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 […]
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
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
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.
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.
Read more to find out more about leases and buying a business. Read more
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.
This article was originally written in 2010 and updated in 2015. The disaster mentioned was part of the crash in the real estate, stock market and general economy in 2008.
The hardest hit industries in these economic times are real estate agents, furniture and accessory stores, clothing stores and fast food restaurants. The first thing consumers cut out when they are on a tight budget is their expensive coffee drinks and lattes.
The teenagers, who are a big part of the fast food consumers, have found that they also do not have money because their parents have cut their allowances or stopped them all together. When there is money for fast food, or the family decides to eat out, they now pick the places with the cheapest prices. Lower priced establishments get the business and the higher priced pizza places do not. Read more
Today I received the Business Broker Press© release of the ten top selling businesses. At the top of the list was E-Commerce. E-Commerce refers to web based business that sells products online. This can be anything from cosmetics and clothing to automobiles and dating services to meet the future mother of your children.
Up until World War II middle America bought its products primarily from the small merchants in town. Then after the war the Big Box stores started. When the internet became popular the trend away from people making their retail purchases from “brick and mortar” store became more and more popular. Read more
What Motivates a Business Seller?
When working with buyers as a business broker and a CPA doing due diligence, the buyers universally ask one question. “Why is the seller getting out?
This is a good question but the question I ask is, “How do you know if the seller is telling you the truth?” Read more
I often hear from business buyers that they are looking for any type of good business. That approach is very much like finding a trophy wife and saying any lady will do as long as she is exciting. An exciting woman for one man can be a disaster for another. You really need a good fit for your personality. This is the same in a business.
You are getting married to your business, and spending more time with it than with your wife. I am not mechanically inclined so I would never own an automotive shop. I am however a numbers person so selling a product or service where I can use my accounting and sales background would be a good fit for me.
I had an out of work mechanical engineer type person doing pool retrofitting sales for me as a temporary job until he found a new job with corporate America, making very big bucks. He would figure out how to solve the problems the installation crews came up against and automated the quotation process so the price popped up. He was good at both sales and production. He was not however good at pricing the product so that we made enough profit.
Find out what type of work gets you up in the morning. A salesman can take any type of wholesale or service type business and turn it into a moneymaker, regardless of how well the prior owner has done. A trained retailer is good at working with fixed retail locations while anyone not a retailer will die running a retail storefront. Five percent of the owners of most types of business make a very big profit. Thirty percent do very well, while over fifty percent are starving. The issue is not what type of business is a good business to buy but what type of business will be a good business for you to turn around and create with.
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Certified Public Accountant (CPA) # 106752
Certified Fraud Examiner (CFE) #594927
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Business Buying Services
PO Box 2734, Seal Beach, CA 90740-2734
Phone: 805-428-2063
Fax: 562-446-0575
