If you are buying a business, there are a few things that are critically important if you have any hope of successfully getting to the closing table. Here are our top 7:
Don’t Be Greedy
Many buyers come to the market looking to buy a business for pennies on the dollar. This is both unrealistic and unfair to the business seller. You should expect to pay a fair price for a business, as that business wouldn’t be around for your to buy if the seller hadn’t worked hard to build it.
Know Why You Are Buying
Buying a business only because you want to be your own boss is a mistake. Entrepreneurship takes hard work, long hours and a great deal of responsibility. Take some time before trying to buy a business to decide if this really is the life for you.
Be Ready To Provide Background Info On Yourself
Many buyers come to the business market expecting sellers to disclose highly confidential business information like tax returns and financial statements but then refuse to provide any information on themselves. You will have to provide sellers with a financial statement and a resume, so be ready.
Realize The Perfect Business Does Not Exist
Yes, that’s right. Buyers who are looking for a perfect business will never find one. Look at businesses with an open mind. Most issues you find in small businesses can be overcome with some creativity and hard work by a new owner.
Offer A Decent Down Payment
Offering $10,000 as a down payment on a $750,000 business is insulting to a seller. It also shows a complete and total lack of commitment on your part to the negotiations and potential sale.
Don’t Take Forever
Once you enter into the due diligence phase, you take the business off the market for other buyers who might be interested. It is completely unfair to the seller for you to drag your feet during this phase. If you are serious about buying the business you will complete your due diligence and move forward with closing in a timely fashion.
Be Nice To The Landlord
Landlords typically have nothing to gain by being helpful or cooperative, and landlords are also famous for both holding up and killing deals because they didn’t like a buyer. Always show up on time to meetings with your future landlord, be nice (even if they aren’t) and come prepared to prove you can be successful as the business owner by bringing your financial statement and resume.
Business transactions have a lot of moving parts, so if you want to be successful in your decision to buy a business you will have to be prepared to put in the effort and cooperation during the sale process.
Do you have questions about the requirements of a buyer during the transaction process? Would you like to know what kinds of financial information you will be required to provide? Feel free to leave a comment or question here and we would be happy to help.
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