Melvin Feller MA Illustrates How You Can Buy Any Business During Any Economic Cycle!
 |
| Melvin Feller Discusses Starting Your Business. |
Actually,
there are advantages and disadvantages of buying an existing business
and If you get it right, there can be many good reasons why buying an
existing business could be the right move for you. Remember though, that
you will be taking on the legacy of the business’ previous owner, and
need to be aware of every aspect of the business you’re about to buy.
Advantages:
 |
| Melvin Feller Talks Buying a Business. |
There
may be established customers, a reliable income, a reputation to
capitalize and build on, and a useful network of contacts.
A business plan and marketing method should already be in place.
Existing employees should have experience you can draw on.
Many of the problems will have been discovered and solved already.
You can always re-sell the business.
Disadvantages:
You
often need to invest a large amount up front, and will also have to
budget for professional fees for solicitors, surveyors, accountants,
etc.
If
the business has been neglected you may need to invest quite a bit more
on top of the purchase price to give it the best chance of success.
You will need to honor or renegotiate any outstanding contracts the previous owner has in place.
Deciding on the right type of business to buy:
 |
| Melvin Feller Recommends Being Your Own Boss. |
Ideally
your business needs to fit your own skills, lifestyle and aspirations.
Before you start looking, think about what you can bring to a business
and what you’d like to get back. List what is important to you. It is
useful to consider:
Your expectations in terms of earning — what level of profit do you need to be looking for to accommodate your needs?
Your commitment — are you prepared for all the hard work and money that you will need to put into the business to get it to succeed?
Your strengths — what kind of business opportunity will give you the chance to put your skills and experience to good use?
The type of business — limited company, partnership etc. — that you’re interested in buying.
The business sector you’re interested in
— learn as much as you can about your chosen industry so you can
compare different businesses. It’s important to take the time to talk to
people already in similar businesses.
Location — but don’t restrict your search to your local area. Some businesses can be easily relocated.
Where to look for a business to buy:
Many national and local newspapers carry advertisements for businesses and business locations or lots.
Depending
on what sector you’re interested in, you could look in trade journals.
Or put in your own advertisement, saying what you are looking for. You
can get contact details for most newspapers, magazines and trade
journals from press directories available on the internet.
Some
magazines, many of them with their own websites, specialize in buying
and selling property and businesses. Of course, do not forget Realtors
who use their publications and websites like loopnet.com, Crexi.com,
Showcase.com, as well as Marcusmillichap.com and get familiar with their
websites, including Craigslist and eBay.
How to value a business:
 |
| Melvin Feller Talks Valuing Your Business. |
Understandably,
how to value a business is often the most worrying part of buying a new
business. Remember, though, that what a business is worth to you will
not be the same as it is to someone else with a different set of
priorities and objectives.
To get a general idea of how healthy the business is, look at:
the history of the business
its current performance (sales, turnover, profit)
its financial situation (cash flow, debts, expenses, assets)
and why the business is being sold
The following list of questions will help you discover possible areas where you could financially get hurt.
How healthy is the business?
Stock:
How much is there?
What condition is it in?
Assets:
Does the asking price take into account depreciation?
Is anything leased or currently being purchased?
Intangible assets:
How much goodwill comes with the business?
Are any trademarks registered?
Products:
What are the profit margins on each product or service?
Which products or services account for the majority of sales?
Licenses:
Which ones are required to conduct business?
Are there any outstanding issues with the licenses?
Debts:
How old are the debts?
Which debtors owe the most?
Creditors:
What does the business owe?
What is the credit history like?
Suppliers:
What are their prices?
What’s their credit policy?
Employees:
Is the business adequately staffed?
Is it over-staffed?
Do all employees have the necessary skills?
Do all of the employees have the necessary equipment to do their job safely?
Premises:
Do they need refurbishing?
Are they leased or company owned?
Competition
What percentage of the market do the competitors have?
Valuation methods:
 |
| Melvin Feller MA Discusses Valuation Methods. |
Your
accountant can advise on how to put a specific value on the business
and do the actual calculations. You can then decide how much you want to
offer, or if you want to buy it at all. If you do decide to make an
offer, the research you do now will be completely verifiable once you’ve
agreed a purchase price and terms with the seller.
Make sure the business is worth buying by doing your due diligence:
Having
done your research, it is important to verify the information you now
have. A period of time is allowed for you to access the business’ books
and records in order to verify that all of the information that you have
discovered up to now is accurate, and this is known as due diligence
period. It should give you a realistic picture of how the business is
performing now and how it is likely to perform in the future.
When to begin due diligence.
Don’t
start due diligence until you’ve agreed to a price and terms with the
seller. For a down payment they may agree to take the business off the
market during your investigation.
The investigation period is negotiable — but most small businesses need at least three to six weeks.
Where to get help
You
should get accountants and attorneys to help you identify various risk
areas but you can also get information about companies directly from the
internet. Remember, due diligence is much more than the finances of a
business. You need to come out of this period knowing exactly what you
are getting yourself into, what needs to be fixed, what the costs are to
fix them and if you are the right person to take over this business.
Key areas to cover are:
employment terms and conditions
outstanding litigation
major contracts and orders
IT systems and other technology
environmental issues
commercial management including customer service, research and development, and marketing
Information sources
Dig
as deeply as you can and use whatever documents are available. For
instance, if you’re looking at employee records, you could check out:
payroll records
staff files
copy of retirement and profit-sharing plans plus financial statements, if relevant
employment contracts
the staff manual
union contracts, if relevant
you may also need information from external sources such as the landlord, tax office or bank.
A step-by-step process on how to buy a business
Get professional advice
Professional
help is invaluable as you go through the negotiation, valuation and
purchase process. You may find it useful to contact the professional
organizations to get advice and help on finding a lawyer or an
accountant.
Research
Research the business sector you’re interested in, including the best time to buy. Shortlist two or three businesses.
Make sure a business is worth buying:
conduct due diligence and verify any information you have been given.
As well as checks on the business, your attorney will conduct searches
in order to verify relevant licenses etc.
If
you’re planning to arrange a loan, the lender will insist on carrying
out their own survey and valuation at your expense, but you may want to
pay for an additional independent survey and valuation.
Initial viewing and valuation
Be discreet — the owner may not want staff to know they are selling, but be thorough and record key findings.
Arrange finance
Lenders generally require:
details of the business/sales particulars
accounts for the last three years
financial projections even if no accounts are available
details of your personal assets and liabilities
Make a formal offer
If
you make your initial offer by phone, follow this up in writing. Head
your letter subject to contract and include this phrase in all written
communication.
Negotiation
Before
completing the sale, try to negotiate an overlap period so you have
time to become familiar with the business before taking over. Record all
the main point agreed.
Completion
Even
after you reach an agreement on the price and terms of sale, the deal
could still fall through. You have to meet certain conditions of sale to
complete, including:
verification of financial statements
transfer of leases
transfer of contracts/licenses
transfer of finance
Looking after existing employees:
There
are regulations that govern what happens to employees when someone new
takes over a business. These apply to all employees when a business is
transferred as a going concern, meaning employees automatically start
working for the new owner under the same terms and conditions. For more
information, check on your responsibilities to employees if you buy or
sell a business.
Inform and consult employees
If
you do want to discuss reducing numbers of employees or reorganizing
the staff it’s a good idea to do this once you’ve completed the due
diligence period, but before you take over the business. As the new
employer you should inform and consult all employees — including
employee representatives — who may be affected.
Employee Retirement Plans
 |
| Melvin Feller Believes that Employees add to the Bottom Line. |
As
their new employer, you do not have to take over rights and obligations
relating to employees’ retirement plans put in place by the previous
employer. However, if you don’t provide comparable retirement plan
arrangements, you could theoretically face a claim for unfair dismissal.
Related guides on www.USA.gov:
Franchising or buying an existing business can simplify the initial planning process. Starting a business from scratch can be challenging. Franchising …
Your qualifications to buy a HUD home depend on your credit score, ability to get a mortgage, and the amount of your cash down payment. You can also …
The process of buying a business and resources to help decide if buying a business is right for you. The process of buying a business and resources to …
You can find the right business name with creativity and market research. Once you’ve picked your name, you should protect it by registering it with …
dnr.wi.gov/Permits/professionalicenses.html
Professional
and occupational licenses. First time applicants must submit their
applications directly to DNR. Renewal licenses can be obtained from …
FROM START-UP TO BIG SUCCESS. The City of San Antonio’s Small Business Office makes it easy for your start-up to grow into a big success. Take …
sos.oregon.gov/business/Pages/starting-business.aspx
The How to Start a Business in Oregon guide (PDF) provides a checklist to guide you through the process of registering your business. 2. Create a …
The SBA helps women entrepreneurs launch new businesses and compete in the marketplace. Connect with the training and funding opportunities …
The SBA offers support for veterans as they enter the world of business ownership. Look for funding programs, training, and federal contracting …
Market research helps you find customers for your business. Competitive analysis helps you make your business unique. Combine them to find a …
Welcome to the 2019–2020 edition of the U.S. Small Business Administration’s Wisconsin Small Business Resource Guide. The SBA helps make the American …
Finance Your Business. Explore the variety of government-backed loans and funding programs for your business. Small Business Loans. Government loan …
Home Buyer’s Guide How to Make the Most of Your Home Buying Experience. … ensure that they conduct their business in a legal and ethical manner. The …
Who should read this guide? This guide can help if you’re thinking about buying a Medicare Supplement Insurance (Medigap) policy or already have one …
Open a Business. Learn what it takes to start a business in Puerto Rico. Start a Business in Puerto Rico. Expand or Relocate a Business in Puerto Rico …
Each state has additional requirements for starting and operating a business. For information regarding state-level requirements for starting a …
The SBA connects entrepreneurs with lenders and funding to help them plan, start and grow their business. We support America’s small businesses. The …
Will you need the franchisor’s ongoing training, advertising or other help to remain in business? Will you have access to the same suppliers? Could …
Your business
will need special assets and equipment to succeed. Figure out which
assets you need, how to pay for them, and whether you should buy …
Comments
Post a Comment