Advantages Of Buying An Existing Business
The
advantage of buying an existing business is that you are buying a business
that is already producing an immediate cash flow and has an established
customer base. download dvd
You
may encounter many advantages of buying an existing business.
Some of those might be;
What is a Business Worth?
There are many factors to consider in valuating a business. However, the final sales price is determined between seller and buyer. There are tangible and intangible assets in a business. The tangible assets, such as equipment, fixtures, inventory and other similar assets are the ones that are the most visual.
The intangible assets such as the reputation of the business, its customer base and its strengths within its own competitive market, also called "goodwill", are the assets that produce a cash flow. Although the most recent year's cash flow is usually the best indicator of current business performance, it is also important to review financial information of previous years. Some years may show higher or lower expenses than usual, which may be caused by a one time expenses or income. In that case adjustments should be made.
Other factors a buyer should take into consideration are lease terms or possible ownership of premises, competition, reputation, years in business, industry's outlook for the future, special permits, licenses, terms of sale and depending on the type of business, location.
Financing for Buyers
Seller
Financing
Seller financing of part of the acquisition may be available, however
some sellers are hesitant because of the fear that the buyer will be unsuccessful.
Seller financing normally ranges between 20 and 30%. As a protection the
seller will require a UCC-1 financing statement to be filed in the public
records with the local and state agencies.
SBA
Loans
More banks are being approved as Small Business Administration lenders,
which is a Government guaranteed loan and was created to promote lending
to small businesses. SBA loans are now available to business buyers under
very reasonable terms with up to 70 percent financing. Certain programs
require minimal paperwork, however the buyer must prove the stability
of the business and be in a position to offer collateral, such as equipment
or real estate.
Other Financing
Other sources of financing business acquisitions may be obtained from
Equity Groups or Capital Markets.
The Wilson Group can assist the buyer in obtaining business acquisition
financing.
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