Although buying a small business is a big step, it isn't a step that you have to take alone. Here are several resources that can help you close on the business of your dreams.
Buying a business is exciting. When you enter the market to buy a business, you're greeted by a stunning array of business opportunities, many of which have the potential to become a major turning point in your life and your entrepreneurial career.
But narrowing the list of prospective opportunities down to the business that is the perfect fit for your personal and career goals can be difficult. And once you do find the business that is right for you, seeing the deal through to completion can be even more daunting.
The good news is that you don't have to navigate the process of buying a business alone. At BizBuySell.com, we believe there are at least five important tools and resources every buyer should consider when they enter the business-for-sale marketplace.
1. Business Brokers
Brokers have a wealth of information about businesses that are for sale and often know about opportunities that haven't yet been listed publicly. Additionally, good brokers have keen insights about the marketplace and can advise you on which businesses will be best aligned with your buying objectives and your budget. (Not to mention the fact that a broker can help you identify and prioritize your buying objectives and your financial options and, therefore, budget.)
A business broker can also play an important role as an intermediary and advocate in your dealings with sellers. When unexpected roadblocks bring the buying process to a grinding halt, as often happens, business brokers know how to overcome the obstacles and get a deal across the finish line.
2. Online Tools
Research is critical when buying a business. Fortunately, there are plenty of online resources available for business buyers. From helpful articles to online business-for-sale listings, your laptop or tablet is a gateway to the tools and information you will need to locate and acquire your business.
Additionally, there are many online tools that can help you assess specific companies. For example, at BizBuySell we offer a Valuation Report that provides you with access to tens of thousands of currently listed and sold businesses (i.e., "comps") to help you assess what your budget can buy and evaluate a seller's asking price.
3. Appraisal Experts
While online valuation tools are great starting points for valuation, a detailed valuation of the specific business is critical before entering the negotiation process. Generally, the seller will have already hired an appraiser to determine the value of the company. But savvy buyers know that business valuation isn't as straightforward as sellers make it out to be, so they take the extra step of hiring their own appraisal expert.
Your broker may provide these services or he/she can help you find an appraiser with valuation experience in the industry and geographic area of the business you want to acquire. With the right appraiser, you will be better able to gauge the value of tangible and intangible assets, and strengthen your position during the negotiation stage.
4. Legal Counsel
At some point in the process, you will need to engage the services of qualified legal counsel. Although it's technically possible to acquire a business without the help of an attorney, it's not advisable--there are simply too many legal details that can derail the deal and jeopardize your success post-sale. If you are working with a broker, he/she can help you find the best lawyer for your needs. (Tip: Brokers are a great direct resource, but they are also an excellent gateway to other trusted resources.)
During the buying process, your attorney will be responsible for drafting purchase agreements, contracts and other documents related to the acquisition. In many cases, the buyer's relationship with the attorney continues after the deal has closed--with the attorney providing legal services throughout the business lifecycle.
5. Accountants and other Financial Advisers
Although many people associate accountants and financial advisers with sellers, it's just as important for buyers to tap into competent financial expertise. At the beginning of the process, your accountant or financial adviser will help you determine how much you can afford to spend on an acquisition and can help you secure the capital you need to be a serious buyer.
During the later stages of the buying process, a skilled accountant can decipher the financial records of businesses you are considering, and help you decide whether sellers' claims line up with historical balance sheets and earnings statements.
Outside resources bring data and objectivity to the process of buying a business. Although we would all like to think that we're rational decision-makers, emotions cloud our judgment. By combining your own research with key online tools and the assistance of third parties, you can minimize risk and increase the likelihood that your career as a new business owner will start on solid ground.
CURTIS KROEKER is group general manager for BizBuySell.com and BizQuest.com, the Internet's largest and most heavily trafficked business-for-sale marketplaces. BizBuySell.com has more than 910,000 monthly visits. @BizBuySell