Secrets to Buying a Business
One of the most fundamental career choices for an individual to consider is whether you want to work for someone else or work for yourself. But working for yourself sounds a bit like starting your own business. This thought makes some folks queasy, seems pretty feels risky, and requires an excellent business idea, which you may not have at the drop of a hat. However, there is a Door Number Three: purchasing an existing business immediately and putting yourself in charge.
Termed “entrepreneurs through acquisition,” these business purchasers always look for businesses with enduring profitability. These are businesses that are more apt to have a stable income over time. In addition, they’re attractive to the lenders and investors who will provide funds for your acquisition. OK, these aren’t sexy fast-growth tech companies that make headlines on all the TV business channels. They’re companies that have two characteristics which may make them appear to be “boring” and dull—but in reality, these characteristics actually make them enduringly profitable.
1. Recurring customers.
The main essential component of enduringly profitable smaller businesses is not a rapidly expanding customer base. Instead it’s that they have recurring customers who form a very loyal and strong customer base. These types of companies have the ability to attract and maintain the right customers—those customers who value the company’s products and services and will continue to purchase them year after year.
2. Slow Growth.
Although astronomical growth makes headlines in the business journals, it’s accompanied by high risk. High growth results in new customers outnumbering the existing ones. These new customers may not be loyal to your brand or to the company. These new customers may have new demands and cause disruptions or changes to your business workflow. In addition, those headlines of your astronomical growth will also attract competition, looking to take advantage of the expanded market and the opportunities you’ve created. But low growth means low risk, which is important when it’s your money at stake. The pace is slower with an established business that grows more slowly, and you’ll have time to know your customers and forge lasting relationships with them. They’ll tell you what it is they value, which will help you with your future business strategies. Slow growth pays the rent and makes payroll month after month. Boring? Sure, but your sleep a lot more soundly knowing that you’re being steadily successful in the long run.
Secrets to Buying a Business
There actually are no real secrets buying a business. Running your own company lets you to lead an organization, make impactful decisions, and enjoy the flexibility that allows you to work in a way that best fits your needs. By purchasing an enduringly profitable, slowly growing firm, you can combine the opportunity for professional independence with the stability of buying an established and profitable small business.
You’ll have many questions to ask when you’re buying a business. Working with a qualified business broker will pay dividends. Your business valuation consultant will help you to review the documents, the business climate, and the industry, so that you make a wise decision that will build your business for the future.
To find out more about business buying opportunities in the Sacramento area, please visit our website Services and choose from the drop down menu the information you’d like.
For more immediate help, please send an email to Andrew Rogerson or call our office at (916) 570-2674.