Thursday, May 12, 2016

How To Buy A Business For Sale



Starting from scratch isn’t the only way to get started in business. Buying a business for sale can help entrepreneurs hit the ground running. When most people consider starting a business, most think of starting from the ground up. However, that presents several distinct disadvantages, including marketing the new business, difficulty of building a new and loyal customer base, hiring employees, establishing cash flow, and other issues- all without a reputation or track record to go on. It can be one of the most life-altering and important decisions an entrepreneur can make.

However, buying a running business may be less dicey than starting up a new one. When you purchase a business, you take over a running operation that is already generating cash flow. You gain an established customer base, employees, and a reputation. In addition, you don’t have to reinvent the wheel. i.e., set up new systems, procedures, and policies, due to the fact that the business is already in operation; unless, the business requires some major changes to stay alive.

Obviously, there is no such thing as a sure thing when it comes to business, and buying a business for sale is no exception. If you’re not careful, you could get stuck with uncooperative workers, obsolete inventory, or outdated sales and distribution methods. To ensure you’re getting the best deal, heavily consider getting a broker to help you do the following:

• Choose the right type of business
• Tale a closer look at the business
• Determine a fair price
• Never place too much faith on multipliers
• Determine the book value of the business
• Look at the estimated return on investment
• Calculate the capitalized earnings
• Determine the intangible value of the business
• Decide on a fair purchase price

Unfortunately, this process can be more expensive than starting from scratch. Nonetheless, it is easier to obtain financing to acquire an existing business than to establish a new one. Investors and bankers usually feel more comfortable dealing with existing businesses with a proven track record. Additionally, the process of acquiring an existing business, provides entrepreneurs with valuable legal rights, like patents and copyrights, which could prove extremely profitable.

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