June 11, 2010
Successfully Buying A Business In A Down Economy
You want to get out of the corporate rut, leave the traffic behind, and stop worrying about whether your job is on the line each and every day…. sound familiar?
So, you think to yourself “maybe I should buy a company?”
I would like to give you few pointers to help you make an informed decision if you decide to pursue an acquisition, even in this difficult economy.
Ask yourself the following questions:
1. Do I have the ‘entreprenurial spirit’ to own my own business? To many it looks easy, and it may have the potential for great money, but it’s NOT as easy as it looks. Do you have passion, ambition and the ability to lead others? These are all traits that entrepreneurs share and will help you in your quest to be a successful business owner.
2. Do I have adequate capital resources? We all know you need money to buy a business! However, there are many factors to consider other then purchase price when determining how much money you will need to acquire and then run a business. Make sure you have a clear understanding of what you will need to protect your investment. Please seek the advice of an intermediary or your accountant.
3. Do you know HOW to evaluate a business that is for sale? Most people THINK they do, but they don’t really know how to peel back the onion to make an informed decision about the true value of the business. Again, seek expert counsel on this subject with either a business broker or M&A intermediary. These professionals have an intimate understanding of the valuation process. The thorough evaluation of a business will allow you to make an educated decision.
4. Can I get financing? We live in tough times. Getting proper financing takes into account many factors. Do YOU have what it takes to get past underwriters? Ask your intermediary or financial consultant to evaluate your abilty and capacity to obtain a loan before you go to the banks.
5. Do you have a financial bottom line that you need to earn if you are buying a business? Many people think by buying a business they will become rich immediately after closing. The truth is, you are not. Take inventory about what you need to survive, pay necessary bills, and be aware that you may have to live at a level less than you are accustomed to for a while after you purchase your “dream” business.
Need help answering any of these questions?
Contact the professionals at Calder Associates. We can help you reach your goals!