Monday, July 5, 2010

How To Buy A Business | Internet 9 Blog's

How To Buy A Business | Internet 9 Blog's

July 4th, 2010 | admin | 0 Comments »

It has been said that owning your own business would be great if you didn’t have to deal with employees or customers. Entrepreneurs often find that the reality of owning their own business is often quite different from what they were originally hoping. In other words, long hours, sleepless nights, stress, employee issues, and extended times of wondering whether things will finally take off. As with most things however, owning your own business is risky, but it can be incredibly rewarding. The knowledge that you can have a direct impact on the direction of the business and that you are building something that will grow, and hopefully outlast you, is very important to most entrepreneurs. The possibility of actually becoming wealthy during the process is often just a bonus.

All that being said, buying a business is not a particularly easy process. It can be difficult to find the perfect business. Due diligence can be cumbersome. Financing in these conditions is going to difficult to arrange, and the transition from the previous owner to the new owner is fraught with challenges. That being said, there are 3 key things to keep in mind as during a the business purchase process.

Finding the Perfect Business. There are numerous ways to go about searching for businesses that are for sale. There are several sites that operate like a multiple listing service where sellers can list their business and buyers can scroll through and sort according to various criteria to find the businesses they need. As an example, take a look at http://www.businesstradeboard.com.

Determining the Value of the Business. Generally, the seller will have some idea in their mind as to what they want to sell the business for. However, it is important to keep in mind that there may be a big discrepancy between the price that a seller wants for the business, and what it is actually worth to a buyer. If the buyer is viewing the business as an investment, then the value to them is determined by not only what they think the business will generate financially, but that also needs to be compared with what other opportunities the buyer has for their money. In other word, other businesses that may have more potential. The result is that the value to a buyer is actually a number that goes up or down depending on where else the buyer could put their money. Finalizing on an agreed value with the seller is generally a negotiation that can take some time.

Closing the Deal. There are innumerable details that most be covered during the closing process. Whether it be the final letter of intent, due diligence, accounting review, financing, or the final legal closing process, there are numerous ways for things get off the tracks during this final step.

Not only can a business broker be of invaluable assistance to make sure that things are dealt with accordingly, but they can also be a good sounding board to make sure that you are actually doing what you should be doing. Many buyers use business brokers to find them a business, but there is nothing wrong with actually leaning on a broker or advisor who has been through the process many times before to make sure that things move along, obstacles to closing are removed, and the process is actually enjoyable.

Scott Larson has been a corporate finance consultant for the last 13 years. His specific area of expertise is assisting small to medium sized companies raise growth capital, complete acquisitions, or in leverage shareholder or management buyouts. He also owns http://www.businesstradeboard.com
Tags: Business

No comments:

Post a Comment