| As more people join the ranks of the | | | | industry which you are considering. Getting to |
| unemployed, the desire to own a business that | | | | know other business owners is good idea. They |
| they have more control over becomes very | | | | will be a source of information. |
| appealing. | | | | Tip Seven: |
| The hunt for a business can be daunting and, to | | | | Your best resource is a professional business |
| assist you, I have compiled these tips. | | | | broker. In many states a real estate license is |
| Tip One: | | | | required to sell businesses, but a business broker |
| It may seem an odd tip, but really is an important | | | | is trained to sell businesses, not homes. Many |
| one. Make sure you are ready to purchase a | | | | professional business brokers belong to trade |
| business. But you say; "Why would I be looking | | | | associations, like the International Business Brokers |
| for a business, if I'm not prepared to buy?" | | | | Association and Business Brokers of Florida. These |
| Yes does seem a no brainer. But from my | | | | associations provide training in the field of business |
| experience, working with hundreds of buyers, | | | | brokerage and mergers and acquisitions. |
| some are really ready to buy and others appear | | | | Business brokers are in contact with business |
| to enjoy the process. | | | | owners and, because of this, know when the |
| Realize that there is no "perfect" business. When | | | | owner is considering selling his business, but does |
| you find one that meets most of your standards, | | | | not want to advertise it on the open market. |
| make an offer. Be sure to include in the offer to | | | | When working with a broker, he or she will |
| purchase contract that you are granted a due | | | | attempt to pre-qualify a buyer by asking a series |
| diligence period to examine the books and records | | | | of questions. These questions will include what kind |
| of the business. And if the business is not | | | | of business are you looking for and, what type of |
| generating the revenue that you were told, you | | | | business would you be interested in operating. |
| have the right to back out of the contract and | | | | Another question is how much money does the |
| your deposit money is returned. | | | | business need to generate after expenses (also |
| Tip two: | | | | known as cash flow to owner) for you to live |
| Do some research on the type of business you | | | | comfortably. This leads to the broker's the next |
| would enjoy running. When you acquire a business, | | | | question. |
| you are purchasing a job. So it is important to find | | | | "How much money would you like to invest in a |
| out what is involved in running a business in that | | | | business?" This is a polite way of asking; "How |
| industry. Restaurants, bars and convenience | | | | much money do you have?" The wrong answer |
| stores involve long hours. Will the business require | | | | is; "As much as it takes." Or; "It depends on the |
| special skills or licenses that you have to qualify | | | | business." Unless you are Warren Buffet, it doesn't |
| for, or a waiting period to take the test for that | | | | depend on the business. If you as rich as Warren |
| license? | | | | Buffet or Bill Gates tell the broker up front, if not |
| Are you willing to invest the time and money to | | | | state that monetary limit. |
| make the business successful? I once sold a | | | | The broker will be spending time searching for a |
| business where part of the owner's job was to | | | | business in your chosen industry, within your price |
| market. The business contacts were made visiting | | | | range, and with the desired cash flow, but can |
| existing and acquiring new clients on weekends. | | | | only efficiently help you if he knows your down |
| The new owner purchased the business and | | | | payment comfort level. |
| became upset that the clients were not calling | | | | Brokers prepare business profiles on the |
| him. When asked if he was marketing to the | | | | businesses that they have listed and, theses |
| clients, he stated that he wasn't going to work on | | | | profiles include the information listed in tips three, |
| weekends. | | | | four and five. So you don't have to search for |
| Tip Three: | | | | this information. Let me say, however, that there |
| Get as much information on the business up front. | | | | are cash businesses. |
| Request copies of at least three years tax | | | | Business brokers have contacts that make the |
| returns and current profit and loss statements | | | | acquisition process smoother than attempting the |
| and, if you are not comfortable reviewing them, | | | | process solo. These contacts include attorneys |
| have your CPA look them over. If you don't have | | | | that specialize in business closings. Since these |
| CPA, now is the time to hire one. You will need an | | | | attorneys are involved in closings on a daily basis, |
| accountant or CPA for the new business. | | | | they have the forms prepared and the staff can |
| Tip Four: | | | | quickly prepare the necessary documents. This |
| Ask for an equipment list from the Seller. If you | | | | results in the procedure being done correctly and |
| are purchasing the property, ask for a site plan | | | | often with a cost savings. |
| and see if the owner has a recent appraisal of | | | | Business brokers have contacts in the lending |
| the real estate. If the business is leasing the | | | | industry. I don't know how many times I have |
| property, ask for a copy of the lease. Check the | | | | heard a buyer saying; "I'm going to get a loan to |
| terms as to what is covered, the length of the | | | | purchase the business." It is very rare that a |
| lease. Does it contain options to renew? You don't | | | | conventional bank will loan money to purchase a |
| want to be forced to relocate the business in the | | | | business. And I have heard of only one that |
| near future because the lease expires. And find | | | | loaned on a distribution company. The Small |
| out what is prohibited by the landlord. You may | | | | Business Administration (SBA) guarantees loans |
| think that a large new sign is what the business | | | | and some businesses qualify. There are SBA |
| needs, but the landlord does not want it on the | | | | mortgage brokers and the business broker works |
| property. | | | | with these contacts to secure you a loan, if the |
| Tip Five: | | | | business qualifies. |
| Check the local ordinances as what activities the | | | | Business brokers have the necessary forms to |
| business can and cannot engage in. Perhaps you | | | | prepare an Asset Purchase Agreement. These |
| want to buy a restaurant and what to add live | | | | forms are created from experience and, |
| music at night. The local laws may contain a noise | | | | oftentimes standardized by the associations to |
| ordinance that would prohibit having a band. | | | | which the broker belongs. The Asset Purchase |
| Tip Six: | | | | Agreement is the most important and it |
| Where do you find businesses for sale? You could | | | | incorporates the due diligence issues and other |
| check the newspaper classifieds, though the | | | | contingencies that protect the buyer. |
| businesses for sale column is thinner than it used | | | | Owning your business allows you to gain more |
| to be just five years ago, there are still | | | | control of your destiny. Small businesses employ |
| businesses listed there. | | | | the vast majority of Americans, even more than |
| Now businesses for sale tend to be listed on the | | | | the large corporations. A business becomes like a |
| internet, with websites like BizBuySell.com, | | | | child that you grow. I wish you luck in finding that |
| BusinessNation.com, BusinessesforSale.com, and | | | | business that may not be perfect now, but |
| BusinessForSaleFlorida.biz. | | | | through your ingenuity, hard work and brilliant |
| Network with people who own businesses in the | | | | ideas you can create the perfect business. |