Finding the Right Business Opportunity
Are you looking for the right business opportunity?
Business opportunities seem to abound everywhere whether you live in Sacramento, CA, Chicago, IL or Timbuktu. If you pick up the business news there are new technologies that seem to roll out such as anything with an ‘i’ in its name be it a iPhone, iPod, or iPad. Even the home page for my web browser I open every morning has the same ‘i’ but it does not belong to Apple but Google, that is, it is www.igoogle.com.
Now go to any website and there are advertisements all over it extolling the greatest new business opportunities be it in the food, retail, manufacturing or the construction industry. New opportunities include leaving your corporate job to work from home or join the newest and fastest growing industry such as selling yogurt, cupcakes or the retiring baby boomers looking for senior care.
With so many business opportunities, where do you start? The answer will depend if you are selling a business or buying a business or may be buying a franchise.
If you are selling your business the single biggest mistake I see being made is not being ready and preparing the business for sale. Because the seller lives and breathes the business they expect they can answer and provide the documents a buyer needs as they move through the process. What they do not realize by taking this approach is that the buyer has a very short attention span. Buyers already feel uncomfortable looking at business opportunities because if they are starting out, they are not sure the questions they need to ask. If they look at a number of businesses, they then learn what they need to do but by this time they are burned out by the process or do not find the perfect business. Therefore, the number one step a business seller needs to take is to be prepared so when the right buyer comes along, asks their questions and you are instantly able to produce the answers, you increase your chances of the buyer continuing to consider your business opportunity.
For someone selling a business, the second suggestion is to get professional help. The business seller should keep their focus on what they do best which is run the business and keep it successful. Being distracted by questions from buyers asking commercially sensitive questions and wanting to meet to go over business plans, finance questions, legal issues, tax matters and other demanding items at what always seems to be the wrong time can simply lead to mistakes and the buyer disappearing.
If you would like a one page summary of the steps to sell a business, click on this link – The many steps to sell a business.
If you are a business buyer open to new business opportunities, I offer the same suggestion I made above and that is to be prepared. If a business owner is selling their business they normally have a tremendous amount of time, energy, pride and other emotions built into their business. In addition, they probably have plenty of money they put to work and expect to get back probably at a much higher rate than they put in. If they are taking active steps to sell their business it means they are serious and so as a buyer they expect you will turn up serious. Unfortunately, too many buyers do not turn up serious and so after the seller has a few disappointing experiences, their guard tends to go up and they do not offer as much information as quickly and as comprehensively as they are not sure of the buyers next steps.
How does a buyer show they are serious? A good buyer will show they are serious by understanding there is a need to sign a Non Disclosure Agreement or Confidentiality Agreement. The business seller will want to know the buyer brings cash as a down payment to buy the business or if they plan to offer all cash, that cash is available rather than the buyer willing to get the cash if they like the business. One of the worse things a buyer can do is inquire about buying a business and explain that the funds to buy the business are coming from an investor who is either an immediate member of the family or a trusted family friend. Without exception the person that should be making the inquiries about buying the business should be the person who is putting their money at risk. If they are too busy to find the right opportunity then you can guarantee they will be too busy to do the follow up work it takes to buy the business.
Other steps for a buyer to take to show they are serious include reviewing their credit score so they can quote their number to a seller and review their credit report to make sure there are no mistakes that could be embarrassing when a lender or seller asks to look. If the buyer wants to get third party finance, take the steps to get a prequalification letter so they can show the seller they have the ability to get some finance and keep the sale process moving. A good seller will be reluctant to sign any Letter of Intent or offer unless the buyer can prove they have the ability to buy and finance the purchase.
If you would like a one page summary of the steps to buy a business, click on this link – The many steps to buy a business.
A lot of buyers forget they have a second choice when looking to get their own business. That second choice is to buy the rights to a local franchise.
If you would like a one page summary of the steps to buy a franchise, click on this link –
The many steps to buy a franchise.
The final most important critical item the buyer needs to demonstrate is their ability to buy the business. If the buyer wishes to get an SBA loan the buyer will need to show they have management experience in the same industry as the business they are buying.
Would you like to know the value of your business? If you would like to know the value of your business or would simply like more information, this link will allow you to get a free sample of a Brokers Opinion of Value – Sample business valuation
If you have questions about the value of your business call Andrew Rogerson on 916 570-2674.