Buying an Established Business
Currently operating and established, existing cash flow, financial continuity, possible owner financing, seller training for smooth transition
Substantial investment, possible transfer risk, purchasing intangible as well as tangible assets
Here are some items you might want to check when considering the purchase of a business:
- How long has the business been established?
- How long has the present owner had the business?
- Why is the present owner selling?
- Do the books and records indicate a history of success?
- Is there enough monthly cash flow to make the monthly financing payments or debt service?
- And enough to pay a reasonable salary to you, the new owner-manager?
- And some left over to provide a fair return on assets and your cash investment?
- Does this business provide the lifestyle quality you seek?
- ? Are the business fixtures and equipment state of art and well maintained or are you going to have replacement expenses?
- How much competition is there in the local market and regional markets?
- Is the industry in which the business operates declining or growing?
- Does this business require special licenses or qualifications?
- Do you have experience managing people?
- If the property is leased, is the lease assumable? Are there options to renew?
- How difficult will it be to find qualified employees?
If the business is clearly successful and making good money, you can expect to pay a top price for it because it includes the intangible factor called 'goodwill'. If the business is a 'fixer upper', or has not yet achieved its potential, or is undercapitalized or poorly managed or needs additional exposure to the community, you might find a real bargain. For the energetic individual who thrives on a challenge, this is the best buy.
Reasons for buying a business | Starting your own business
Buying an established business | Buying a franchise
| Buyer Groups