Items to be considered as you are buying an existing Business
Franchise for sale
When a lot of people bring to mind starting a business, believe that of starting from scratch--developing new ideas and building this company through the ground-up. But starting from scratch presents some distinct disadvantages, including the impracticality of creating a customer base, marketing the new business, hiring employees and establishing cash flow etc.
Generally, buying an existing business is less risky than beginning from scratch. When a clients are bought one takes over an operation that's already generating cash flow and profits. It has an established customer base, reputation and employees who definitely are conversant in every aspect of your business. There is no need to reinvent the wheel--setting up new procedures, systems and policies--since a effective formula for running the business was already put in place.
Although buying a business is often more costly than starting from scratch, it is quicker to get financing to buy an existing business than to start a new one. Bankers and investors generally feel more comfortable coping with business that already includes a proven track record. In addition, buying a business may offer you valuable legal rights, for example patents or copyrights, which could prove very profitable.
Important points to be considered
Acquiring the perfect business begins with deciding on the best kind of business. A good option to start is by looking at a business that one is knowledgeable about. Also size of business, with regards to employees, quantity of locations and sales should be thought about.
Next, pinpoint the geographical area.Labor pool and costs of doing business on the bottom, including wages and taxes must be assessed. Further you should investigate every business in your community that meets the requirements.
Getting in touch with a business broker is yet another strategy for finding businesses for sale. Most brokers are hired by sellers to discover buyers and help negotiate deals. A broker might charge a commission--typically 5 to 10 percent from the price. The help brokers can offer, especially for first-time buyers, is often definitely worth the cost.
Franchise for sale
Whether an agent is hired or otherwise not setting up an "acquisition team"--banker, accountant and attorney-is a necessity. These advisors are essential to what is called "due diligence", which means reviewing and verifying all of the relevant details about the business.
You have to assess the company's reputation and the strength of its business relationships. Existing customers, suppliers and vendors end up being an essential way to obtain their relationships with all the business. Business Bureau, industry associations and licensing and credit-reporting agencies enables you to ensure that there aren't any complaints from the business.
Following your preliminary analysis, acquisition team should start examining the business's potential returns and its price tag. Whatever method is used to determine the fair market price of the business, assessment with the business's value should take into consideration such issues as the business's financial health, its earnings background and its growth potential, along with its intangible assets (for example, brand name and market position).
To have a concept of the business's anticipated returns and future financial needs, one view of the projected financial statements must be taken. Balance sheets, income statements, cash flow statements, footnotes and tax returns within the past three years are key indicators of your business's health. These documents help conduct a financial evaluation that highlights any underlying problems.