Below are the most common questions we get from potential business buyers.
The failure rate in small businesses are largely in the start-up phase; an existing business has a proven track record. The existing business has demonstrated that there is a need for the product or service in a particular location. Financial records are available for the business and many will also provide a small amount of seller financing. Many sellers will stay and train a new owner for 2 to 4 weeks to teach you the intricacies of running a business, setting you up for success.
Generally, a prospective seller will work with a business broker to determine the value and right asking price for the business. Vantage Business Brokers is familiar with market considerations and, by reviewing the financial records of the business, will make a recommendation of what we believe the market will dictate. In many cases, how the sale of the business is structured is more important than the actual selling price of the business. Too many buyers make the mistake of being overly- concerned about the full price when the terms of the sale can make the difference between success and failure.
It’s your decision as to what phase of the process you want to involve an attorney however, we strongly advise the use of an attorney at some point in the process. Some buyers prefer to engage an attorney after the terms & deal have been negotiated, to minimize expenses. It is important, however, that the attorney you hire is familiar with business acquisitions and has the time available to draft or review the documents in a timely manner. At Vantage Business Brokers, we can refer you to an attorney who specializes in small business acquisitions. An experienced attorney can be of real assistance in making sure that all the details are handled properly.
A professional business broker can be helpful in many ways. They can provide you with a selection of different and, in many cases, unique businesses, including many that you may not be able to find on your own. Business brokers are also an excellent source of information about small business and the business buying process. They are familiar with the market and can advise you about trends, pricing and what is happening locally. At Vantage Business Brokers, we handle all the details of the business sale and will do everything possible to guide you in the right direction, including, if necessary, consulting other professionals who may be able to assist you.
Obviously, you want to consider only those businesses that you would feel comfortable owning and operating. You also want to consider only those businesses that you can afford with the cash or financing you have available. In addition, the business you buy should be able to supply you with enough income – after making payments on it – to pay your bills, or have the potential to do so in the near future. You should always consider what you can do with the business after you acquire it – how you can improve it and make it more productive and profitable, while reducing expenses.
When you find a business, the business broker will be able to answer many of your questions. Once you get your preliminary questions answered, the typical next step is for you to tour the site, and meet with the current owners. If you want to move forward, you will submit an offer to the seller who can approve it, reject it, or counter it with his or her own offer. Once you and the seller agree on the price and terms, the next step is for you to deposit earnest money with the seller's broker and begin your "due diligence phase". Once your contingencies have been met and you are satisfied with the information & financials you have received/reviewed, the closing documents can be prepared, and your purchase of the business can be successfully closed. You will now join millions of other entrepreneurs who, like you, have chosen to become self-employed.