Questions about buying a business answered
Buying or selling a business can be a complicated venture. While some businesses are sold without the help of accountants and attorneys, we strongly recommend that both the buyer and seller engage professionals.
While the e-2 process is quite complex and we certainly recommend a consultant that specializes in obtaining visas, several of Transworld’s agents have done numerous E-2 transactions and can provide enough help to move you along the process.
Our website, www.tworld.com, has a search page where you can look at thousands of businesses. There are a lot of other websites that have businesses for sale. If you find any business for sale, please call your Transworld representative and we can contact the seller or other broker on your behalf.
Transworld is generally paid by the seller not the buyer. However, other costs do come into play. Legal and accounting fees are generally required and additional startup costs may also come into play.
Depending on the complexities of the business, the former owner will offer varying levels of training. On most small businesses, the owner will offer training for two to four weeks at no cost to the new owner.
As part of the acquisition process, you will have to go through “due diligence.” During this period the seller is required to present documents to verify his profit numbers.
No, while 100% of the purchase price is sometimes required, sellers will frequently provide owner financing to some extent. Additionally, a bank may be able to loan up to 80% of the purchase price through a loan sponsored by the Small Business Administration.
Businesses vary in price a great deal, however, it would be unlikely that one could buy a business with much less of a down payment than $20,000.
Yes! As an entrepreneur, you may romanticize the idea of being your own boss. The question is, how do you get there? The first thought is often starting your own business. Although that has numerous advantages, starting from scratch understandably comes with challenges. It is important to note that being an entrepreneur is not limited to starting a business from the floor up, in fact, there are several advantages to buying an existing business.
For the most part, buying a business is considered less risky merely because it is already established. An established business has a vendor and supplier list, a customer base, and an entire trained staff already in place. There benefits of acquiring a company with a good financial history and immediate cash flow. With customer loyalty, there is goodwill –and is likely one of the most important and incredibly valuable intangible assets when you buy an existing business. Meanwhile, a new start-up business must build the market for its goods and services, create a following, develop a financial history, etc., all while trying to create some cash flow.
An existing business may not only have a storefront but probably also comes with equipment and inventory – which can be a major upfront investment. Although you may think this is reflected in the listing price, it is important to note that the previous owner already had seasons of trial and error to establish which equipment worked best and which inventory is most popular among its customers. This information is priceless as it will save you time and money.
Although every investment comes with ups and downs, purchasing a business is a good idea. This is especially true for someone who wants to invest and see a return quickly, rather than someone with the time, patience, and energy to dream up something new.
If you are thinking about buying a business, Transworld Business Advisors has an experienced team of business brokers in offices across the country ready to help you find the right business to buy. If you have not settled on a specific industry, our brokers can discuss the details of each with you as you narrow down your options.
Now that you have decided you would like to buy an existing small business, you are likely wondering what is next. Well, finding the right business to buy can be simple but you will need to be prepared, understand what is expected of you, and ensure you have the right kind of support on your team.
Step 1: Ask yourself: What kind of business would I like to buy?
You need to decide what industry you might like to enter. Does this industry align with not only your interests but also your skills? What kind of products or services do you feel confident you can market and sell successfully? All these questions are important before you make an offer on an existing business.
Step 2: Hire a business broker.
Now, before you begin your search, hire a business broker. Not only are they a great help for negotiations and contract drafting and signing, but they are also experts in both the selling and buying process. With a unique perspective from both sides of a sale, they provide invaluable advice during the process. Not to mention, they will come in handy with checklists, strategies, and a network of sellers with businesses for you to choose from.
Step 3: Establish your goals.
Before your search, you will need to establish what your goals are. For instance, what is your budget? What is the maximum amount you can spend? Not to mention other factors that need to be considered such as what industry, company size, location, sales, and staff you are interested in for investment. Without these goals, the search will be overwhelming and fruitless.
Step 4: Research! Search for businesses on sale
Your Transworld business broker has access to an extensive network of businesses for sale. With their guidance, you can punch in your preferred parameters (the goals you have established) and then begin your search!
Step: Make an offer!
Meet with business owners and tour the businesses. Getting to visit business you have interest in and meeting with the owners is crucial. Once you have reviewed the offering and met with the owner, at this point, you you will want to make a contingent offer on the business. If it is accepted then you can start the next step.
Step 6: Do your due diligence!
Have a signed purchase and sale agreement or LOI? It is time to do your due diligence. For due diligence, you will need to have a team of lawyers, accountants, and brokers in your corner. At this point, the experts need to do a deep dive into the business’s financials to ensure everything they have said about their numbers is true. To help, use this checklist As a start.
Step 7: Go to the closing
Once all the supporting documents, leases and contingencies are handled. You can move to get the deal closed and start the transition period! Congratulations!
To buy a small business, you will need money on hand to make the purchase but arguably, the most important thing you need is a trusted and experienced business broker. Your broker will walk with you through the entire process and serve as your eyes and ears to help ensure you purchase a business you love and that the process is smooth from beginning to end. With knowledgeable brokers across the country, you can count on Transworld Business Advisors – contact us today.
From business brokerage to mergers and acquisitions, we are the business sale specialists.