Buyer Frequently Asked Questions
Why should I buy a business rather than start one?
An existing business has a track record. The failure rate in small business is largely in the start-up phase. The existing business has demonstrated that there is a need for that product or service in a particular locale.
Why do people go into business for themselves?
- To control their own destiny.
- Don't want to work for someone else.
- To better utilize their skills and abilities.
- To make more money.
Why should I go to a business broker?
Business brokers can offer you a wide variety of businesses to look at and consider. They're also an excellent source of information about small business and the business buying process. They are familiar with the market and can advise you about trends, pricing, financing, and what is happening locally.
What should I look for in a business?
You want to consider only those businesses that you would feel comfortable owning and operating. The business you buy must be able to supply you with enough income — after making payments on it — to pay your bills. However, you should look at a business with an eye toward what you can do with it: how you can improve it and make it more productive and profitable.
How are businesses priced?
A review of the financial information will be necessary before a price — or a range of prices — can be suggested for the business. By reviewing the financial records and market considerations, the business broker can make a recommendation of what he or she feels the market will dictate. Since most business sales are seller-financed, the down payment and terms of the sale are very important.
What happens when I find a business I want to buy?
When you find a business, the business broker will be able to answer many of your questions immediately or will research them for you. Once you get your preliminary questions answered, meet the sellers, and see the business, the typical next step is for the broker to prepare an offer based on the price and terms you feel are appropriate.
Do I need an attorney?
An experienced attorney can be of real assistance in making sure that all of the details are handled properly. Business brokers are not qualified to give legal advice. However, it is important that the attorney you hire be familiar with the business buying process and has the time available to handle the paperwork on a timely basis.
Why do deals fall apart?
Beware of the three Ls: landlords, lenders, and lawyers. Further, in the due diligence process, undisclosed issues may arise.
What does it take to be successful?
You need to be willing to work hard and, in many cases, to put in long hours. Too many people think they can buy a business and then just sit behind a desk and work on their business plans. Owners of small businesses must be "doers." A business owner has to — as they say — be the janitor, errand boy, employee, bookkeeper and "chief bottle washer!"