Buying A Business

Making the choice to buy a business could be your solution to financial independence.

If your business is currently profitable, the time to profitability is reduced to zero. A profitable business is one that is producing sufficient, and free, cash flow and owner income in order to support the lifestyle you desire.

Your first challenge is to find such a business that appeals to you on a day to day basis. This is important because you are going to have to ENJOY owning and working your new business. It helps if you already have some basic knowledge of the industry in which your new business resides. What trend is that industry currently on? Make sure that the industry is getting larger, allowing you to expand along with it.

Your next challenge is to determine the cost to purchase that business. If you do not have the total amount needed, where are you going to get the additional funds? Perhaps the seller will be agreeable to offering you terms that will allow you to use some of the free cash flow that was mentioned to make installment payments. This arrangement usually requires you to have good credit and a sizable down payment. How will you know if the offered business is really worth the asking price? Sellers can ask any price they wish. You, the buyer, have to be able to assess the true value for yourself. You will need to be able to evaluate accurately the assets’ market value and its wholesale value. Remember, you cannot pay retail for an asset and expect to realize a profit from turning it. There should be profit margin to benefit you for taking the risk of ownership.

The bottom line in buying an existing business is to do your homework. Perform your “due diligence”. Verify everything you can. Reject or deeply discount what you cannot verify.

Give yourself a generous margin of error to reduce risk. DMGL Consulting Group can guide you through the process with our business guide. Order your copy online today!