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I received an e-mail from
Vincent, a 27-year-old go-getter who wants to know what he needs to do to buy a
business from a retiring baby boomer.
Some of my advice isn’t very
sexy…
Live below your means and save money. Most
first-time buyers need down payments and have to pay closing costs and this
money almost always comes from savings.
Build your credit. Learn to use credit wisely and
qualify for larger and larger facilities personally. You may need to use the credit when you make
your deal. Perhaps buy a house if it
makes sense for you.
Choose the right industry. You need to
pick an industry with a many potential target companies.
I’ve got these and a few more
points in this video I recorded the other day.
Watch it here: https://youtu.be/SAIiek5ZQz4
Most importantly though for
Vincent, learn what you’re doing before you go looking for a deal!
Learn how to buy a business at
www.BusinessBuyerAdvantage.com where you can access tons of information and enroll
in my online course.
In fact, it’s such a great value that it
really should be shipped in one of those Wal-Mart ‘Great Value’ packages. (The course works out to about $20/hr. and
comes with a 30-day money-back guarantee!)
You can see how my whole buyer system works in this video from a few weeks
ago: https://youtu.be/ooixMSaFf6Y
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Go to www.DavidCBarnett.com
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I’m coming to Saint John, NB on March 1st.
Seats are already filling up. Find all my live events here: http://davidbarnett.eventbrite.ca
. The Centre for Entrepreneur Education and
Development in Halifax will be having me do two workshops in Halifax, NS on
April 10. Visit www.CEEED.ca
for more info.
Ted Leverette's Partner On Call network is one of the oldest buyer-side consulting firms which helps people find and buy a small business the right way.
He recently published a 4 part report on the most common problems encountered by small business buyers. [Check it out here]
I came across this story about a bar/restaurant deal in California. What strikes me is that the price was right, the buyer had experience and an adequate down-payment. The deal came together quickly because the banker also saw that the deal made sense.
Unfortunately what I see so often here locally is that sellers want unrealistic prices and so the businesses stay on the market forever and scare off the serious and qualified buyers.
CEO & President , Paramount Restaurant Brokers, Inc. DBA SellingRestaurants
SBA Loan funded in 45 Days for a Restaurant seems impossible, particularly in California where the state is over regulated with delays in liquor license transfers, fictitious name filings, health inspections, fire inspections, entertainment licenses and the list goes on and on.
But there are rare instances as in the case of Pirates Grub N Grog in Channel Islands California, where there are motivated parties on all sides of the deal, buyer, seller, banker and broker.
I entered into contract with Pirates Grub N Grog representing the Buyer. I knew the business well and I knew the owner just as well. I had already prepared the valuation analysis using the tax returns. Sales price $525,000. Knowing I was getting into contract, I contacted my banker to have him review the restaurant's financials. I knew we had a strong business with an adjusted net in the $240,000 range. Bingo on the value.
Then I sized-up the buyer. Solid experience! About $110,000 cash. A FICO in the 750 range. Owned real estate without debt worth $350,000. We went for a loan of $400,000 including $40,000 of working capital. We had the seller carry $75,000. The buyer would be out of pocket when escrow closed about $69,000. I polished his resume.
We had loan approval in 8 business days. But before that I had gotten the lease negotiations and liquor, license transfer process underway only because I knew the deal was solid on all sides.
This started June 20th. We are funding the loan this week July 30.
The banker said he has never seen a deal fund so fast and particularly for a restaurant with all the regulations in California. But it is all in preparing the business and buyer as well as having motivated parties to the deal. read more
To learn more about how to properly find and buy a business with or without a broker, consider enrolling in my 16 week business buyer course which begins this fall Click for more info
I discuss the dilemma of a prospective business buyer trying to deal with a seller who wants twice what his business is worth. How do you help overcome incorrectly set expectations?
Also a discussion about the value of a small business.
In this video I discuss the difference in mindset between entrepreneurs and investors. These two mentalities often clashed during my business brokerage career.
I talk about the differences between a business owner working towards a dream and a potential business buyer who wants to analyze this business and determine its worth based on cash flow.
