March 17th, 2008 quantum
Once a particular business appeals to you, it becomes imperative to acquire certain details about that business opportunity. Therefore, ensure you conduct extensive research and seek vital information before devoting your time and resources or any focused attention on any one business opportunity. A sampling of some of the information to obtain includes:
In addition to determining the business location, asking price, gross revenues and available cash flow, determine the value of Furniture, Fixtures & Equipment and inventory and whether they are included in the asking price. Determine whether seller financing is available and the likely amount of the required down payment. Other relevant information to consider includes: (1) the year the business was established, the number of employees and the monthly payroll, (2) whether the business is relocatable, (3) the nature and extent of seller training and support, (4) the seller’s reason for selling, (5) the condition of the business facilities, (6) the market outlook and level of competition, (7) growth and expansion possibilities, (8) the lease terms available to you as the buyer.
After reviewing detailed information, if you wish to continue pursuing a particular business opportunity, then utilize the services of a competent business broker to represent you as your exclusive agent. Most reputable business brokers representing the seller will cooperate and “share” their commission with the business broker representing the buyer. Accordingly, the buyer can often obtain “free representation” through the Broker Cooperation arrangement. Following this methodology will ensure that you acquire a business that represents a valued investment.
To learn more, visit us at www.QBSNet.com
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March 11th, 2008 quantum
We are Business Brokers that work closely with a group of institutional lenders (both SBA and Non SBA) that specialize in financing new business purchases so that our qualified buyers are able to consummate a purchase to which they are otherwise committed. Toward that end, our business brokers can assist you by compiling various financial information and records and obtain pre-qualification for third-party financing.
In order to obtain third-party financing, a lender will typically require that the business demonstrate a history of financial earnings performance and the business buyer must establish that he or she has the background and experience to ensure the continuity of the business in the future since most lenders are concerned with the financial performance of the business under the leadership of a new owner. Furthermore, the lender will likely want to collateralize the loan with the assets of the business, the buyer’s personal assets, or both. Realize that anything of value that the business owns can be used as collateral and the faster those assets can be converted to cash, the more attractive they are to the lender. Thus, accounts receivable will have greater value to a lender than equipment because it can be converted to cash easier and usually at the pre-determined amount assigned by the lender; whereas equipment and machinery will be more difficult to liquidate and therefore, the lender may only assign a liquidation value to these assets. In any case, most lenders will have guidelines by which they discount the assets for collateralization purposes.
Determine the Amount of Working Capital Necessary to Fund the Business
The financial requirements of the new business may be greater than the amount you need to complete the purchase. Whether this working capital comes from you personally or from a lender, it is a typical rule of thumb that you have enough working capital available to cover three months of operating expenses assuming a fifty percent decrease in gross revenue as an extremely conservative precaution. Therefore, if you are currently employed and own your own home, you should consider applying for a home equity line of credit while employed and your current employment is available as a credit reference. You will not incur any interest expense until you draw upon the line and it will be available later when and if you need it.
Some of the options available for a buyer to consider are enlisted below:
1.Seller Financing
Most small business purchases involve seller financing, which includes the seller financing a part of the purchase. Generally a seller only gets involved in financing the purchase if he is certain about the viability of the business in the future.
2.Small Business Administration (SBA) Financing
The Small Business Administration was established to help grow the economy through loans to small businesses for acquisition as well as expansion. The SBA web site (www.sbaonline.sba.gov) is a great resource to small business owners. The SBA will finance up to 70 percent of the purchase payable over 10 years. They will also provide funding working capital and have separate programs to fund machinery purchases as well as real estate.
At Quantum™ Business Solutions Network, accountants and financial experts provide the necessary guidance to buyers in financing the purchase.
Visit our website, www.QBSNet.com
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