I’m often asked about the best type of business to list or purchase. I’ve met a significant number of business owners over the years and learned that it isn’t for everyone. As an owner, you’re the first one in, the last one out and definitely the last to be paid. But on the other hand, the rewards of business ownership can be great. If you’ve decided that owning and operating a business is what you want to do, then what should you be looking for in a business?
Questions like existing, start-up, franchise, non-franchise, owning a building, leasing, etc. must be answered? You also need to understand that finding a business to purchase that can pass muster when carefully examined is a difficult task at best.
You can search on your own or find a competent business broker to assist you. I’ll assure you that the latter choice will save you time, energy and money so long as the business broker you select is qualified and ethical. One of the most important attributes your business broker must possess is the willingness to steer you away from a business you should not purchase. The idea is to find a business that is right for you and your family and to investigate it in an analytical rather than emotional manner.
Having a business broker represent you will give you a variety of advantages. He/she will help you narrow your search to a specific industry and then to a group of business opportunities within the industry. You’ll then need to carefully consider what requirements the business will place on you and your family.
I remember helping a gentleman purchase a donut franchise and being called several weeks after the closing. He told me that his senior baker had resigned and that he was filling in at 3:00 am while looking for a replacement. Fortunately, the franchisor had provided the necessary training that allowed the franchisee to do this.
Once you identify a business that appears to be what you want, you have to submit an offer and work to achieve mutual acceptance. When the basic terms and conditions are agreed on, you enter the due diligence process and verify that everything the Seller represented is true. Having completed the review of books and records, you move to the funding process.
The business broker will once again help you find the best financing available. You then have to be approved for the lease or complete the necessary inspections required to purchase the property. If the business is a franchise, you’ll have to attend and successfully complete training prior to closing. Finally, you close the transaction and are handed the keys. Now, that’s when the real work begins.
If owning a business is your dream, go for it! Bill Gates had to be convinced by his friend and partner, Paul Allen, to leave Harvard and start Microsoft. It worked out OK for him.
So, what about you?