which means that you should have enough money to purchase and invest in the business to take it to the next level.

But we are also talking about other resources. You need to ensure you have enough time to run the business, a computer or laptop you will use for administration, etc. You can also use your current social media accounts if you are popular on Facebook or Instagram.

How to Determine the Price for an Ecommerce Business

It varies from one e-commerce website business to another, and ultimately depends on your estimation and business valuation, but the general rule says that an e-commerce website business can be valued anywhere from 10 to 24 times its monthly profit. In other words, if you have a business that secures $3,000 per month, you will need at least $30,000 to purchase it. The price may vary depending on the potential of that e-commerce business’ ability to increase profit.

The main idea is to buy a business that is profitable and can remain profitable as this should be your primary goal when running e-commerce business. The estimated monthly earnings should be high enough to motivate you to work on growing the company.

Here is more about how to evaluate the worth of an ecommerce business

Naturally, business owners wouldn't want to sell their business for less than its worth. There are a number of valuation methodologies you can use to determine the fair value of a business. Let's take a look at what it takes to fairly evaluate an e-commerce business for its worth.

There are a few ways you can determine the value of an e-commerce business.

1. Multiple of Seller Discretionary Earnings. You might evaluate a business's worth by looking at their historical earnings. When favorable factors are agreed on, the businesses expected worth will be higher during the valuation.

2. Discounted Cash Flow (DCF) Analysis isn't the primary way to evaluate the worth of an e-commerce business, but it is a useful analysis.

3. Online business sales fluctuate more widely than those of traditional businesses, which make this analysis less suitable for e-commerce. These can include a company's size, years in business, yearly revenue, and so on.

4. A company with an active customer base and positive market outlook will be worth more than a company without active customers or a profitable niche.

Evaluating the worth of a company doesn't come easy, however, it's a necessary step you must take before finalizing a sale.

Where to Find an E-commerce Website Business to Purchase

Once you have the required capital, the preferred market niche, and other desired variables, it is time to look online and find an e-commerce business to buy. The good news is that there are numerous marketplaces where you can buy and sell e-commerce websites.

However, we advise you to stick to the reliable ones, such as:

• Shopify Exchange – exclusively designed for Shopify stores, and an excellent place to find a website fast. The great thing about this website is that it is free, and there is no success fees or other charges.

• Flippa – you can choose between thousands of different business, which means you have a vast range of websites to pick from when buying.

• Empire Flippers – it is interesting to note that every website put up for sale passes through the screening process of the administrators.

• BizNexus - Inventory of online businesses for sale 100% vetted by expert online brokers from all around the world. Sellers are prohibited from posting directly on the site so there is a built-in level of vetting required as every listing on the site is a business that a broker see’s as sellable, and that a broker has initially vetted themselves.

Have you been thinking about starting your own online store? Not sure if the life of an ecommerce entrepreneur is for you? Don't worry, we've got you covered. We've created this video to break down the advantages and disadvantages of starting an ecommerce business.

How to Be Sure You Made the Right Decision

You’ve found e-commerce business that seems like an attractive purchase, but you are not 100% sure that you made the right choice. If you want to be certain in your decision, just follow these steps.

Don’t Hesitate to Ask Questions to the Seller

The chances are that the seller has listed some basic information about the website and themselves, but it is always wise to ask for more details. Start by trusting yourself and conducting online research on the owner and the business.

See if the seller has LinkedIn or other social media profiles, and ensure that they are a real person, and not someone hiding behind a fake identity. Do an online search for the business, too, as it may encounter user reviews and other valuable information.

Here are some other questions to ask the seller:        

1. How long has the business been running – the longer the better and bigger chances for success. Businesses with longer operation period provides a lot more data for making an informed decision.

2. Why they are selling the business –look for an authentic reason. Perhaps they bought another company, or they got a better job. Maybe they are moving to another country. Whatever the reason, you need to make sure that they are telling the truth.

3. Tell me more about yourself – that includes the previous experience in e-commerce business, other business they own, and anything else that may be relevant to your purchase decision.

It is also vital to acquire as much information as possible about how the business is operated. Some e-commerce websites have documents that are official standard operating procedures. That will make you're taking over a lot easier as you have a set of rules to follow. Additionally, ask them if they run the business themselves or hire additional staff.

Ask for Sales Data and Website Visits

You should always demand the seller to send you a profit and loss statement for the previous year. That includes detailed information about revenue, gross profit, cost of goods sold, operating expenses, net income, etc. In other words, you want a comprehensive financial report that would prove the claims that the seller makes about earnings.

Furthermore, you may want to check the website traffic. The best way to do that is to ask for access to Google Analytics. There is no need for the seller to worry about anything as the access can be read-only option for this tool, and this is all what you need...

Here are some things to keep in mind:

• If you notice a bounce rate less than 30%, or higher than 90%, and session duration lower than at least 45 seconds (or less than two opened pages per session), it may be a sign that the traffic sources are untrustworthy.

• You want to ensure that the website has had a constant number of visits over the last several months. If the number has significantly increased lately, make sure to determine the reason for that.

• Make a difference between organic, referral, direct, and paid traffic, as well as the one coming from social media. Any option that seems legit and doesn’t require any investment is acceptable.

Finalizing the Sale

If you think you made the right choice, and want to finalize the deal, it is time to enter the negotiation phase. Since you asked so many questions to the seller, it is only natural to introduce yourself. Tell them a bit more what makes you a reliable and trustworthy buyer.

Once you establish trust, you can talk about your plans with the business. It is something that a seller might want to know, especially if they care about their e-commerce business. Finally, ask them about the price, or give your offer. However, make sure to explain why you’ve chosen to offer that amount of money (estimated monthly earnings, future potential, etc.).

Now, once you agree on the price, you may want to ask an attorney to analyze all legal aspects of the deal. That might not be necessary if you are buying small e-commerce online business and using a marketplace as a mediator. However, make sure that the seller confirms there are no lawsuits currently related to the business.

Finally, determine all the details about the payment. You may want to pay in installments, but the seller needs to agree on that. You should also ensure to agree on a support period during which the seller is obliged to answer any question or concern that you have about the business. Also, make sure to negotiate social media accounts, mailing lists, product images, and other resources that may be a part of the transaction.

Final Take

If everything goes right, you will soon become the owner of an e-commerce website. As you can see, the process is not complicated. However, it will take a bit of time and effort to choose the right company, and make sure everything goes smoothly. Once you finalize the transfer, it is time to design a strategy to skyrocket your e-commerce business and boost your profits.

Financing the Purchase of an Existing Business: Different Financing Methods to Know

Do you want to purchase a business but don't have the money for business acquisition? Here's all about financing the purchase of an existing business.

It's important that you take the proper steps when you are looking to acquire a business. 

As such, you'll need to learn the ins and outs of financing the purchase of an existing business on your terms. Thankfully, there are lots of ways you can go about it. 

Follow these tips to see which form of financing suits you. 

1. Ramp Up Your Own Funds to Allocate

When someone is looking to sell a business, there are countless arrangements that come into play. 

The best thing you can do for yourself is to put up your own money if you have it. This way, you call the shots and aren't worrying about crazy interest rates or strict terms. 

It's always best to have a nest egg set aside, and you can use this nest egg to your benefit when you decide to allocate some of your own money to acquire a business. 

2. Find a Traditional Bank Loan

If you are looking into buying a business on your terms, you'll need to explore all options in front of you. 

Getting a traditional bank loan is still an incredible option. Reach out to either a big bank, community bank or credit union to see what sort of loan options you can explore. 

Make sure that they are feasible for your budget and that the terms are beneficial to your needs. 

3. Talk to the Small Business Association

Be sure that you look into the Small Business Association (SBA) as an outlet when you'd like to get some lending. 

These organizations are allies for small businesses such as your own and can help you get your hands on the funding that makes the most sense.

They'll give you access to the financing options that are most conducive to growth so that you are able to expand your business.

4. Use Your 401k to Roll Money Over

You can use your 401k as a tool to fund a business. 

If you have been building your retirement money over the years, this can be a great outlet for acquiring a business. The benefit of using a 401k is that you'll be able to do so without the same early withdrawal penalties that you would experience when taking the money out for other reasons. 

5. Get Financing Through the Seller

Finally, it also pays to seek financing from the seller. 

A number of sellers will offer you ongoing financing at a great rate, which can expedite the sale of the business. Be sure to thoroughly read through the terms to know what you are getting. 

Financing the Purchase of an Existing Business: Use These Tips

Financing the purchase of an existing business is a strategic move that you need to carefully consider. If you're in the market for buying a new business, let these tips guide you. 

Our company can help you out so that you can find the assistance that you need. 

For more information on buying a business on your terms, stay tuned and get in touch with us for more help. 

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.

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

There are so many small businesses today and they come with many risks. Buying an established business is a better option. 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, fail 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 are 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, the company’s financial documents serve as a roadmap for optimizing the business moving forward. You have a baseline and existing trajectory to work off of and improve, and you can evaluate the company’s operating expenses to reduce waste and increase 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 multiple inefficient cash flow levels, 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 email marketing lists goes a long way.

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.

How to Buy a Business | Four Vital Questions to Ask

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.