Questions Every Buyer Should Ask Themselves
Finding a business to purchase should be the final step in a process that begins with self-evaluation and a sound financial assessment. Before buying a business, you should determine what type of business you are qualified to run and would enjoy owning. Based on your own skills, technical knowledge, abilities, interests, and personality, you can determine which type of business will provide you with the best opportunity to use your talents most effectively and turn a profit. There are various assessment tools available to assist in this process. Finding a business that compliments your natural skills is an essential element to a successful journey.
ABMI can help. We've been helping business buyers find their "ideal deal" since 1982. The process begins with a no cost, no obligation, in-person meeting between you and an ABMI agent/consultant/advisor, during which you will be encouraged to talk about your preferences.
Initial Financial Questions To Ask
Along with answering questions about personal fit, you should know how much you can comfortably afford to spend as a down payment on a business (most buyers utilize a bank loan for most of the purchase price, with the buyer investing a down payment), and how much you will need the business to generate in cash flow to fulfill your personal financial needs (salary you will need from the business you buy). The process of finding the right business for you takes thoughtful consideration of a number of factors. The team of professional intermediaries at ABMI can help. When you are ready to start asking questions and begin the exciting journey, you may phone ABMI at 913-341-6300 or register at this ABMI web site. We wil then contact you to schedule your initial appointment.
Do Your Homework
You will need to know "the realities of the marketplace", meaning, you should ask questions about how businesses are valued/priced in the "real world" of successful acquisitions. Some prospective buyers are, unfortunately, the "victims of bad advice", with unrealistic expectations, who search, sometimes for years, for businesses that can be bought for "below market" prices. Although there are certainly sometimes some bargain deals "out there", the truth is that most worth while business acquisitions that have a realistic chance of being acquired are priced in conventional ways, using fairly standard rules of valuation/pricing.
ABMI offers all buyers confidential, candid advice about how businesses are priced and sold. There is no charge for this service.
Return On Investment Questions
One of the most important questions to ask of every business opportunity you might consider purchasing is...What is the likely annual Return On Investment?... meaning, after you acquire the business, and after you pay all of the business' overhead operating expenses, and after paying for the "cost of goods" (the cost of the product or service the business sells), and after you pay the "cost of occupancy" of the premises (rent cost if you lease the premises, or cost of the mortgage principal & interest if you are buying the premises/real estate), and after paying the principal and interest cost of the business acquisitions loan you arrange, the remaining "cash flow" before income taxes should provide you with a "Return On Investment" (return on your original down payment) that is more attractive than the ROI you might receive investing that down payment in some other instrument (stocks, bonds, savings account, CD, rental real estate, or whatever). Most buyers insist on an ROI from buying a business that is better than alternative investments might deliver.
ABMI, having sold thousands of different businesses over the last almost 30 years, has a keen understanding of the Return On Investment (ROI) that a reasonable buyer can expect to achieve from buying a business. Although there are no guarantees, if the buyer achieves sales and operational management similar to the sales and management of the former owner, it is reasonable for the buyer to expect the ROI to be fairly predictable.
ABMI offers buyers a no cost consultation, showing analysis techniques that help buyers determine the historical and future Return On Investment possibilities of a wide variety of business acquistions, for buyers buying everything from laundromats to manufacturing companies...from fast food restaurants to large distributorships...from car washes to internet service companies...from retailers of all kinds to trucking companies.
How To Find The Business That's Just Right For You
At any given time, there are, in most cities, hundreds (or thousands) of businesses for sale. Some are failing businesses, some are businesses that have been successful in the past but are struggling now, some are fairly profitable, and some are ultra successful. And, there are a number of ways you can discover what's on the market. Some businesses are advertised in the local newspaper, in the "Businesses For Sale" section of the classified ads; some can be found by networking with bankers, attorneys and accountants; some are listed with realtors; some are listed with business brokers; and some are advertised on the internet in "business opportunity" web sites.
ABMI offers a free "Business Discovery System" to all buyers, whereby we help buyers find their "ideal deal". The process includes ABMI first encouraging a buyer to describe their ideal investment, then ABMI's agent initiating the process that helps the buyer find that ideal.
Some buyers have elected to engage ABMI in special search projects, whereby the buyer pays ABMI a fee for it's services, but most engagements with buyers are at no charge to the buyer.
The search process includes ABMI showing the buyer the many businesses for sale that ABMI presently has listed, and includes surveying our associates/agents for information on listings they are in the process of bringing to market at any given time.
ABMI charges no fees to business buyers on most small business transactions, but is paid a commission by the business owner when the business sells, except for special projects at the buyer's request, when ABMI might be asked to represent a buyer in a transaction.
ABMI works with all buyers by explaining the various elements included in a business acquisition, including: financing options; SBA details; information on how to choose a business to buy; options available to a buyer in the terms sellers might offer; how to conduct thorough and low risk due diligence in acquiring a business; etc. This service is offered to buyers as an accomodation, at no charge.
Then, when the buyer chooses a business to buy, we volunteer to help buyers arrange the financing. ABMI has helped thousands of business buyers arrange financing, on hundreds of millions of dollars of acquisitions of all sizes, all prices, over the almost 30 years we've been brokering businesses.
And, ABMI works with the buyer's lawyer, accountant and other advisors to assist in a smooth, "clean", low risk conveyance of the business assets.
ABMI will be here for you, to answer your questions, and assist in an orderly search and acquisition.
To arrange a no cost, no obligation consultation, you may phone ABMI at 913-341-6300 or register with this ABMI web site and we will then contact you.