Find Your Passion In Your Work When Buying A Business

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The most common comments I hear from business buyers are “What is a good business to buy?

I am open to any business that can make me money” They also bring up this question whenever they find any company that looks interesting. “Is this a good industry to be in?” What they are not getting is that every industry is a great industry for the few doing well and a terrible industry for the rest of the world. I would say that 50% of all business owners just barely get by, 30% do average, and 20% of the business owners make a profit that they are proud of. It has nothing to do with what industry it is but everything to do with the management of the company.

So if it is all about the management, how do you know if you are going to be good top management material?

Well there are several things.

Let’s review some of those traits. Read more

Business Buying Opportunity: Should You Buy A Distressed Business?

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Everyone wants to buy a good profitable business making over $100,000 per year. The problem is there are only a limited amount of these businesses on the market. The reason for this  is everyone wants the same thing.  The results is the pricing is too high and the availability is too low.  Read more

The Art of Getting Financial Records Before Signing a Letter of Intent

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How to handle brokers wanting offers before due diligence We have all heard of “The battle of the sexes”. What is not as well-known but as difficult a battle “is the one between “brokers and business buyers” regarding getting a business’s financial information. This article will discuss: 1. How to get listing brokers to release […]

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Protect Yourself From A Bad Purchase Agreement

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It is important to protect yourself from forfeiting your deposit when you sign a purchase contract. This would seem to be a very obvious statement. Except, what is not obvious is that so few people know how to do that. The result of inexperience is that too many people lose their purchase deposit. The deposit checks vary from $5,000 to $50,000 or even more. Read more

Business Due Diligence or a Seller Warranty? Which is Better…

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The seller told the buyer “The books do not show all the money, but I guarantee you that this business will clear $10,000 a month after taxes.”

How often have you heard these words? Wouldn’t it be great if you could actually get a guarantee from a seller when buying a business? You can. But you have to ask for it, and you have to give the seller a good reason for them to give it to you.  Read more

Buying a Business: Disasters When You Don’t Have Your Own Agent

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Should you allow a Dual Agent or Get your own buyer’s Agent? A Changing, More Aggressive Business Buying Market

Yesterday, I was reviewing a buyer’s signed escrow instructions.

He came to me after signing the escrow instructions and purchase contract, as his agent had said he should. His agent said he needed to hire someone to do the due diligence after he opened escrow. When I read the escrow instructions, I was shocked.

Read more to see how it turned out.

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Business Valuation Pitfalls: What is the True Worth of a Business?

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I am often asked how can we determine the true worth of a business.

The first step to this process requires determining the actual profit of a business in the current market conditions.  The second step is to create a value for the current income stream assuming it continues into the future or you may want to look at the profit potential of a business not based on the current business activities.

What is Seller’s Discretionary Income?

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Business Buying Pitfalls: Should You Sign a Personal Guarantee on a Lease?

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When you buy a business it usually comes with a lease already in place.

If the lease is not coming due shortly the seller tells you to assume and qualify for the lease. They think this gets them off the hook, but it doesn’t. The seller then becomes a guarantor of the lease in case the buyer defaults. Only if a new lease is written is the seller fully off the hook and the buyer can negotiate new terms and conditions with the landlord.

It is in the buyer’s best interest to negotiate a new lease with terms and conditions acceptable to the buyer.

Read more to find out more about leases and buying a business. Read more

5 Ways to Protect your Purchase Deposit from Theft

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Whenever you make an offer for a business and put down a deposit you are putting yourself at risk that it could be forfeited to the broker and/or seller. Here are a few things you can do to make sure that does not happen:

Business purchase deposit protection

  1.  Write LOI (Letter of Intent).  This is not a binding document, and no deposit is necessary. Then after you have agreed with the seller on the price and major terms, a formal offer can be written. At this point you can afford to pay to have the purchase contract reviewed by your attorney, or due diligence CPA, before being signed.  Read more

Expert Business Advice: On Avoiding Worker’s Compensation Insurance

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The underground economy is the illegal way to avoid paying payroll taxes and workers compensation insurance.

Of course when and if you get caught, the penalties are quite high.  If you do the bulk of your work yourself and only hire low paid staff that has low payroll expenses, you can compete with the underground economy.

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