Are you looking to embark on your entrepreneurial journey and buy a business? The process can seem overwhelming, but we’re here to demystify it. In this blog, we’ll answer the top ten frequently asked questions about buying a business.
Top 10 Buyer FAQs
1. How do I decide what type of business I want to buy?
Look beyond the financials and potential ROI. Consider choosing something you are experienced in or passionate about. The more familiar you are with the industry and trends, products or services, and customer base, the more likely your business is to succeed. That’s why having trusted business brokers on your side makes a world of difference.
2. How do you value a business?
There are many factors that go into the valuation of a business. This may include: growth potential, cash flow, sustainable profit, asset value, financial history, location, competition, customer base, industry trends, ongoing management, desirability, and the economy. We take all of these into consideration when we present a business valuation to buyers.
3. Are there any tax benefits associated with buying a business?
Upon purchasing a business, business goodwill, fixed assets, building purchases all will provide depreciation benefits while you build the company. Part of what we do is pre and post tax advising to our clients, differentiating us from other business brokers.
4. When will I obtain copies of the financials and tax returns?
Preserving confidentiality is our priority. You will be able to access financial information when negotiations with the seller begin. Initially, a buyer will sign an NDA, assuring the seller that their confidential information will not get out to employees and competitors. We enter the due diligence phase wherein we obtain complete, detailed copies of all necessary financial statements.
5. What is the due diligence phase of buying a business?
Due diligence is the process of verifying the information provided by the seller to ensure that it is accurate and up-to-date. During this period, you should work with an accountant and lawyer to make sure you have all the information you need to move forward.
6. Is it the right time to buy?
It’s always the right time to buy a business. The market level sets itself, so don’t let interest rates affect your decision. Go out, buy the business, and we’ll help you negotiate the finer details.
7. How long will the current owner stay onboard and help me with the transition period?
The typical time is 6 months. If you need more time, that can be negotiated and you may have to pay an additional purchase or consulting fee. Sellers are happy to assist with the transition because they want their business to be in the best hands and thrive for years to come.
8. Am I capable of running a business?
You are capable. Do you know the industry? Do you like being in that business? Do you think you’ll make money in it? If the answer is yes to all of those questions, you’ll be successful. Surround yourself with the right people, such as bankers, accountants, payroll companies, and employees who will support you.
9. Can I afford to buy a business?
Maybe you didn’t save enough money for the down payment. However, we can ask if they’d be interested in a seller carry back. The seller finances a portion of the business to be used as a down payment in purchasing the business. Now, instead of having to come up with 10-15% of the acquisition price, you might only have to come up with 2-5%. We can negotiate what works for your budget.
10. I’m ready to buy a business. How do I start?
If you’re looking to buy a business, our website is always up to date with current listings. Our listings include manufacturing, hospitality, bars, restaurants, retail, among other industries. We work with many professionals that are well-connected in the business world. If you don’t see a business you’re interested in, contact us and we can find one for you.
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