Should I Start a New Business or Buy an Established Business?
In most cases, our recommendation is that you buy an established business, as 57% of “new” businesses fail within the first 3 years.
While an established business has a built-in market base with recurring revenues, proven products or services and tested locations. Most of the time, an established business can be successfully transferred through adequate training and a planned introduction to employees and existing customers and vendors.
And often, new owners take their recently acquired business to the next level by injecting fresh ideas, better management and a renewed energy and passion.
As many businesses are sold due to illness, retirement, partnership disputes, desire to downgrade, or because the owners are not longer challenged.
Steps to buy a business
The commitment is to yourself, to purchase a business at a price and terms consistent with the marketplace and in line with your needs and abilities.
You must sign an agreement promising to maintain confidentiality for all the information provided to you on the businesses.
#4 Review of Businesses
Together we discuss and review various types of businesses and select some that appeal to you.
#3 Background Information
You must provide information about yourself, such as a resume and financial statement. The more we know about you the more likely we can find a business you will like. The more information we provide the seller the better the terms he or she will consider.
#5 Introduction to Businesses
We introduce you to the businesses you are interested in and discuss the important factors of each.
#6 Meeting the Owners
A meeting between you, the seller and us may take place. Giving you the opportunity to ask questions and to present yourself to the seller.
#8 Present Offer
We present your offer to the seller.
#7 Offer to Purchase
You write, with our assistance, an offer or letter of intent for the business. Earnest money may be required to demonstrate your seriousness to the seller. Most offers are contingent upon your inspection of the financial books and records of the business. The offer is not binding until you remove all contingencies.
We provide the seller with your background, financial information, experience and rationale at arriving at the offering price, terms and conditions. Favorable background information will result in a better consideration of the offer.
We carefully explain the terms and conditions of the offer to the seller and decision makers.
#12 Mutual Acceptance
When buyer and seller agree to all terms and conditions of the sale, the offer becomes a Purchase and Sale Agreement.
The seller accepts the offer to purchase as presented or submits a counter-offer.
You meet with the seller to examine the financial records. Any questions you have are resolved at this time.
#14 Contingency Removal
You remove all contingencies in the Agreement. It is now a binding agreement.
#16 Escrow/Closing Attorney
We provide all documents to the transferring agent or attorneys so they can prepare the closing documents.
#15 Lease Assignment
(If not Purchasing the Property and Building) We work with the landlord to obtain an assignment of the current lease or a new lease for you.
Arrangements are made for you and the seller to count and price the inventory (if required).
#18 Transfer of Ownership/Closing
All parties meet to sign documents.