Laws of the Business Buying and Selling Jungle

Written by Russell L. Brown


Continued from page 1

Jungle Law #7: If A Seller Really Wants To Sell, You Probably Shouldn't Buy!

Whenever you look at any business for sale, you should approachrepparttar situation with a great deal of caution. You should make it your business to verify all ofrepparttar 106015 facts possible aboutrepparttar 106016 business, including determiningrepparttar 106017 reason for sale. There are some very good motivations for sellers to sell and other ones that are not so good. Usually,repparttar 106018 best reason for a sale fromrepparttar 106019 buyer's perspective isrepparttar 106020 planned retirement ofrepparttar 106021 owner or a sale necessitated by illness. By far,repparttar 106022 best potential purchase is a long-standing single-owner profitable business whererepparttar 106023 owner is approaching (or at) retirement age and is generally reluctant to sell but realizes that he eventually has to.

Jungle Law #8: 99% Of Potential Business Buyers Never Buy A Business!

This alone may be reason enough for a seller to retain a business broker to represent him in sellingrepparttar 106024 business. A professional broker knows how to sort throughrepparttar 106025 many non-qualified potential buyers to get torepparttar 106026 few who actually do haverepparttar 106027 means and motivation to buy a business. Oncerepparttar 106028 unqualified potential buyers have been culled out, still only somewhere around 50% of these folks eventually buy a business. For this and many other reasons, I strongly recommend that sellers use a professional business broker to represent them in selling their business.

Jungle Law #9: Always Assume There Are Skeletons In The Closet!

Most businesses have some negative feature(s) thatrepparttar 106029 seller will be reluctant to talk about. You can be sure that any problems will come out later as buyers begin analyzingrepparttar 106030 business (due diligence), and it could killrepparttar 106031 sale ifrepparttar 106032 problems are perceived as cover-ups. This is because buyers will ask themselves (logically) "if they hid this fact from me, what else are they hiding?" Ifrepparttar 106033 negative aspect(s) is clearly presented and discussed withrepparttar 106034 buyer, it may not be a serious problem becauserepparttar 106035 buyer may feel that it can be overcome, avoided, or changed. The seller should strongly consider this and determine all ofrepparttar 106036 possible negative factors that could affectrepparttar 106037 sale ofrepparttar 106038 business. Ifrepparttar 106039 problems are very serious and non-correctable,repparttar 106040 business may not be salable.

Jungle Law #10: Someone Will Always Get Cold Feet Just Before The Closing!

Closingrepparttar 106041 deal is always difficult, but usuallyrepparttar 106042 shortest part of buying or selling an operating business. After all,repparttar 106043 valuations, investigations, and negotiations are complete and now it's a matter of getting everything into writing in a form that satisfies everyone so thatrepparttar 106044 transfer of ownership ofrepparttar 106045 business can take place. However, you can definitely count on someone getting cold feet just beforerepparttar 106046 closing. Be prepared for this! The seller and buyer may both start to wonder if they are really getting a fair deal. The best way to get ready for this is to anticipate it happening and then to deal logically, reasonably and unemotionally with it atrepparttar 106047 time.

Jungle Law #11: Negotiations Must Stop At The Signing Of The Purchase And Sale Agreement!

Oncerepparttar 106048 Purchase and Sale Agreement has been signed by bothrepparttar 106049 seller and buyer, there is an excellent chance thatrepparttar 106050 sale will actually take place. But, there must be an end torepparttar 106051 negotiation process or things will begin to unravel. The deal at this point is like a house of cards with many parts ofrepparttar 106052 negotiated deal contingent on another part. Trying to reopen negotiations after a Purchase and Sale Agreement has been signed will most likely lead to a collapse ofrepparttar 106053 entire deal.

Jungle Law #12: After Buying A Business, Do Not Change Anything (At First)!

Of course, this doesn't hold true if you're buying a turnaround situation; but in general, ifrepparttar 106054 business you are buying is profitable, leave it alone while you learn how to manage it in accordance withrepparttar 106055 status quo. One ofrepparttar 106056 experiences I have had that best illustrates this point is as follows: One buyer of a fast food chicken franchise soon afterrepparttar 106057 closing changed meat suppliers because he found that he could getrepparttar 106058 chicken at 10¢ a pound cheaper. Whatrepparttar 106059 new owner did not realize was that these chicken pieces were 25% larger than those provided byrepparttar 106060 original supplier. The problem with this is;repparttar 106061 franchise doesn't sell chicken byrepparttar 106062 pound; it sells it byrepparttar 106063 piece. The new franchise owner completely wiped out his profit margin by paying a smaller price per pound but delivering torepparttar 106064 customer 25% more chicken atrepparttar 106065 same retail price!

More articles like this at: http://www.BusinessBookPress.com/articles/business_articles.htm

Mr. Russell L. Brown has been a business broker and consultant for over 25 years and has been directly or indirectly involved in all aspects of the buying, selling, brokering, and valuing of hundreds of existing companies. He is widely sought as an expert consultant and lecturer on the topic of buying, selling, and valuing businesses. http://www.BusinessBookPress.com


Getting Into Business: Don’t Start It! Buy It!!

Written by Russell L. Brown


Continued from page 1

There are many other issues associated with valuing a business which are beyondrepparttar scope of this article and a prospective buyer is advised to read as much information on this topic as possible. Before you actually proceed with a purchase you should seekrepparttar 106014 advice and guidance of competent professionals.

Next, you’ll need to start thinking about how you’ll pay for this business. This also becomes an integral part ofrepparttar 106015 negotiation process to arrive at a selling price. There are actually many sources of financing available torepparttar 106016 purchaser of a business and frequentlyrepparttar 106017 buyer will use more than one of these sources:

Buyer's Personal Capital Business Seller Financing U.S. Small Business Administration (SBA) Commercial Bank Loan

In almost all sales of small businesses, there is some amount of seller financing. This amount can range from 50% to 75% ofrepparttar 106018 total purchase price. In most situations, a seller wants to receive as much money up-front as they can, while a buyer will want to pay out as little as possible.

Once you’ve completed negotiatingrepparttar 106019 selling price forrepparttar 106020 business,repparttar 106021 next step is to finalizerepparttar 106022 sale, take possession ofrepparttar 106023 business, and begin operations. Closingrepparttar 106024 deal isrepparttar 106025 hardest to accomplish, but usuallyrepparttar 106026 shortest part of buying a business. After all,repparttar 106027 valuations, due diligence, and negotiations are complete and now it’s a matter of getting everything into writing.

The best situation for all parties is to follow an orderly process that will move things along in a business-like manner. The major elements ofrepparttar 106028 purchase and sale process are:

Binder and Earnest Money Agreement Purchase and Sale Agreement Closing (at which actual title and ownership is conveyed)

The Closing date and place are set to everyone’s convenience and all ofrepparttar 106029 pre-closing tasks are assigned torepparttar 106030 various parties for completion. Atrepparttar 106031 Closing,repparttar 106032 actual legal instruments of transfer are signed, money and/or promissory notes are exchanged, andrepparttar 106033 buyer becomesrepparttar 106034 new owner ofrepparttar 106035 business.

Well, that’s a snapshot of what it takes to buy an existing business. As involved as it may seem, it’s far less trouble than starting a new business, faster, and certainly less risky. If you have an entrepreneurial mind-set and would like to consider getting into business for yourself, even if it’s only a home-based business, I strongly urge you to consider buying an existing profitable business. There’s tens of thousands of them out there right now just looking for a new owner.

More articles like this can be found at: http://www.businessbookpress.com/articles/business_articles.htm

Mr. Russell L. Brown has been a business broker and consultant for over 25 years and has been directly or indirectly involved in all aspects of the buying, selling, brokering, and valuing of hundreds of existing companies. He is widely sought as an expert consultant and lecturer on the topic of buying, selling, and valuing businesses. More information about Mr. Brown and the books and software he has authored may be found at http://www.BusinessBookPress.com


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