Ask The Business Broker- Questions and Answers on Buying and Selling Businesses

QUESTIONS ABOUT BUYING A BUSINESS

Should I buy a business or start one?
Starting a business from scratch is worth consideration but be advised that the majority of start-ups do fail.

If I buy a business, what should I look for?
Look for a track record. Don't just rely on projections. Look for cash flow, customers, employees, vendors, licenses or permits, owner provided training and possibly even owner financing.

Should I use a business broker?
A professional business broker can help provide a selection of businesses for you to consider.

How do I know if the price is fair?
Valuation varies and is subjective. There are rules of thumb but the final price ultimately comes down to how badly you want to buy the business and how badly the seller wants to sell. Consider the business' assets (inventory, equipment and receivables) and the earnings and projections.

What's involved in buying a business?
For starters, decide on your price range and the type of business that you want. Try to remain flexible while at the same time focusing on your preferences. Get the basic preliminary information, e.g. location, description, price, financials, employees, history, tenure of current owner, reason for sale, terms of lease.

QUESTIONS ABOUT SELLING A BUSINESS

I want to sell my business. What information will a buyer be looking for?
Impress upon the buyer the advantages of your existing operation. Buyers will first want to see evidence of your track record and won't want to rely on projections. Decide on an asking price and a bottom-line price. Try and see what comparable businesses have sold for. Also prepare a list of customers, employees, equipment, vendors and licenses. Think about whether you are willing to offer any seller financing and be sure to have an answer to the reason that you're selling.

Should I use a business broker?
A professional business broker can help find buyers and also assist with many of the transaction details, including negotiation.

How do I price my business to sell?
The price will be influenced by how badly you want to sell and how badly the buyer wants to buy. Consider the market's supply and demand of comparable businesses; review your business' assets, e.g. inventory, equipment, receivables, and your earnings and projections.

Do I have to offer financing?
No, you don't. If you can, it may help expedite your sale.

Questions, comments or requests can be directed to manager@webbizbroker.com