There’s an old saying that states, “Free advice is worth [only] what you pay for it.” While this is true in many situations in life, how does this homily apply to buying a business? After all, anyone who wants to buy a business will need some serious advice on the matter. They will want answers to such questions as, “What kind of business should I buy?” and “What’s the advantage of a franchise over an existing business?” and “How do I know it’s a good price?” and so many more. Additional concerns arise once the reality of buying a business starts to sink in. Then buyers will want to know, “How much money do I need to operate the business properly?” and “When will I start to show a profit?” The novice may not even know which questions to ask, not to mention having a clue about the answers. In this situation, free advice is both available and worthwhile. Even the cost of paying for such advice is nominal.
Advice on Buying a Business
So do you settle for free advice, or pay someone for it? In either instance, where do you turn to learn more about buying a business? There are a number of resources available to prospective business owners. You simply have to know where to look. Here are some places to start:
- Entrepreneur Forums – Business forums are for entrepreneurs and small business owners. You can meet fellow entrepreneurs, business experts, business owners, business investors, and business brokers. Discuss topics and ideas on how to start a business, buy a business, sell a business, franchises, business management, business strategies, business plans, inventions, and entrepreneurship.
- Local chamber of commerce – As a means for finding out about businesses for sale in your area, the chamber of commerce is an excellent resource, and it’s free. Many FSBO (for sale by owner) businesses are listed through this organization, and you can also obtain a list of reliable business brokers in the vicinity.
- Business brokers – In the same way Realtors list homes for sale, business brokers facilitate the matching up of business sellers and buyers. Brokers are a good source of information as to which businesses are available to buy, but keep in mind they will usually try to steer you to companies with which they enjoy a direct listing relationship. There are also franchise brokers who act in the same manner, except they specialize in selling franchises (imagine that!) and represent anywhere from several dozen to hundreds of corporate masters.
- The SBA – The U.S. Small Business Administration is a terrific resource if you wish to buy a business. First, their Web site is organized on a state-by-state basis, with listings of companies for sale as well as direct links to every Secretary of State’s office. This information is valuable because you will learn about things like business licenses, taxes, employment regulations, and many other factors necessary to the purchase and successful operation of a business. The SBA also acts as a funding resource. In addition to offering advice on how to apply for a bank loan, they have several programs in place to assist small business owners on finding the money they need to buy a business and keep it running smoothly. For example, in the event you do not qualify for a conventional loan, there are circumstances where the SBA will act as a loan guarantor on your behalf.
- Lending institutions – Bankers and credit union managers have their fingers on the financial pulse of a community. As a result, they know whose credit is good, and whose is stinko. They oftentimes know which companies are for sale before the general public is aware of the situation, plus they’re a great resource for … money. By going to a banker for advice on buying a business, you begin the process of creating a firmly entrenched professional relationship that could also open the doors to funding the purchase of that business.
- Other professionals – The two primary professions not heretofore mentioned that are intimately involved in buying a business are CPAs (or accountants in general) and attorneys. Both fields attract business-type thinkers, and business owners require their respective services on an ongoing basis. While rules on confidentiality prohibit them from telling you the specifics on any particular case or client, their level of general knowledge on how to buy a business is nearly invaluable. Buying a few hours of their time is money well spent.
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