5 Things You Must Do Well When Buying a Business to Not Get Burned

Are you not sure what Business to buy? Need to know what is a fair deal?

Martin Smith thought he was buying an established business with good credit and collectable accounts receivable. The day after settlement the surprises began.

Inventory could not be used because expiration dates had past. Money shown as receivable had already been collected. Vendors that were only willing to ship COD. Over $100,000 of real problems that should have been detected during the business purchase process popped up and almost shut Martin down.

Can you afford to be surprised? Of course not.

You have the power to not end up like Martin.

Owning your own business is part of the American Dream. Buying a business has many advantages over starting one from scratch if you know how. Be prepared and get all the benefits of buying an existing business.

Tangible benefits such as existing cash flow, existing customer base, existing systems, knowledgeable employees, and locations can be obtained cheaper by buying an existing business than starting from scratch.

1. Understand and Know What You do Well and Like

You must really look at the activities you like to do and find a business that allows you to do them. For instance some people want customers to come to them. A retail store may work well for them. On the other hand some owners would loose their minds staying in a store all day; perhaps something with outside sales will work for them.

Are you a people person, a thinker, a leader, or a salesperson? Do you like steady hours, flexibility etc. How much money do you have to purchase with? How much money must you make every week?

Remember the process of buying the business is not the same as running one. Do everything possible to make sure you buy one you will love running.

2. Make a Comprehensive Search for a Business

Make sure you know how to look for a business. Don't just go to one source but really check multiple reliable sources to find the business that is right for you.

Systematize your notes so you know what you looked at. Make sure you compare your strengths and weaknesses with the day-to-day tasks of running the business.

3. Understand and Value the Business Properly

Understand the basic financial techniques to value a business; it's cash flow and other assets. Know how to prepare a basic business plan in order to make projections into the future.

Understand how the business is getting its customers. Know how it delivers goods and services. Know the cash flow and how you will keep the current cash flow and then grow the cash flow.

4. Know how to structure and finance a business

Have a basic understanding of how the business valuation and related cash flow tie together. Make sure you know a number of possible ways to put a transaction together to overcome different risks.

Understand what may be financed by a conventional bank loan, a SBA loan or seller take-back. Understand how to take your outline deal and put it into a final enforceable contract.

5. Perform Due Diligence Thoroughly and Correctly

Know what to look for when investigating a company. Know how to tie accounting records into source documents. Understand inventory, equipment, vehicle titling and other problems. Understand what should occur at settlement. Make sure you are getting what you have agreed to pay for.

Bonus Tip

Recognize that the Broker almost always represents the Seller. For most small business purchases you, the buyer, will go through most of the process on your own. Make sure you know enough to get select the right business and negotiate a fair deal.

Gregory R. Caruso is an expert at helping business owners plan and execute the sale of their businesses. Greg is an inactive CPA, attorney, and business owner with 20 years experience. He can be reached at www.successfulexits.com.

In The News:

Best SEO audit tools in 2020  Promotion World
How to land fast in PUBG Mobile  Red Bull Australia
Scrum's top 7 misconceptions  The Enterprisers Project
Here is the ‘American Idol’ top 7  Atlanta Journal Constitution
The Top 7 PPC Strategies for 2019  Social Media Today
Top 7 most toxic plants found in Ontario  www.insideottawavalley.com/

Top Ten Reasons to Write a Sales Letter for Each Product? - Part 1

Authors/publishers are great at getting their books written. Entrepreneurs know... Read More

How to Apply the 12 Steps for Managment Conflict and Resolution

1. Admit there is a problem.The very first step in... Read More

Top 7 Reasons You Should Back Up Your Data Online!

How much is your data worth to you? In this... Read More

7 Tips To Increase The Success Of Your Online Business

1. Outsource what takes you too long to doWhen you... Read More

The 10 Benefits of Cross Cultural Training

Cross cultural differences can and do impede upon communication and... Read More

The Hidden Power Of Understanding: A Secret To Building Massive Momentum In Your Business

You're busy with your business today, aren't you?You're pushing your... Read More

Increase Exposure, and Profits With Powerful Memorable Business Cards Using These Ten Strategies

Your business card is a valuable piece of real estate... Read More

Ten Tips for Working at Home

1. Maintain regular working hours and stick to them.2. Get... Read More

7 Money Saving Tips to Decrease Home Business Expenses

We all know that running a home business is highly... Read More

The 7 Keys to Business Success

Do you run a business that seems to run you?... Read More

10 Things To Do When Business Slows Down Over The Holidays

I'm sure you've seen it happen every year: your business... Read More

Top 7 Tips For Writing Your Marketing Plan

A lot of people are at a loss when it... Read More

10 Things To Ask Your Accountant

This is a quick checklist of a few things that... Read More

Top 10 Items to Review & Build Your Business Now!

In building and runnng an independent private practice or small... Read More

7 Keys to Running a Successful Business

Although dentistry may appear to be different than other types... Read More

Event Planning: Seven Best Practices Successful Planners Use

Do you plan events for the corporate world like product... Read More

Business Attire: 10 Tips to Perfect Your Look

Being appropriately dressed is essential in making good impressions in... Read More

The Lazy Person Secrets To Overnight Wealth And Fame

There are so many simple, yet really sure-fire ways of... Read More

7 Things You Can Do To Weather The Lows Of A Business Cycle

Hey, as hard as this may be for you to... Read More

The 10 Biggest Mistakes People Make Managing Organisational Performance

mistake #1: rely just on financial statementsProfit and loss, revenue... Read More

7 Reasons You Want Referral Business and How to Get Them

Studies have proven that there is one reason why people... Read More

10 E-mail Organization Tips

Who doesn't have issues with organizing their inbox!? I receive... Read More

Business Meeting Etiquette

Business etiquette is essentially about building relationships with colleagues, clients... Read More

Advice for New Coaches: 10 Ways to Attract Your First Paying Client and Receive Endless Referrals

Many new coaches struggle to attract their first client. Often,... Read More

Never Sell Again: Get Repeat Business and Avoid the Need to Prospect

If you're a business owner, you know that repeat business... Read More