BUYING A BUSINESS

BUSINESS-ACQUISITIONS.COM

We help our buyer clients negotiate the purchase of their new businesses and we help them adequately plan and prepare for the transition.

Business Acquisitions, LLC identifies businesses that meet your business purchasing criteria. A good transition plan is an important component of business success. It is important to look beyond the act of purchasing a business in order to adequately plan and prepare for a successful transition. We work with your financial and legal advisors to help identify the criteria that will help you successfully step into the business and make it your own.

WHY DO YOU WANT TO BUY A BUSINESS?

When buying a business, it is critical to match your desires and skills to the type of business you plan to purchase. Here are some sample questions that you will need to answer in order to find the right business:

• Why do you want to be a business owner?
• What are your strengths and weaknesses?
• Do you want to be a hands-on or absentee owner?
• What skills will you bring to the business?
• What is your experience in managing/running a business?
• How many employees do you want to have?
• What types of businesses are you most interested in owning? Why?
• How much do you want or need to earn from your business?
• What type of work schedule would you prefer?
• How far from your home would you be willing to travel to your business?
• How much money to you have to invest in a business and still have a cash reserve for operating expenses?
• How do you plan on financing the purchase?
• What financial resources do you have available to invest in the business?

Your answers to questions such as these will help identify the best business for you. Business Acquisitions, LLC is happy to provide an informal consultation to help you begin the process.

WHY BUY A BUSINESS RATHER THAN START ONE?

The motivation for owning and growing your own business is most often obtaining financial independence. When you buy an ongoing business, you have an immediate cash flow and an established customer base.  The success rate for starting a business from scratch is much lower than that of purchasing a business: statistically, only one in five businesses survive three years. Some of your challenges in a new business are attracting clients or customers and attracting and maintaining a trained and motivated team of employees, getting the product or service offering right and getting financing for growth.

Customer Base

Existing businesses have established customer loyalties to products and services, and, in many cases, locations that can survive the transition in ownership. As your advisor, we will help devise a plan ensure that the transition is handled in a way that preserves customer/client relationships. Recruiting new customers and clients, as is necessary when starting a business from scratch, is expensive and time-consuming.

Employees

Skilled and experienced employees are a valued asset of a purchased business; the workforce in place is a significant part of the business goodwill. Building a team from scratch when starting a new business is a notoriously hazardous challenge.

Products and Services

Systems and processes are already established when purchasing a business. Even though a buyer may want to make changes as the business evolves, there is a proven starting point in products and services that customers/clients are willing to purchase. New business can get products and services wrong—in any of a multitude of ways from feature offering to quality control to price.

Financing

Normally the seller will provide part of the financing which can make getting additional financing form banks easier. In addition, vendor relationships and trade terms have been established. New businesses often have to pay up front or COD for supplies and products, and the cost of money to start up a venture is significantly higher than the cost of money for an established business—if it is available at all.

Purchasing the Right Business

Getting a clean business to buy is easier to achieve though proper due diligence and competent advisors. A skilled business broker acts as an effective intermediary who can assist in creating a win/win agreement.

The transition period is critical. Structuring the sale so that you and any team you bring with you have adequate time to understand and operate the business. With an existing owner by your side, having a profitable successful business is made much easier. There are more known factors to build upon as you plan your future. You can grow the business you acquire to an exciting new level and by-pass many of the start-up frustrations.

Evaluating Franchises

Name-brand franchises can be a good opportunity for many business purchasers. However, most franchisers have clauses that provide them with the ability to vet any franchise purchaser, or allow them to actually take over the resale function. Potential franchise purchasers need to make sure they understand the terms of the franchise agreement before investing time and money in evaluating such an operation. Franchises that do not have name recognition do not have the main benefit of buying a franchise; the value of the start-up manuals and training may be reduced to little or nothing in the short term. So, this is one case where starting up may be better than buying a franchise.

Questions? Check out our Business Buyer FAQs page.