A big advantage in buying an ongoing business is that you, as the new owner, have an immediate cash flow "source" and an established customer base. You don't have to build a business. You simply take over an existing successful business with the present owner's assistance.
Financing
We may be able to assist you in obtaining financing. Banks are reluctant to finance business purchases for several reasons. First, many small businesses attempt to minimize profits shown on financial statements to reduce tax liability. Secondly, a bank cannot manage a business if foreclosure becomes necessary. Additionally, many businesses are service-related with few hard assets to secure a bank loan and banks have been historically reluctant to lend solely on cash flow. Therefore, over ninety percent of business purchases are financed by the sellers, which demonstrates their confidence in the ongoing business.
Confidentiality
Unlike the sale of real estate or franchises, the sale of an ongoing business is very confidential for both the seller and the prospective buyer. All inquiries are held in strict confidence. Meetings are confidential, and we are available after hours and on weekends.
Things a Business Buyer Should Know
At SUNBELT, we are advocates of finding a business that you like and would feel comfortable managing. You, like every other prospective buyer, have a vision of being your own boss and calling your own shots. A business must fit your visions to be successful.
An old saying in the real estate industry is, "The three most important things a buyer should look for are location, location and location." While location is important to a business buyer, be aware that track record and management round out the three components of a successful business.
Let's assume that you find a business that you like and its location is fine. But, because of poor management, the business may not show the greatest track record. Purchased for the right price and on the right terms, this business could become more successful with proper management, making it a good way to achieve your vision of being in business for yourself.
As a prospective business buyer, you will be concerned as to why the business owner is selling the business. Business owners sell for a variety of reasons. Besides the obvious reasons of retirement, bad health or relocation, many sellers simply tire of doing the same thing and want to move on. If it is a good business for you, the reason for the sale doesn't matter.
Finally, be aware that most businesses sell for much less than their listed price. So, if it's a business you like, don't be afraid to make what you consider to be a reasonable offer.
Remember, your SUNBELT broker is a well trained professional who knows how to buy a business. Utilize your broker's talents and call your broker whenever you need assistance or have questions about the process.