May 8th, 2008 quantum
By searching through libraries, websites, associations, competitors and affiliations you can gather some very useful information. While conducting your research you will be searching for answers to the following questions:
- How big is the market?
- Is it expanding or shrinking?
- What key publications and other media are being used to advertise?
- What are the advertising costs?
- Who are the competitors (check the yellow pages and conduct local or regional internet searches)?
- Is the subject business competitive?
- Where does the subject business fit amongst the competition?
- What is the competition spending on advertising?
- Where is the competition advertising?
- Are there any major growth areas?
- Are there any new product trends?
- What are the industry distribution channels?
- What sales/marketing applications are being used within industry?
- Who is the industry/market leader?
- Where is this business ranked within the industry?
The above represents a sample of the type of questions that will help you gain relevant insight into the business that you are interested in buying and the industry in which it operates.
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April 8th, 2008 quantum
Buying a business requires a major commitment on a buyer’s part. Not only will it have a financial impact, but it will likely produce a significant life-style change. The buyer’s life is certainly influenced by how he or she earns a living. Most people purchase existing businesses to achieve one or more of the following objectives:
• Quick return on investment
• Instant cash flow
• Obtain a business with an established credit history and existing vendor relationships
• Trained employees
• Established customer base and reputation.
• To secure a long-term job.
Obtaining a good business at a great price should be your goal (if you acquire a “great” business, then more often than not, you will be forced to pay a huge premium since you are paying for the past and not what the what the business is capable of in the future). Therefore, it is usually preferable to purchase a good business and then make it great. Achieving a great price requires being respectful of the business accomplishments of the seller while using objective facts to disprove the seller’s calculation of the list price. In addition, there are numerous other factors that come into play, including the manner in which you structure the purchase, your ability to “finance” the purchase price, the cost of money in the financial market, current industry expectations, marketplace demand and last but not least, being in the right place at the right time.
Another important aspect that shows the commitment and sincerity of a buyer is the preparation of all the necessary documents before hand. Remain organized throughout the process of identifying and focusing on a business to purchase. For each business opportunity you identify, maintain a file with the following categories:
1. Accounting and Financial Section
2. Owner Questions Section
3. Sales Section
4. Marketing/Advertising Section
5. Industry Information Section
6. Competition Section
7. Customers Section
8. Personnel Section
9. Suppliers/Vendors Section
10.Licenses/Permits/Filings Section
11.Offer To Purchase Section
12.Legal Section
13.Due Diligence
14.Other Section
15.Financing Section
Approaching the challenge of identifying and then acquiring a good business requires the right outlook and proper preparation. Rely upon Quantum’s Buyer Program to guide you through the Business buying procedures toward finding a lucrative business opportunity.
Visit Quantum™ Blog and know more about the complexities involved in a business deal.
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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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October 22nd, 2007 quantum
Pre-qualification of each business opportunity involves communicating with each seller and/or the seller’s representative, obtaining and reviewing pertinent business information and records and performing a preliminary evaluation to determine whether the business represents a valuable opportunity and meets the client’s purchase criteria as outlined during the client interview.
Screening and Reviewing:
It is very essential to review the company’s profile and thereafter, more detailed records and information to ensure that there will be a solid audit trail to corroborate the seller’s representations of value. Throughout this process legal guidance with accounting and tax expertise enables the business brokers to respond to a variety of buyer questions and concerns and participate and manage the transaction aimed toward streamlining the process of consummating a purchase.
For example, Business Brokers will analyze the gross profit percentage from year to year and examine whether any expenses have been substantially reduced from year to year to make the business look better for sale (i.e. a reduction of advertising, promotion or marketing expenses or employees could have been released). If depreciation declines dramatically from one year to the next, it might be an indication that equipment has come to the end of its useful life – if so, when and at what cost, will it have to be replaced.
These two procedures will help a buyer to take an informed decision about a business acquisition.
Visit Quantum™ Blog for more information on business transactions.
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October 19th, 2007 quantum
In order to effectively represent a buyer in a purchase transaction, the business broker should thoroughly interview and evaluate the buyer in order to completely understand his or her purchase criteria. The broker needs to have a clear understanding of the buyer’s needs and expectations from the business opportunities to be pursued. The client interview thus becomes the primary step in the purchase process.
Initially fundamental information about the buyer is gathered by the business broker. This includes background, experience, education, management skills and financial requirements of the buyer Thus, the client interview enables the broker to judge the professional interests and industrial expertise of the buyer and hence seek a business opportunity that best suits the client’s skills and capacities. Throughout this process, the broker should enlighten the buyer about the nuances of the business purchase transaction.
The business brokers will often probe about the buyer’s past employment and the aspects of the position enjoyed most by the client. This is important information because with this knowledge, a business broker could best present business opportunities that include similar components to the past employment in order ensure to the buyer’s compatibility with business opportunity presented. A buyer is made aware of the capital intensity of a new business, so that he is prepared to finance unexpected and mandatory capital expenditures, especially if the prospective business involves equipment.
During the client interview the buyer is often informed about the documentation and paper-work he has to be ready with when approaching a business opportunity for purchase. The buyer has to maintain an organized file that should include important facets such as a accounting and financial section, owner questions section, sales section, marketing/advertising section, industry information section, licenses/permits/filings section, legal section, due diligence etc.
For a buyer, the client interview presents an opportunity to gain a certain comfort level from the business broker concerning what lies ahead and how to best be prepared. Information and guidance provided to the buyer in the client interview promotes success down the road by ensuring extreme diligence in understanding the products and/or services offered by each business considered and the competition in the marketplace.
In sum, the client interview sets the stage for each step of the business purchase process that follows. We, at Quantum™ Business Solutions Network, strive to ensure this process is executed in a manner most beneficial to our clients.
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October 17th, 2007 quantum
Conducting extensive research and identifying specific business opportunities is perhaps the most crucial first step that you can take as a business buyer.
There are many channels which can be utilized to locate and identify qualified business opportunities. QBSNet’s marketing consultants have developed a comprehensive marketing network of accountants, attorneys, bankers and other leads aimed toward locating qualified businesses that fit your established criterion. We also maintain our own database of qualified business opportunities.
Once we begin a search for qualified business opportunities on your behalf, we will notify you by email that we have identified certain business opportunities that meet your search criteria. This will typically occur by requesting that you log into our database of qualified business opportunities.
You will be requested to review the summaries of each business opportunity selected on your behalf which contain basic information relating to each business opportunity including, the Business Type, the Business Location, the List Price, the Net Cash Flow To Owner (Net Cash Flow is arrived at by starting with net (before tax) profit and then adding back any payments made to the owner, interest and any depreciation of assets) and Quantum Comments (our input why we believe the particular business represents a valuable opportunity).
If any particular business opportunity is appealing to you, select “Click Here For More Information On This Business Listing” and you will have immediate access to more detailed information concerning that business listing.
After reviewing the detailed record of information available through our database, if you wish to continue to pursue any particular business opportunity, click “Interested” and a Quantum™ Business Solutions Network Consultant will be notified to contact the owner of that business (or the owner’s representative) in order to obtain additional information concerning that listing.
The new and advanced qualified business locating and identifying network is a fast and elaborative way of searching a business opportunity that appropriately suits the criteria provided by a business buyer to us. This not only makes the procedure for searching a qualified business listing more easy but also reliable and result-oriented.
Conducting extensive search and identification of specific Business Opportunities, will present the buyer with a variety of business listings to choose from.
Visit our website www.QBSNet.com and get expert advice on recognizing suitable business opportunities.
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October 2nd, 2007 quantum
After our affiliation with a leading regional Law firm Myers Dawes Andreas & Sherman, LLP, to provide both Business Brokerage and Legal services under a single roof, the move to introduce complimentary legal services was to follow naturally. The inclusion of discounted legal services would mean that you can have access to expert assistance on the legalities that are involved in a business transaction without having to hire a separate attorney or legal officer.
Provision of Legal services for different qualified services shall enable the client to save $20,000 or more depending upon the value of business purchased or sold. The announcement was recently covered in a Press Release, from which the following excerpts are taken:
“The program of providing complimentary legal services for qualified listings to our clients would help them save $20,000 or more, depending upon the value of business purchased or sold. We have introduced this discount program to combat the problems that our clients encountered when they selected a particular business opportunity. Legal complexities and intricacies are an integral part of any business selling or business buying process and unless you have qualified legal help available at hand, you run a very high risk of faltering”
This consequently saves their time and resources from being spent unnecessarily, ‘running from one firm to other’, by eliminating a duplication of costs and the coordination of professionals to ensure a smooth transaction”.
“This idea of combining the legal expertise of MDAS with the already established accounting, business and marketing experience of Quantum™, will give Quantum™ a definite edge and will allow us to offer one of a kind comprehensive business brokerage service under a single umbrella”.
You can read the complete press release at the following URLs:
http://www.prleap.com/pr/95683/
http://www.qbsnet.com/southern-california-discounted-legal-services-los-angeles.php
Visit our website - www.qbsnet.com to find out about the other lucrative business brokerage services that might suit your business or professional requirements.
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September 24th, 2007 quantum
Many times buyers will encounter the issue of whether to include the unearned deposits in their deals or not. Moreover, a change in ownership can often impact the quality of work provided or services rendered. These issues can add complexity to a transaction. Below, we have tried to shed some light on the issue. The following scenario offers a way to proceed under a particular set of facts.
“If someone wants to purchase a bakery and the seller has accepted deposits from customers for future work that would occur after COE, what should be stipulate in the offer? As in the case of a specialty cake like a wedding cake, the person who originally contracted with the seller would be distraught to learn that there is a new owner and all cake designers have their own style, however standard. Should a buyer ask the seller to contact all people they have contracted with to notify them of the sale or would a publishing of notice of sale in the paper as required by escrow be sufficient? Another issue is that a 4-week escrow period is not much time to contact a bride and tell her that the person who was going to do her cake will no longer be doing it (doesn’t give bride much time to find another baker). Doing this might arise legal issues. A seller wanted to keep the deposits, have the buyer collect the remaining balance then make the cakes.”
The solution to the problem is given below:
Answer:
The deposits represent an asset of the business which should be transferred to the buyer. In the event that no services have been rendered through COE toward making the cakes, then the seller would not be entitled to any portion thereof. In the offer, we would suggest that you negotiate for a Management Assistance – Training period which would cover the period of time during which it would take to fulfill all of the pending wedding cake orders. In the event, the Seller was available for guidance, etc., we would further suggest not alerting the customers of any change of ownership and seek the Seller’s design and input advice as necessary for each cake.
For more of such expert advice, keep visiting our Quantum™ Blog.
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