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"What
we can do for you..."
Security
A
big advantage in buying an ongoing business is that you
as the new owner have an immediate cash flow and an
established customer base.
You do not have to build a business; you simply
take over an existing successful business with the
present owner’s assistance.
Financing
We assist you in obtaining financing.
Banks are reluctant to finance business purchases
for several reasons.
One, all small businesses attempt to minimize
profits shown on financial statements to reduce tax
liability. Also,
a bank cannot come in to manage a business if
foreclosure becomes necessary.
Therefore, over ninety percent of business
purchases are financed by the owner himself, which
demonstrates his confidence in the business.
Confidentiality
Unlike the sale of real estate or franchises, the sale
of an ongoing business is very confidential for both the
seller and the prospective buyer.
All inquiries are held in strict confidence.
Meetings are confidential, and we are available
after hours and on weekends.
Things
a buyer should know
We
at The Haley Group are advocates of finding a business
that you like and feel comfortable managing.
You, like every other prospective buyer, have a
vision of being your own boss and calling your own
shots. An
old saying in the real estate industry is … “The
three most important things a buyer should look for are
location, location & location.”
While location is important to a business buyer,
be aware that track record and management round out the
three components of a successful business.
Let us assume that you find a business that you
like and its location is fine.
But because of poor management, the business may
not show the greatest record of accomplishment.
Purchased for the right price and terms, this
business could become more successful with proper
management making it a good way to achieve your vision
of being in business for yourself.
Finally, be aware that many businesses sell for
much less than they are originally listed…
sometimes-even 50% less.
So, if it is a business that you like, do not be
afraid to make what you consider to be a low offer.
The
Process
The
process of buying a business is as follows:
-
Evaluate
the basic information on alternative businesses that
sound interesting to you.
-
Visit
the business (if possible) without announcing
yourself as a buyer (incognito) to get a “feel”
for the business.
-
Meet
with the Seller, asking from general to probing
questions on anything and everything, except actual
price negotiations.
-
Do
your preliminary evaluation, based on the
information provided by the seller to The Haley
Group and you.
-
Make
an offer, assuming that all of the information you
have been provided is correct, but include contingencies,
which allow you to confirm such information.
The Haley Group will show you how to write an offer
to protect you as the buyer.
-
Once
a sales price is agreed upon, make a closer
investigation of the business, confirming to your satisfaction
the
validity of your offer.
-
Have
documents prepared for the closing.
You may agree with the seller to share the
cost of a closing attorney.
This lawyer will not argue the position for
either party, but drafts all necessary legal
documents to comply with the agreement a buyer and
seller have reached.
-
Close
the purchase, and begin your first day as the owner
of your own business.
The seller will assist
in an orderly transition because most of his money
is coming from your success.
You
are part of the American Dream – You and your family
own your own business!
Top
10 Tips for Buying the Right Business Right
- Make sure the
broker or intermediary is licensed!
- Buy
a business you like.
Although profitability is important, you will
risk making a terrible mistake if you do not buy a
business that you like.
Often, people who buy hastily without
considering personal satisfaction later sell their
businesses at a loss.
Will you be proud to own the business?
If you are not sure, do not buy that type of
business.
- Be
flexible. The
Haley Group advises its clients to be open to all
sorts of businesses.
Do not lock your self into a McDonald’s or
a Mailboxes, etc.
Who knows, you may surprise yourself by
taking a liking t a Blimpie or Signs Now franchise.
If you lock into only one type of business,
it will take you much longer to find a business to
buy. Examine
the following categories: retail; service;
manufacturing; distribution; restaurant; lounge;
coin-operated business.
First, decide if there are any categories
that you do not want to be in, then focus on the
remaining categories.
- Do
not expect much financial info.
Do not expect “traditional” financial
information from the owner of a privately owned
business. The
only accounting required of a privately owned
business is filing tax returns, which are prepared
to report the lowest possible tax liability.
There are other ways to verify cash flow
later.
- Consider
chemistry. This
may seem like an unusual recommendation, but The
Haley Group tells its clients to forget about buying
a business if they do not like the current owner.
The buying process is a long and somewhat
complicated one -- it is imperative that the buyer
and seller work through it together.
- Go
with owner financing.
The owner of the business should finance the
purchase. In
most cases, this is the sole source of financing
available to buyers of an existing business.
With owner financing, you can feel secure in
believing the owner’s representations as to income
and expenses, and you have a remedy if there are any
problems after closing.
It also gives you a “silent partner” with
a personal stake in you success.
- Do
not pay cash. You
may not want a loan over your head, but do not pay
all cash for a business – even if you have it.
You should keep a stash on hand for
emergencies and business improvements.
If you insist on paying all cash, at least
place some of the purchase price in escrow for a
period of time to protect yourself from any problems
that may surface after the closing.
- Make
an offer before you have seen all of the financial
and other business records of the business.
It is simply not possible to know everything
about a business before you make the initial offer.
The offer does not commit you to the
business, but it does let the seller know you are
serious.
- Stay
calm. Buying
a business can be like dating.
You’ve got so many emotions going –
do you like the business, does the owner like you,
is this feasible, what does my family think, etc.
– that you’re bound to get a little flustered.
Keep your wits about you; you will need them.
Remain calm, and negotiate your offer with
quite reflection and reasoned discussions.
As you go through negotiations, always use
this simple formula: Cash Flow Available minus
Annual Payments to Owner = $$$ for you and your
family. If
at any time during the negotiations this formula
does not result in enough money for you and your
family, stop.
- Investigate
the business. Once
the owner has accepted your offer, the real work
begins. Verify
cash flow and identify any hidden problems.
If you see red flags in either of these
areas, change or terminate your offer.
There should be stipulations in your offer
that allow for this.
- Close
quickly. Once
the deal is made, try to close as quickly as
possible. You
do not want owner to have second thoughts or news of
the sale to leak out to employees, suppliers and
clients.
THE
90% RULE: FACTS ABOUT BUYERS
- 90%
of all buyers are first-time buyers.
In other words, they have never been in
business before.
- 90%
of all buyers will finance the purchase of their
business.
- 90%
of all buyers do not know what kind of business they
want or best serves their needs.
- 90%
of all buyers are terrified and/or uneducated in the
business buying process.
- 70%
of all sales will be financed by the seller.
- 90%
(or more) will not buy the business that was
advertised or the one that they called in on.
Advantages
of Buying an Existing Business
-
Actual
results rather than pro-forma.
-
Immediate
cash flow.
-
Trained
employees in place.
-
Established
suppliers and credit.
-
Established
customers and referral business.
-
Existing
licenses and permits.
-
Training
by the seller.
-
The
availability of owner financing.
Advantages
of Buying A Franchise
-
Known
name means instant recognition.
-
Proven
product or service.
-
Ongoing
support means you are in business for yourself but
not by yourself.
-
Better
than 90% of new franchises are successful.
-
Operating
system in place all the mistakes have been made!
-
Opportunity
to add additional units within the franchise system.
-
Training
by the seller.
-
The
availability of owner financing.
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