With corporate downsizing, economic downturn and other factors, there are a lot of very knowledgeable buyers out there looking for one of very few good business to buy. This means that you, as a buyer have a lot of competition. Consequently, you need to be well prepared. Professional business buyers, report that it takes anywhere from 3 months to 3 years to find right business. So, if anything, what can be done to speed this looking process and at end finally get a good business?

The decision – first step is deciding to buy a business. Once you have made this decision and you are definite and firm about fact that you are definitely buying a business, process has started.

The second step is to decide what kind of business. This is really really important. What are criteria for this business you are looking to buy? Do not make a wish list or what would be nice. Make a list of what is important. For example, if your standard of living requires $100,000 income, do not compromise by looking at businesses that make only $50,000.

That is unless you consider yourself a knowledgeable business manager and marketing person who knows that any business they buy will double in income and sales. That kind of buyer can buy a business that makes no profit and probably should.

Other criteria include; is it something you can handle? What kind of work are you willing to do? If you like sales and do not like running a factory, buy a distribution company, or sales organizations, and do not buy a manufacturing firm, unless you have a partner that likes running a production line.

I have people call me to inquire about buying a body shop that have no automotive experience at all. You can buy an auto repair shop, muffler shop, brake shop or lube store, and learn business, with no experience to start. You probably should not buy a salvage yard body shop, or scrap yard with out being raised in business. If you are a salesman you can buy almost any business.

All manufacturing, distribution or retail sales require good personal sales skills. If you are poor at communication skills or English is a second language, consider buying a liquor store, gas station or hamburger stand, just a few of businesses that do not require, personal selling, or do they?

About you - There are some things you need to prepare for brokers when they start coming to you with possible businesses. You need to make sure that you have your down payment sorted out. Expected down payments are anywhere from 25% to 100% of selling price. So make sure you know what you want to spend and then make sure you have down payment easily available.

Then you need to get your financing options determined. You can get yourself pre-qualified for a business loan or an SBA loan if business you are buying is required by you to show a profit on books. SBA loans are only available to businesses that have shown a 5-year profit on their tax returns. If you are looking at businesses that are heavily unrecorded income, you must have cash or seller financing.

Being your own broker - You should determine who is going to make your offer. A broker, or yourself? If it is you then you should locate necessary offer forms and study them carefully. Determine what must be in your offer so that you can put in an offer, instant you find a business that meet your requirements. This is an important step, as putting in an offer tends to lock out other buyers while you look over business. Make sure you have contingencies in your offer, which means you have lots of “get out of deal” clause.

I would like to suggest, for less experienced buyer to hire as a consultant sharpest attorney or business broker you can find and pay him for his time to watch your rear end, in negotiations and in reviewing companies you are considering buying. In real estate we call this a buyers agent, except with businesses listing agent will not always co-operate in splitting commission. This means you need to be willing to pay your agent an hourly fee for helping you. Let me give you a real example.

David and his father were looking for a business to buy. They were interested in a Scrap yard that I was selling. I asked their buying agent to bring them over so I could interview them and to explain this business to them. In 3 minutes it was clear that they should not even consider this business. We spent balance of meeting talking about businesses they had looked at and pros and cons of each. I gave them my honest suggestions about each from their description. They thanked me and left.

Two months later David calls and asked if he could come talk to me. He told me about an FSBO “For Sale by Owner,” who would never pay any agent a commission unless he got his price + commission. That of course doesn’t make sense to a buyer. David told me about deal and I gave him my honest opinion about it. David asked what my time was worth and gave me a check for an hour’s time.

Two months again passed and David called and said, "I need to see you today." He proceeded to tell me about a Car Wash Soap manufacturing company that was suppose to be making $500,000 profit per year. The asking price was $2 Million. David wanted several things from me. He wanted my opinion of business, he wanted me to help get price down to a more reasonable amount and he wanted me to verify income. It took me 30 hours of reviewing books and talking to seller to determine that business was making only $350,000 per year including what was not on books. The books were made complicated, intentionally so that no one could understand what was going on.

I related my findings and told David he had to do his own negotiations but I would coach him every step of way. David paid my fee and I didn’t hear from David for one year. When he called, I asked what happened to car wash soap business. He filled me in on story.

According to Dave Airey, VP of Sales and Marketing at OTI, “We started looking for a way to move our application to a GUI “look and feel,” but after two years of investigation it became obvious that it was not a practical goal. As an alternative we investigated upgrading our legacy application to a new product.”

OTI’s requirements for a new system revolved around their customers. After many years of custom changes, legacy system was geared to client requirements.

Airey noted, “OTI’s initial search took us to major ERP players, but none had features we required to support our loyal customers.”

Finding an ERP System with Strong Functionality: The search for a new ERP system ended when OTI was introduced to PRONTO North America (www.PRONTOerp.com). According to Airey, “We were introduced to Pronto and were immediately impressed with rich functionality. One important feature was that Pronto is fully integrated. We had engineered our legacy system to be fully integrated so this was of major importance.”