Still a Buyer's Market for Purchasing a Small Business

Yes the economy still kind of stinks. And yes the banks aren't giving out money. But this is a good thing...

If you are in the market for buying a small business.

I'll be quick and to the point on this. If you are truly ready to buy a small business, now is the time to do it. Business owners are more running scared than actually doing poorly. When they are running, they aren't looking for opportunity to keep growing. And you can easily see that with proper due diligence. That's a business buyer's market.

Many business sellers are in the baby boomer category and are looking to continue on with retirement plans. When they have that mindset, they do not want to wait another few years to see what may happen to their solid business. They want out now. And that means a business buyer's market.

Bank's are tight on lending and seller's want to sell. When that happens, the best type of financing for all parties becomes much more clear and acceptable. And that would be seller financing. Sure you still have to come up with a down payment and most likely more than a bank would ask for (in normal times). But who cares? Now you can get a business worth $500k for $400K plus not go through the lengthy process of dealing with a bank. It's a business buyer's market

Look if don't have some kind of liquid money you can't and shouldn't be buying a business anyway. So why not find the many gems, mostly owned by baby boomers, that are waitng to get picked off. Discounts galore and no slow banks processes. You can't ask for more. All you need is that down payment and a solid foundation of the business buying process.

Did I mention it's a business buyer's market?


To Your Business Buying Success-

The Business Buying Guru

Finding a Business to Buy- Information Gathering

Finding a Business to Buy- Information Gathering

To continue on in sequence with my previous finding a business to buy post, we need to look at information gathering for a business you want to further look into.

Once you have signed the non-disclosure and asked for further information, you will receive a packet of vital business buying information. In most cases you are not going to get 3 years worth of tax documents or even P&L reports for that matter. You can ask for it, but the odds are slim on getting it. That’s too much information at this point to give to a semi-committed Buyer.

What you will get is a profile which will give the latest 12 months of revenues, expenses and cash flow information. Other provided information may be whether inventory is included in addition to its value, the value of furniture, fixtures and equipment (FFE), an extended business description, and lease or property purchase information.

At this point the address and name of the company may be given to you, but often that is done after you have reviewed the information and request to see the business. Again, this avoids giving tire-kickers vital information and the location when they are really not serious Buyers. This may disrupt the business or waste the Seller’s time.

Click this link for a short video on information gathering in regards to buying a business.
http://www.youtube.com/watch?v=YNu_3oyLfAA

Once you watch the video, click here to grab the rest of the tools you will need to successfully purchase a business.


To Your Business Buying Success-

The Business Buying Guru

Finding a Business to Buy- Taking Action

Just some quick words today on what to do once you have found a listing of a business you would like to consider possibly buying.

If you see something you like, take the next step in getting more info from the Seller or Broker. You will most likely need to sign a non-disclosure form. If a Brokerage gives you this form, you will only have to sign it once and it will carry over to every listing they show you.

Respect this short but very legally binding document. It should basically state that you will be receiving confidential information and you agree to keep it confidential. Confidentiality will also mean not exposing the for sale status to any employees, vendors, customers, etc.

Lastly, if this form comes from a Broker, it will have a circumvention clause that states if you try to pull a fast one and go around the Broker after you have this vital information, you will be caught (believe me you will). When that happens you, as well as the Seller, will owe money to the Brokerage company. It’s shady and not right so just don’t do it.

Remember that this is not a house or piece of property you are looking at. These are necessary measures taken to protect the livelihood of the person that owns the business as well as their employees. Understand the complexity and seriousness of purchasing a business and the rest of the process will go very smooth.


To Your Business Buying Success-

The Business Buying Guru