Questions Buyers Ask

Questions Buyers Ask

Why should I buy an existing business?

There are several reasons to buy an existing business: Actual results rather than pro-forma. Immediate cash flow. Trained employees in place. Established suppliers and credit experience. Established customers and name recognition. Existing licenses and permits. Training by the seller. The possibility of owner financing.

What about confidentiality?

Unlike the sale of real estate or new franchises, the sale of an ongoing business is very confidential for both the seller and the buyer. All inquiries are held in strict confidence. You will be asked to sign a non-disclosure agreement before any detailed information about a specific business is given to you. Meetings are confidential and may be held after normal business hours. This protects the business you may purchase by preserving the customers, suppliers and employees for the seamless transfer of the business to you. Confidentiality also cover you as we will never disclose your insolvent in the process.

What are some of the things to consider when buying a business?

The main item to consider is, “Do You Like The Business?” Additional considerations are: location, down payment and the owner’s true discretionary income. What training will the seller provide? What support will my suppliers give me? Can I improve the business? What can I do that the seller is not doing? What is my competition?

How much down payment will I need?

The amount of down payment varies depending on the type of business, the amount of hard assets included, the seller’s situation and your liquidity. Buying a business is actually very down payment driven. Naturally the amount of money you have for down payment determines the size business you can purchase. Typically, the more cash down you can offer a seller the lower the total sale price of the business. Your Sunbelt/Business Brokers South broker will discuss with you the level of cash investment you will be comfortable with. Your Business Broker will explain to you that you should not totally commit all of your available liquid assets because of the importance of operating cash after you take over the business. Knowing your comfort level of cash investment is the most-important information that your Broker needs to know to match you with the right business.

Why should I use a broker to buy a business?

First, you will save time and money. The seller pays for your Broke’rs services, and the Broker knows what businesses are available. The Broker will learn what businesses are in your price range. The Broker knows the seller’s needs and what your requirements are. Therefore, your Sunbelt/Business Brokers South Broker can structure a transaction that is good for all parties involved. Your Broker is a professional and has experience in overcoming every imaginable obstacle, and will show you how to make an offer to purchase that protects you. Your Broker can coordinate the process and handle the negotiations at arms length. This is important because after the closing you will still need the seller’s good will and assistance in learning the operations.

Why should I go into business for myself?

Several surveys to answer this question seem to reveal the same findings. in the order of importance to the buyers, here are the results:

  1. To do my own thing, control my own destiny
  2. Do not want to work for someone else
  3. Better use of my skills, ability and imagination
  4. To build something I can pass on to children
“Change is the law of life. And those who look only to the past or present are certain to miss the future.”
John F. Kennedy

It is interesting to note that money came in fourth on the list, not on the top.

What does it take for me to be successful?

First you will need enough money to make the investment of buying a business and to make the improvements you see as necessary. You will also need operating capitol and reserves to live on. Next you must be willing to work hard, keep long hours, stay motivated, and keep your enthusiasm high. Far too many business buyers think they can just sit back and let the business continue to run as before. Real business owners must be doers. You are going to be an entrepreneur and risk takers. If you accept these conditions, you should be successful and excited about the possibilities.

How do I make an offer on a business I like?

Working through your Sunbelt/Business Brokers South Broker, you can make an offer at a price with which you are comfortable. This allows room for negotiations. You assume the information given you so far is correct, but you will have time to verify fully to your satisfaction before any closing takes place. This is done by the addition of conditions and contingencies to the offer to purchase. Your Broker will suggest several to you that will protect your interests. This will allow you time for due diligence and the luxury of stepping back and looking at this purchase without the emotion of continued negotiations.

Aren’t most businesses up for sale ones that are losing money?

This is a common belief, but a belief that is not usually correct. The vast majority of businesses for sale are being sold for human reasons rather than financial ones. Human reasons include health problems, change in the owner’s family situation, divorce, desire to do something else, relocation, retirement, or just plan burnout. Generally speaking, a business does not survive for several years if it is losing money consistently. However, most business owners will take advantage of every opportunity to reduce the income taxes that the business must pay on profits. Therefore, it is necessary to determine the true owner’s benefit to fully understand the financial health of the business. The answer is, most businesses we offer for sale are earning a profit.

Our cash is limited; do you sell any small businesses?

Sunbelt Business Brokers and Business Brokers South have a large selection of businesses for sale in all price ranges, with listings of under $50,000 and over $5,000,000. The buying of a business is down payment driven, with cash requirements as low as $10,000 to $20,000. There will be many opportunities available to you.

What does it cost me to use Business Brokers South?

There is no fee or charge to a buyer. Our compensation is in the form of a commission earned when we successfully bring a buyer and seller together at the actual closing of the transaction. Our interest is educating you about the buying process and in finding a business that works for you. Your Sunbelt/ Business Brokers South Brokers will work very hard in understanding your needs and interests, and then staying with you throughout the entire process.

Should I consider a franchise?

Some of the advantages of buying a franchise are:

  • Known name means instant recognition of a proven product or service.
  • Ongoing support means you are in business for yourself, not by yourself.
  • Better than 85% of franchises are successful.
  • Operating systems are in place, with systems that have been worked out for you.
  • Opportunity to add additional locations within the franchise system.
  • Training by the franchiser for you and your employees.
  • The availability of a financing program established by the franchiser.

What are the steps in buying a business?

See the section titled The Nuts & Bolts Of Buying A Business.