BUYING A Business

Are you planning on having your own business? Buying your business can be a complicated procedure. Throughout the buying process, it's important to keep an open mind while searching for a business that will fit your needs, talents, skills and lifestyle. A business broker has many different types of businesses for you to consider; however, you need to remember that there is no such thing as that "perfect" business. Another vital thing to keep in mind is that at some point you must be able to make the "leap of faith" that separates you from being a "looker" to a "doer." This isn't easy, but it must happen if you are ever going to be in business for yourself.

Going into business for yourself is a big step, one that can be full of apprehension and even fear. Almost 90 percent of all those who purchase a small business have never owned a business. Most of them bought a business that was different than what they had been looking for. These buyers had the opportunity to explore the marketplace and subsequently found a business more to their liking. In most cases, the seller financed the sale.

As you begin your search, keep in mind that running your own business is more than a job; it is a lifestyle change. In most cases, it is a very big lifestyle change. Usually, you will be working longer hours, making all of the decisions, and, as the expression goes, "you will be the chief cook and bottle washer." In other words, you will be doing all of the work from running the business to, in many cases, sweeping the floor and changing the light bulbs.

Most buyers are looking for many of the following in considering the purchase of a business:

Pride in the service or the product
Flexibility
Income
Control of your own destiny
Recognition
Security
Privacy
Status
Customer and employee contact

Professional Advisors

It is important to get legal and accounting assistance when purchasing a business. Attorneys can assist with forming your entity, explaining liability issues related to being a business owner, assist with any leases needed to operate the business and review and make recommendations on the purchase agreement and ancillary documents. Accountants can explain tax consequences, assist with due diligence, help prepare financing packages and add insights into the entire business operation. After closing, a good attorney and accountant can help you succeed and make business ownership much more rewarding.

Operational Due Diligence

Adequate due diligence is important for a number of reasons. One of the most important aspects of due diligence is helping you understand how the business works and what role the seller played in the business. Since the seller almost always leaves the business after a period, it is important to learn as much as you can about what the seller does in the business operations.

Financial due diligence

Like operational due diligence, financial due diligence is important. It can also give you insight into the important components operationally. For instance, the business may have seasonal aspects which are reflected in the financial statements. You will need to make certain that your financing is adequate to support the business during any seasonal downturns. Lack of planning for working capital needs is a common problem in many businesses. During due diligence, you will also want to independently verify that the financial records of the business are satisfactory to support your decision to purchase the business.

Industry Due Diligence

Business buyers neglect this aspect of due diligence the most. Although it�s rare that there are industry problems which make the purchase a bad idea, often times industry due diligence gives insight for planning and growing the business. The growth of the internet has made industry due diligence much less time consuming. There are many sources available for most industries.

Financing

Understanding all aspects of your acquisition financing is critical. Your financing plan should include the needs of the business as well as your family needs. You do not want to buy a business and immediately face a cash flow problem in the business or personally.

Personal Issues

Purchasing and operating a business will have periods of significant stress. Most successful business buyers understand this and don�t allow the process to overwhelm them or their loved ones. A key element is to make certain you have a clear understanding of your personal financial circumstances and any pressures you may face caused by deadlines.One of the most common questions asked by those who have never purchased a business (which is incidentally about 90 percent of those looking to buy a business) is how do you actually buy a business. There is no right or wrong way to buy a business. However, it is important that you get answers to all of your questions and that you have all the information necessary to make an informed decision. Here are the steps to buying a business that over the years have become the most efficient and practical:

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