7 Easy Steps to buying a business

Many have felt the desire to do something entrepreneurial. The allure of being one’s own boss can be very rewarding.

By purchasing an existing business you can dramatically increase the probabilities of success.   Existing businesses have a proven track record of profits, they may have a well-known brand, name, location, product mix, etc., and an established customer base for immediate cash flow. 

If you are considering a decision is to buy a business, I can suggest a few things that will help to ensure that you will be happy with your decision.

1.    Take an honest inventory of your skills, knowledge and interests.  Things such as, do you enjoy interacting with people or more comfortable behind a desk?  Do you like being the leader, making decisions and managing people?  Do you have some technical expertise or talents that you can leverage?

2.    Get a solid understanding of your financial situation.  While financing may be available, it is imperative that all aspiring entrepreneurs know how much money they are prepared to invest and how much they expect to make.  Typically, these two amounts are directly related to one another.

3.    Start your search to find the availability of businesses that match your profile.  Scheduling an appointment with a business broker will give buyers a good sense of what is available.

4.    Make an offer.  Once you are focused on a particular business a well written offer will contain all the language necessary to successfully transfer a business while offering a number of conditions that will give the buyer (and the seller) the required safeguards. 

5.    Focus on the issues. When it comes to negotiating, buyers (and sellers) must make sure they focus on the issues that are important to them rather than details that are not critical. 

6.    Do your due diligence.   There is no point in beginning this until the buyer and the seller reach an agreement on price, down payment and terms.  This is the point in time where a buyer’s accountant comes in and verifies the seller’s cash flow. 

7.    Formalize the ownership transfer. The last step in the process is to bring in a lawyer to complete the necessary paperwork to ensure a smooth transition.  This includes lien and title searches, promissory notes, bills of sale, etc. enabling the ownership of the business to change hands. 

With plenty of businesses to choose from in today’s market, it is more important than ever for buyers to make sure that their efforts remain focused on choosing the right business for them.

Do you have small business questions you would like answered about this article or others?  Please visit www.VRWindsor.com or call 519-903-7807. 
William Sivell is a sales representative of VR Windsor Inc., Business Brokerage; his blog appears every Tuesday.