A Short List of Effective Tips for Buyers

Is this business for you?  What type of business is it?  Does it interest you?  Do you have the appropriate experience and education? Is it affordable?  Realize now that you will need to have the capital necessary to begin operations.

Bizchecker will help you with the necessary market research and competitive analysis.  It will also be helpful in determining the value of the business, assessing a fair price for it.

Ask questions about the reasons for the sale of the business and evaluate whether you can avoid the types of problems that made the seller want to sell, and that you can adequately clean up what you inherit.

With the help of an attorney, comb through all relevant documents uncovering and interpreting any fine print.  Lean on your attorney to make you aware of factors to consider such as leases, branding issues, and other issues you may not think to consider.   Involve your accountant as well to look at how your purchase of the business will affect tax issues.

Determine the value of all liabilities and assets to the penny, and then consider whether you will be able to come out ahead of any of the liabilities that come part and parcel with the acquisition of the business.

Do a cash flow projection and take a close look at the business’ profit and loss and income statements for the several years prior.  Look at the business plan to become familiar with operations and find out where changes can be made.

Consider the current employees and customers and evaluate their loyalty to the business regardless of a change in ownership.  Check all equipment and inventory to ensure that they are as they were said to be.

Acquaint yourself with primary suppliers and find out what you can about the future of the relationship between them and the business when you own it, as well as any input they may have concerning the business.

Recognize the importance of Due Diligence in the transaction.

Discuss payment options with the seller and come to an agreement on the rate and type of payment.

Buying a business can put you far ahead of where you’d be if you had to start it from scratch yourself.  Just know the steps to take before finalizing your decision and follow through one step at a time.  You’ll be glad you did.

When You’re the Seller of a Business

There are a number of things you, the seller, can do to ease the transaction when Selling your business.  This article will help you to get familiar with the most important. 

You generally have only one chance to inspire confidence in potential buyers of your business – use it wisely.  Make sure that all your financials, licenses, and taxes are current.  Catch up on any bookkeeping chores that need tending to and take the opportunity to re-familiarize yourself with the ins and outs of your business.  You may well find yourself needing to answer questions and provide details on a variety of topics concerning the inner workings of your business.  Know that this is just part of the process and entirely legitimate for the buying party to ask.  Being ready for detailed questions will minimize your stress and make you look good when you’re in the spotlight.

When you’re in the process of finding a buyer for your business, your employees may catch wind of your intentions.  While it is best if they don’t have to know before you are ready to tell them, you may want to let them know that they are a valuable part of your plans before they get nervous about their job stability and look for work elsewhere.  It is to your advantage to do what you can to keep qualified, experienced employees in your business when selling it; they are part of the assets that will be considered when determining the value of your business.

There are tools available for determining the value, or more accurately, profitability of your business, such as the Profitability Calculator.  It will help you to be realistic about your price and thwart disappointment.  The price truly hinges on profitability.  You will likely want to consider reworking your financials a bit in order to show how much it benefits you, as the owner.  This is the opposite of how most business owners want to show their numbers to the IRS for tax purposes.

Expect, or at least be open to, the idea of financing the sale of your business.  This option may well help you to sell your business more quickly and to a buyer you trust.  Deferred payments are one way many small business owners go about financing the buyer.  Doing a thorough check of the buyer and asking for regular reports once the transaction has been initiated is important to minimize your risk.