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- How to buy a business with a business broker assistance
HOW TO BUY A BUSINESS
Start from scratch or find how to buy a business
When people want to start a business, they have to begin from scratch, from developing the business idea and building up the company. But there can be problems beginning from the scratch and some distinct disadvantages such as difficulties in marketing the new business, challenges in building a customer base as well as hiring. Establishing cash flow can also be a problem for a person who is just starting the business. When you decide to buy, it is less risky. When you buy a business in Florida, you take over a business operation that is already done by another person. You get a business with a good reputation, established customer base, and employees who are already acquainted to the business. What are the best strategies on how to buy a business? This is why you need to know how to buy a business with a business broker assistance.
Making business purchase choice in Florida
It can be costlier to buy a business than starting a new one, but it may be worth it since you are likely to get legal rights that include copyrights and patents. You also have access to business SBA loans. Of course, you’ll need to be careful so that you don’t get stuck with outdated distribution methods, less cooperative employees, or obsolete inventory.
When you search business for sale you should be specific. For instance, when searching “businesses for sale Florida”, you can specify the business by searching to buy restaurants or businesses for investor visas. Think hard of the business you are interested in and the business you may be more familiar with. You also have to consider your experience in that particular business, the size of the company, location, number of employees, as well as sales.
Using a business broker assistance
Most brokers can be a great help to business buyers, especially for people who want to buy a business for the first time. Here are the ways brokers can offer assistance to you as a buyer:
- Help you pinpoint your interest. Brokers will help you to find what you are interested in and businesses that match your skills. Using a broker may help you figure out that an industry you have never considered would be best for you. In fact, finding a business has a lot to do with personalities. If you are great at sales, then you should be looking for a business that is lacking a good salesperson.
- Negotiating and assisting with paperwork. Brokers help both parties to reach an agreement but more importantly, they understand the process involved in transferring the business from the seller to the business buyer. The business buying process can be complicated at times and it’s good to use an experienced business broker to make sure things go smoothly.
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Verify a business value
One important thing to keep in mind when researching how to buy a business is that during the business purchase process, you will have a period of time to do your due diligence. This includes things like examining the company’s balance sheet, cash flow statements, tax returns, income statements, contracts, and future expected earnings. Many business buyers will use an accountant to assist with this process.
Here are the things to consider when verifying business value before you decide to buy it:
These are all the products and materials for use in servicing clients. You should be present during the examination of the inventory to know the status of the inventory, what amount of inventory is available at the moment and what amount will be available when the financial year ends. For example, you have decided to buy gas station; you should know the average monthly inventory necessary to maintain the sales, compared to the existing inventory. You’ll need to make sure the two figures are adjusted at closing, so you are only paying for what is there.
Furniture, Fixtures, and Equipment
The seller should give you a list of the equipment as well as an estimated market value. You should to know if they are in proper condition, and all the costs the owner has incurred in maintaining the facilities. If you have decided to buy a Restaurant, then check that all of the facilities are in acceptable condition, check the kitchen facilities, bar, tables and chairs, toilets and all other facilities.
Copies of all documents and contracts
Contracts include all the vendors agreements, client contracts, employment and union contracts. Evaluate all the details on the documents and make sure they are correct. You can also have an attorney or an accountant go through the documents to give you a better idea of the specifics. A more detailed list of documents and pre-closing matters are as follows:
- Tax returns
- Financial statements
- Sales records
- A complete list of liabilities
- All accounts payable
- Debt disclosure
- Merchandise returns
- Customer patterns
- Marketing strategies and advertising costs
- Industry and market history
- Location and market area
- The reputation of the business
- A current employees list and organization chart
Mistakes to avoid when buying a business.
Try not to be anxious when you want to buy a business. It may end up having a negative effect on your ability to evaluate everything fairly. Looking on all the steps on how to buy a business, an anxious buyer will have trouble pulling the trigger and entering into a contract. This is referred to as buyer’s remorse and it is common in first time buyers. Many business buyers wind up missing the best opportunities because they are too afraid to enter into a contract of sale. You may never wind up buying a business if this is where you stand. You should know that you will have time to do your due diligence after the contract is signed. Check out our blog about Avoiding Mistakes when Buying a Business.
The other mistake to avoid is to not try to expand a business before you learn it. Buy a business, run that business the same way the seller did for at least six months and then slowly make changes. If you go in and make changes on day one, your clients may be unhappy, your employees may be unhappy, and you may damage the business. Keep things simple and easy for everybody at first. Once the transition is over, then you can slowly customize the business to your needs. This is why it is so important to know how to buy a business.
Contact John Cimba to help with how to buy a business with a business broker assistance in Florida.
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