Buying an Existing Business

Here, we are going to focus on the issues as it pertains to buying an existing business rather than starting a business from scratch. One of the best ways to get involved in entrepreneurship is to acquire a business that is already existing and producing a positive cash flow as well as profits that can be seen through tax returns as well as cash flow analyses as well as through balance sheet that will be required in order for you to purchase the business that you were seeking to acquire. As we discussed in some of our previous articles, when the interesting things about buying an existing business is that the small business administration, traditional banks, and other financial institutions are extremely willing to provide you with the capital that you need in order to acquire the business that you are seeking to purpose provided that you have the appropriate collateral, credit score, and experienced in place that is required for you to run the business on a day-to-day basis. It is far easier to acquire business that is already in operation than it is to obtain the capital that you need in order to launch a new business venture. This is primarily due to the fact that an established business has a history for which a financial institution can render and lending the investment decision on without having to show a formal business plan that pertains to how you intend to use the funds and how you intend to repay this debt obligation over a period of time. As such, if you are already an entrepreneurship that had an extensive amount of experience in the field that you're operating then in may be your best interest to seek to purchase an existing business from which you can expand over a significant time frame. One of the best ways to find a suitable business for purchase is continually search on the Internet for available businesses that meet the criteria that you were seeking as it pertains not only the geographical area that you intend to operate within but also in regards to the financing they need in order to purchase this business. As we progress through several of articles as a relates to the purchase of businesses,  we are to continue it touch not only on the issues as it pertains to acquiring the financing needed in order to buy the business but also in regards to the transition. That will be required prior to and after you acquire the business from its current owner. We will also be discussing in some of these next series of articles as it relates to buying a business is using a business broker to help you locate the business that is most appropriate for you. In many instances, there are a number of companies out there that are highly profitable and producing positive cash flow to the extent that they will support the debt service that is required for you to acquire the operations of the business, but that may not be appropriate for you in regards to the type of business that you want to watch. Finding the specific company that you wish to acquire is an ongoing process, and much like raising capital for a new entrepreneurial venture, is imperative that you focus on the very specific type of business that you want to operate as well as focusing on ensuring that a company that you're buying is a profit and cash flow producing business that will allow you to expand the company as time progresses.

 

As it pertains to buying a business, there are a number of different facets that you're going to need to deal with as it relates to acquiring the company from a third party. First and foremost, you're going to need to work with business broker for individual business owner that is marketing the company for sale to the business public. You can anticipate that the transition, as well as business buying process, will take anywhere from six months to 12 months as a relates to a effectively acquiring and transitioning the business to your ownership. This is primarily due to the fact that he existing owner of the business will need to introduce you to major clients as well as introducing you to the employees of the firm so that the transition from their ownership to your ownership is seamless. Additionally, as you progress from your operations, as it pertains to acquiring a new business, you're going to make sure that the business is economically viable especially as it relates to the cash flow to company so that it is able to support the debt service that you'll need in order to purchase the business. This, of course, assumes that you're putting purchasing the business with some level of equity and debt. As it relates to the specific transaction in regards to acquiring company you can anticipate you will be required to put a down payment on the business and in order to obtain a loan the unique purchase the entire company.

 

Buying a business this is one of the best ways that you can enter into the world of entrepreneurship without having to take an undue amount of risk as it pertains to developing new business. As we all know, one the most risky things you can do with your available capital is to develop a new business from scratch. As someone who is an entrepreneur and had developed a number of different businesses for the past five years, I certainly know that I have had a number of successes and failures as it pertains to my business activities. As such, I have found that acquiring profitable businesses are already generating positive products as well as a positive cash flow ultimately netted me the greatest result possible as it relates to my entrepreneurial activities. As such, as it pertains to entrepreneurship, if this is the first time you are in business then be in your best interest to buying an existing business in which you can use as a base to develop your business's operations. Starting a new business from scratch is an immensely difficult process, and certainly, time and time again, it is always been the most difficult aspects of the entrepreneurial activities that we as a company have undertaken. As such, you are able to acquire someone else's work you can use as the framework in order to develop the business that these specific individual has developed further and simply wants to sell their work to you for a significant price-to-earnings multiple. As we progress through our conversations relating to purchasing an existing business, we are going to focus heavily on the appropriate amount of money that you will need in order to effectively acquire business that you can use as a base to develop and expand your business operations. In many instances, you're going to want to assume that for any business that you purchase, especially if it is a small business, that you can anticipate that you will pay a amount equal to three times the latest year's amount of earnings as it relates to the business activities and operations of that you're seeking to acquire. This is primarily due to the fact that the individual that is selling a business wants to a significant amount of money based on the work that they have spent in developing a business. This is extremely important, because this individual has worked hard to develop a business and they want to be able to capitalize on their success as they sell the business to yield.

 

As we also continue these discussions pertaining to acquiring an existing business we are also going to focus on the issues that pertain to financing for these companies is that you intend to acquire. It goes without saying, that from time to time you will need to finance your activities through angel investment, small business investment companies, venture capital organizations, or other sources of financing in order to effectively produce and acquire the business is that you are seeking to acquire a significant time for it for them. As such, you can anticipate that you will not only need to put up a significant amount of money as you progress through your business by activities but also that you may need to have third-party investors in place so that you can effectively buy these new opportunities as they come around. Additionally, it should be no that there is no shortage of companies that are available for you to purchase on an ongoing basis that will effectively enhance your organization not only from an infrastructure standpoint but also from the standpoint in which you  would be able to expand the profitability of your business on an ongoing basis.

 

If you have decided that the best way to enter entrepreneurship is through the acquisition of new business then we strongly recommend that you focus on acquiring a company from which you can expand the operations of the business have bought not only from organic growth but also for growth that consists of acquiring additional companies to interface well with your existing business operations. If you able to locate business that has a specific niche within a market then you will be able to effectively acquire additional businesses, as time progresses, that will quickly expand the profitability of your business for a significant time frame. In many of our future articles, we will discuss how you can continue to add value on the basis that allows you to increase the value of your business specifically through the acquisition of new businesses that are smaller than the ones that you currently own. This, of course, will also deal with the concept of economies of scale and how you can effectively acquire businesses at a lower price-to-earnings multiple than your business is currently valued. If you're able to specifically purchase a business that can act as the base for the growth of your operations then you can acquire future businesses that are being sold for a smaller price-to-earnings said that it had a substantial amount of value to your business as you convert those customers from the business you've acquired the business that you currently own.

 

I know that we have covered a specific amount of content within this article are to continue to drill down the issues as it pertains to acquiring new businesses as well as initially acquiring a business from which you can expand and develop your business operations. This is one of more complex areas of finance as you progress through your business operations. In being able to acquire a base company from which you can expand your operations you will be able to effectively create a tremendous wealth for yourself as well as building an income stream for companies that you developed by not only initially purchasing a business that you are looking to acquire now but also brought by being able to purchase additional businesses as they become available on the market. Of course, this is one of the more complex areas of finance and continues to further discuss this topic as time progresses so that you have a greater understanding of how you can effectively buy businesses that are of a lower price to earnings portable in the value of your current business. This concept may seem foreign to you as you enter into entrepreneurship, but is an extremely important concept to understand as you develop your business. This is primarily due to the fact that you may simply want to purchase a single business with the intent to run it well, within your local market, with the specific intent of producing a greater amount of income for the business that you are seeking to hire. However for many entrepreneurs, much like myself and other members of TheFinanceResource.com, we consistently look to find ways to increase the value of our business when it comes time to sell our company.

 

When you decide to buy a company especially through a business book or, is imperative to understand on a regular basis from which the business is worth on an ongoing basis. This is primarily due to the fact that as an entrepreneur you are focusing on developing wealth in a way that most people do not. For many individuals, especially people that work regular jobs, their wealth stems from the fact that they are able to generate income through investing in their IRAs or 401(k)s, and other income producing vehicles that are standard in the general economy. However, as a business owner you of your wealth is dependent on the fact that you were able to run a highly successful business that you can ultimately sell to third parties for a substantial earnings multiple. Time and time again, we will touch on the fact that ongoing development of the business that you have purchased you will be able to effectively sell that company to a third party for much more than you initially purchased the business. Within this series of articles, as a relates to buying a business, we are going to continue to focus on probably the issues as it pertains to purchasing a business but also the issues that pertain to sell the business is going to the point that you feel comfortable that you can receive a substantial premium over what you have put into the company. This not only includes the work that you have done in regards to organically grow their business, but also for the work that you've completed through an acquisition program that is appropriate and specific to the genre of business and operating within.

 

We strongly recommend that you focus on, again, developing your organization through the ongoing development of new business assets, new customers, and new streams of income that ultimately greatly enhance the value of your business as time progresses. Also, as part of our sales pitch in regards to operations as TheFinanceResource.com, we strongly recommend that you purchase our programs as it relates to evaluating a business that is suitable to purchase from a third party. Time and time again, we constantly receive comments among individuals that are seeking to purchase businesses so that they are able to ameliorate number of risks that are involved with starting a new business. As such, we are here to provide you with insightful information as it pertains to the acquisition of existing business so that you can immediately create profits and cash flow through your acquisition while concurrently focusing on developing new methodologies that allow you to effectively expand the business that you've acquired from a third-party. One of the other things we will discuss through our continued discussions as it pertains to buying a business is franchise operations, operations as it relates to raising capital for the acquisition of new businesses, and how you can obtain companies in the future after you make your initial purchase of business go to further the value of your company so that you can sold for a much greater earnings potential in the future. We thank you again for tuning in and certainly we'll continue to provide you with insightful commentary as it relates to the acquisition new businesses as time progresses.



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