If you are thinking about buying a business, you must ask yourself some important questions, such as: Why do I want to be an owner? What types of activities do I like? What lifestyle is important for me? You’ll also want to be sure to include your family as part of the assessment. Consider the following tasks to put into place:
Line up a team of professional advisors.
Alert your attorney, accountant and financial advisors that you are looking for a business.
Consider your financial situation.
Be sure to carefully consider how much money you need to live off of and how much money you have for a down payment on a business. Your expectations need to be realistic and something that can be achieved by the type of business you are searching for.
Develop a personal financial statement.
The personal financial statement should show your assets and liabilities and possibly include a supporting statement from your banker or accountant. Be prepared to share this document with the business intermediary who is working with the seller. If you are planning to work with other investors, identify them and create a group financial statement.
Create a profile.
Sellers want to be sure their business will continue to be successful. They want to find a buyer who has experience and will take care of the company’s employees. Really, you are selling yourself to the current business owner(s) and the professional team that represents the seller.
Establish your criteria for acquisition.
Most buyers have no industry experience in the business that they purchase. Buyers purchase companies based on geography and cash flow. They tell us “I want to stay within so many miles of my house and I have a certain amount as down payment money and I need to make a certain amount each year”. Have an open mind. If you can apply your general business operations, financial and or marketing experience to a business, and the owner is not the main technician in the business, then the industry should not matter. If you are interested in buying an existing business, you want the business intermediary to be selling you to the seller. It’s important that you demonstrate that you’re a qualified, motivated buyer. Being prepared and serious about your search is an important initial step.