When you are looking to buy a business, it is important to find
the right business first before worrying about the right price.
Never base your search simply on finding a good deal because
you will find yourself ultimately in a place that you don't want to
be.
The price must be considered secondary to your personal
preferences relating to how you want to spend your time and
energy. Remember that you will be spending between 40 and
80 hours a week at the business you choose to buy.
Deciding on the Business to Buy
How do you know which is the right business for you to buy? A good place to start is by
speaking with a VR Business Intermediary that will lead you down the right path, based on your
interests and needs. Here at VR, we have worked with thousands of people in many diverse
situations, and can match you as the potential owner with a business that's best suited to your
lifestyle.
Evaluating the Business Intuitively
Once you have determined the general type and size of business that you want to buy, you
must evaluate specific opportunities with focus and awareness - for example, if you wanted to
own a retail computer supply business with $100,000 to $150,000 cash flow. To do this
properly, you must combine both the intuitive side with the analytical.
On an intuitive level, you should begin to picture yourself running the business on a daily basis,
and ask yourself the following questions:
- Does it feel right to you?
- Can you see yourself coming to this business every day for the next few years?
At the same time, you should be brainstorming with your VR Business Intermediary and the
Seller about possible changes that would increase revenues, reduce expenses or otherwise
improve the business. Ask the Seller what they would do to improve the business. If your
visualizations of coming to work here and implementing changes are favorable, then you have
found the right business.
Giving an Initial Offer for Buying the Business
Your offer is based upon what you believe the business is worth to buy, which includes a down
payment and terms of the payment agreement. Remember that as much as you want to a good
price for the business, do not lowball the Seller. More often than not, the Seller will take offense
and determine that you're wasting their time by taking their business to another potential
buyer. Therefore, make a fair offer.
The assessment of the business up to this point is based on the information that has been
presented by the Seller - asset values, sales revenues, adjusted cash flow and other pertinent
information must be assumed to be materially accurate and reliable.