TERMS, NOT PRICE
Concern yourself with the escrow deposit and cash flow of the business.
If these two are favorable to the Seller, then price will not be as big of an issue.
FOCUS ON WHAT THE SELLER WANTS
Does he or she want a large escrow deposit?
CASH FLOW RATHER THAN PROFIT
In purchasing a business, cash flow is just as important as profit.
Most businesses listing price is based on the cash flow, so it's vital to know true cash flow.
PURCHASE A BUSINESS THAT CAN BE IMPROVED
When purchasing a business, look at ways you can improve it,
including reducing overhead costs and increasing sales.
Don't let your lawyer kill a potential deal. Do personal investigation and
analysis to save legal fees and give you a firm knowledge of the operation.
IDENTIFY THE PROBLEMS
No business is without problems and they must be identified.
Determine if each is correctable or terminal.
PERSONAL COMFORT ZONE
Identify your personal comfort zone in order to determine what type of business to purchase.
Purchase a business in which you feel comfortable and would be proud to own.
SHOW ME THE MONEY!
Research funding options along with trying your local bank. Consider that if your business
effects the community by saving or creating jobs, the government may be willing to pitch in.
Also there are many SBA programs that may be available to you.
DON'T BE TOO CAUTIOUS
It is appropriate to do your research and then make a decision, but remember that
being too cautious can sometimes cost you the deal. You may opt to issue a
Letter of Intent to purchase the said business in order to buy some time.
DO NOT BE GREEDY
Prepare to pay for the goodwill of the business.
Sellers have spent time and effort developing this business and deserve a fair price.
OFFER A REASONABLE ESCROW DEPOSIT
Understand that a low escrow deposit indicate a lack of commitment,
and when a seller questions commitment, then the entire deal is in jeopardy.
HAVE A GOOD REASON
Before purchasing, think about why you want to purchase a business.
Owning a business takes time and commitment!
PROVIDE BACKGROUND INFORMATION
Prepare a resume and financial statement.
The Seller will most likely want to know you can run the business successfully.
KEEP AN OPEN MIND
No business is perfect.
Remember that tax benefits are realized from intangible and tangible assets.
TIME IS OF THE ESSENCE
Once both parties have agreed on price and terms, it is important to proceed quickly towards closing.
PREPARE TO MEET THE LANDLORD
If your purchase includes leasing a building or property, be aware that landlords have little to gain from their
cooperation. Therefore, it is important to come to the meeting with your resume and financial statement in hand.
Disclose any pertinent information to avoid surprises later that may destroy your credibility.