Buying An Existing Business

There is a new form of entrepreneurship emerging - the "buyout entrepreneur." Many people are finding that they can make good money from buying and revitalizing an existing business.

When you purchase a business, it comes with an existing reputation, customer base, suppliers, equipment, leases, and cash flow. Many entrepreneurs are better at growing ventures than starting them on their own. There are several smart strategies to consider when buying the right business:

  • When negotiating terms with the seller, keep in mind that the business should generate enough cash to buy itself back in five years.
  • Ask the seller to continue working with the business for six months after the sale to help ensure smooth transition.
  • Seek outside help and advice from lawyers, accountants, and bankers.
  • Be sure to obtain any back records, such as audited financial statements and tax records for the past 3 to 5 years.

The risk in buying an already existing business is much less than starting a new venture. Check with the seller to find out the reason for selling the business. As a buyout entrepreneur, you should not have to worry if the reason includes: retirement, other interests, illness or death, internal disputes, business complexity, inadequate capital, doubt or failure, planned exit strategy.

Do NOT buy a business if it is being sold for the following reasons:

  • deteriorating market,
  • product obsolescence,
  • loss of key people,
  • lease problems,
  • legal problems,
  • inefficient operations,
  • poor location,
  • competitive developments,
  • problems with key suppliers, or
  • dependency on one key account.

Consider buying a Franchise?

Maybe a franchise is the right way to go. Instant business with a business model that works (most of the time) and with resources to help you succeed. Check out this site for more information about buying a franchise and listings from the biggest franchises out there. Learn more about Franchises & see listings.

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