BizQuest's Business for Sale Blog

Using - The B.O.S.S. Theory - to Quickly Evaluate a Business

It is often difficult in the early stages of reviewing a potential opportunity (especially for first-timer business buyers) to really determine if it is a good business. There may so much information to digest in some cases that it becomes overwhelming, while with other listings, the complete lack of any comprehensive detail makes the task almost impossible.

Having purchased ten businesses, I have developed a regimented set of guidelines ('The B.O.S.S. Theory') that I follow that allows me to quickly access any opportunity. While my rules may not be completely applicable to you, they will, nevertheless, provide you with an excellent idea of how to go about the review process.

Before going into the specifics, it is important that any buyer understands that you must divide your evaluation in two distinct compartments. The first is the undeniable data, or what I like to call the 'deal facts'. These are all of the parts that are black and white.

For example, the financials of a business fall into this category. Although there may be some discussion or debate regarding add-backs, numbers don’t lie. It is plain old mathematics. There’s no gray area, or shouldn’t be. Another example would be licensing: if the business requires a specific skill-related license that you must hold (i.e. engineering degree, general contractor license, etc.), or having a government license of sorts, then these are again black and white issues that are simple to evaluate.

The second compartment is actually the bigger issues that come into play in all of the gray areas where 'The B.O.S.S. Theory' can helpful. When I look for a business, here’s what I want in place amongst the less than obvious attributes:

Bland – Means it 'flies under the radar' and is less vulnerable to mass competition
Operationally Sound – Fundamentals in place (not a turnaround)
Sustainable – No looming threats that could impact the historical financials
Scalable – Identifiable growth opportunities.

Here are the more descriptive points of each:

Bland

I am not a fancy guy. I like plain vanilla businesses. The more bland, boring and un-sexy it is, the happier I am. These businesses generally attract less attention (competition and otherwise) and you can plod along with great results and effectively build them while nobody is looking. Further, they generally slip by the average business-buyer who tends to look for 'hot' industries or glamorous businesses. I have always subscribed to the notion that I don’t need the fame; I need the money.

Operationally Sound

One of the greatest aspects to buying a good existing business is that you will immediately benefit from having all of the necessary fundamentals in place. Ideally, you should get the keys on Monday and take a paycheck on Friday. With a good existing business, the infrastructure is in place. There are trained employees, functioning systems, reliable suppliers and a stable of customers. The phone will ring as soon you open the doors and the business is already humming. In other words, it is the complete opposite of a start-up and that is precisely what you want.

Sustainable

When you buy a good existing business, a great part of the allure is being able to count on the continuation of the past historical financial activity and profitability. That is exactly why the purchase price will be a multiple of that figure. You want to be certain that there are no known looming threats that can adversely impact the numbers. You want them to continue at least at the recent levels and definitely not decline.

Common examples that can influence the past financials can be customer concentration issues where a disproportionate amount of volume rests in the hands a few clients or a business that relies heavily on location to drive its revenues yet there is a short lease that cannot be extended.

In the former example, if one or two of the customers stop buying, the business can face a massive and potentially unrecoverable situation. Likewise with the premises, if you can’t continue to occupy a location long-term that drives customers through the door, you may be out of business very quickly after getting into it.

Scalable

While it is crucial to have a sustainable business model to build upon, you want to identify and exploit realistic growth opportunities. These are not the 'pie-in-the sky' ideas that many delusional business buyers imagine. You want to be satisfied that there are concrete initiatives you can take to grow. For example, opening up a second location, expanding the product line, or acquiring other complimentary businesses. These are real objectives.

Do not get lulled into believing all of the wonderful recommendations the seller presents that may make it seem easy to grow. They may suggest you hire more salespeople, attend trade shows, advertise more or other 'brilliant' ideas. While some may be good, the truth is they have likely attempted most of these things or if they are so easy why haven’t they done it? It may very well be that growing the business is not as simple as they may articulate.

On the other hand, if you subscribe to 'The BOSS Theory', then identifying and acquiring a good business that can become great with you as the owner, is a lot less difficult that you may imagine.

Buying a Second Business - Should the first one be sold beforehand?

Question:
I own a small, profitable printing business that has provided a nice income for me for the past 6 years, but the business is now at a point where revenue and earnings have plateaued and can’t be grown much further without a significant additional investment. I can afford to make that investment, but I’ve also become very interested in buying another business in a different field. If I did so I could hire a manager to run the print shop, but I am concerned that by trying to run two businesses at the same time I would end up not devoting enough time to either one. On the other hand, keeping the printing business would allow me to have a nice income while I’m trying to build up the other business. Would you recommend trying to run two businesses at once, or sticking with what’s worked and investing in growing the printing business further? Or, should I sell that business and move on to the next? Thanks in advance for you help.

Answer:
Great question! I admire the fact that you have logically concluded that your current business has reached its plateau without making a significant investment. Many business owners are not as perceptive as you and simply trudge along in the world of mediocrity. That is not what a true entrepreneur does; they’re always looking to build something bigger, better, and faster.

That being said, there is a lot to consider. Let’s look at all of the options you noted, then I have one suggestion for you:

Making the Investment in Your Current Business
Practically speaking, this may be the best option for you since all of the unknowns that come into play when buying a new business are eliminated. You already know this business and the industry. You know what it will take investment-wise to get the business back on growth mode. However, it seems to me that you may simply be bored with the current business and need something new to dive into. There’s nothing wrong with that. I would, however, suggest that you go through the exercise of detailing how much you would need to invest financially and time-wise to build this business, and what you expect it to generate. Keep that figure in mind.

Buying a Business in Another Field
Personally, I’m not a big fan of this idea unless you sell your existing business and can focus all of your efforts on this new (ad)venture. A new business, especially in a new industry, will require all of your time initially and so you want to able to focus completely on growing it. Also, keep in mind that, above all, you must buy a business that is right for you. The phrase I use over and over again is: “whatever it is that you do best must be the single most important driving factor of any business you consider purchasing.”

Hiring a Manager
It all depends upon who you hire. Naturally, if there is someone currently in your firm that can step up to the manager’s position, that would be ideal. You should consider engaging this person and remaining on site full-time for at least three months to evaluate their progress. If you hire an outsider, you’ll have to remain on board for even longer. It is entirely possible that your first hire may not be right and you’ll have to start again. If you’re off running another business you’ll end up having problems in two places. Plus, if you’re not on top of a new manager’s performance, things can spiral downward very quickly.

Don’t get me wrong, I’m a huge fan of being able to bring in top people to grow a business. However, the people need to be right for the job. They need to have a big incentive to succeed. You need to be on top of the situation and prepared to remove and replace them if they do not produce results.

Selling the Business
Of course this is always an option. Naturally, this brings with it a set of challenges. Most importantly: how are you going to present a compelling case for the future growth of the current business model to any buyer? While business buyers will often target growth as a key factor for them, many want to make certain first and foremost that the existing model is sustainable. Plus, you need to take the necessary time to properly prepare your business for sale and the process will generally be around six months to a year. During that time it is critical that the business does not decline or selling it will be far more difficult.

Another Option to Consider
As I look back to the ten businesses I have owned, I can identify the one strategy that has produced meteoric results as easily as I can identify which acquisitions were disastrous or way below my expectations. Whenever I acquired a synergistic business, the results were phenomenal. When I got into something completely new while still owning the other entities, it was a mess. The lesson here, at least in my case, which I would counsel you is to consider seeking out a strategic acquisition that can dovetail with or be folded into your existing business. Ideally, this would be an additional product/service that can be marketed to your existing client base, or a technology application that could be sold within your industry.

I simply believe (and this is just my opinion) that growing a business from an already successful foundation is a huge advantage. Have you thought about acquiring a competitor? Or making an acquisition of a complimentary business? If you’re looking to revitalize your business and maybe even yourself, this can be a very viable option.

Questions a Buyer Should Ask a Seller - First-time buyers seeking advice on how to approach initial meeting with seller.

Question:
My wife and I are meeting next week with the seller and his broker of a business we are interested in, and we’re trying to prepare a list of questions to ask. So far we are drawing a blank? The business seems to be fairly straightforward (it is a retail Floral and Gift shop) and they have already given us basic financial information for the past 12 months. What else should we be asking for? Also, what is the real goal for this meeting?

Answer:
This is a wonderful question. I am pleased to learn that you are going to prepare yourself properly for the meeting. While there are numerous questions to be asked, you will want to see how the meeting progresses in general. It may evolve into a productive conversation.

Here are a few of the questions to ask the seller:

• What do you do everyday?
• Do you anticipate any problems with me getting credit from your suppliers
• Do any of your suppliers represent more than 10% of your purchases? If yes, who are they?
• Why are you selling?
• What is it that you like best and least about the business?
• What do you believe is the profile of the ideal buyer for this business?
• What can be done to build the business?
• How long will it take me to really learn this business?
• How long can I count on you to train me after the sale.
• What keeps you up at night about the business?
• Who does the buying for the store?
• What are the details of the lease? How long? Any options? Do you anticipate any problems with the landlord assigning it to me or entering into a new lease?
• How much vacation do you take (not that you’re looking for time off…rather, you want to know if they have adequate staff that will allow you time away)
• Are you the only owner?
• Who are the employees? Any manager in place? Are there any employees that are critical to the business?
• Are you willing to finance part of the purchase? If not, why?

Your other point about what the real goal for this meeting is a very perceptive question/observation on your behalf. There are really three areas to focus on:

1. Answers and Research
You want to get enough answers and detail to your questions so you can immediately focus on researching the business, the industry, the competition, etc. Although the Internet allows prospective business buyers to do phenomenal research and quickly, in today’s environment, good businesses sell fast - very fast. As such, you may not have a lot of time between a seller meeting and preparing an offer. Obviously, you’ll want to do your homework before moving to an offer so be sure to get enough information in your seller meeting to conduct your research. On this note, always ask the seller if he/she has copies of any trade publications. They’re a great source for additional information.

2. Seeing Yourself In The Business
If you take away anything from a seller meeting, it should be the answer to these four questions:

• Do I like the business?
• Can I see myself running it?
• Do I like the seller?
• Do I trust them?

Questions 1 and 2 are obvious. Questions 3 and 4 are critical. If you like the seller and trust them, chances are you and they will be able to work through any and all of the deal challenges that will arise. Trust is also paramount. If not, you will always keep thinking they are hiding something.

I have been involved in hundreds of business sales and in my experience, when the buyer wants to buy, and the seller wants to sell, and the parties trust one another; you cannot stop them from getting a deal done.

3. Impress The Seller
If you have any chance of getting the seller to finance the deal, or bend more they would normally on the deal terms, you need to leave them feeling that “you’re the one” to buy their business. If they believe that you can not only get the deal done, but also run the business successfully, they will go out of their way to make the deal happen.

So there you have it: a series of key questions to ask the seller, and the key points to focus on as your goal when you meet them. Good luck!

Should Recent Retiree Invest in Commercial Real Estate or Buying a Business?

Question:
I am recently retired from a large company but I am hoping to maintain a small income stream during my retirement. I am torn between buying a small business to run and investing in commercial real estate and becoming a landlord. Can you offer any advice?

Answer:
These are two very viable options; however, each one has completely different considerations that need to be made. So much depends upon what you'd really like to do. Commercial real estate is generally less of a risk than buying a business. However, the returns on your investment reflect this, with a business generating far better returns if you buy the right one.

The good news about buying real estate is even if you overpay a bit, as long as you have the financial resources to withstand any market downturn, it will recover. Right now, as you know well, real estate returns are far lower than in the past because the market is so hot. But the building will still be standing in a year. If you buy the wrong business, you'll likely be out of business.

Having said this, I personally prefer the option of buying a business over real estate. I prefer the higher potential returns and, more importantly, I truly enjoy the excitement of the business buying process and then getting into a new venture and building the business. To me, it is far more intellectually challenging than commercial real estate.

Owning commercial real estate is not without its challenges. There are problems that come with being a landlord and you may want to speak to some landlords and property managers to get a clear picture on what they do everyday. On this note, perhaps you can enjoy the best of both worlds and consider buying a property management business or another enterprise that deals in the world of real estate?

I'm sure an investment advisor would tell you to buy real estate or even to diversify and do both. It will all come down to what it is that you want from the investment. Owning a business, though the returns can be attractive and the gratification level great, does take work. In fact, it takes hard work and it is difficult to become successful if you only attack it on a part-time basis. But I'm a business-junkie, and to me the whole concept of business ownership, even with its challenges, is fascinating and I couldn't imagine doing anything else.

Should First-Time Buyer of Small Business Keep Regular Job and be Absentee Owner?

Question:

I have a regular job and I am looking to start a small business on the side. I would initially run the business on a part-time basis and employ a manager to run it and if it picks up fine, I am planning to quit my job down the line. Is this something that is possible? I am trying to buy a small pizza place or sandwich joint or ice-cream parlor. I want to keep the cost below $150,000. I have found a few listings in this range, with annual sales of around $300,000 to $400,000 and making a profit of around $40,000 to $60,000. In all these small mom and pop shops, I found that the owners spend a lot of time on the shop. My question is: can I run such a small business without full-time attention? If I employ a manager to run the show, how much will it eat into the bottom line and is that a reliable form of running this business? What sort of businesses can be run on a part time basis initially? Thanks for your response.

Answer:

I certainly admire your strategic plan. Buying a business and getting it going prior to quitting a job that pays your bills is a good idea in theory. Unfortunately, the reality is that in small businesses, absentee ownership is usually only successful where there is not a need to have supervisory personnel in place to oversee the operations. Coin laundries work well. Restaurants don't. Self-service car washes are good. Retail stores aren't.

The barometer to use is: when a customer comes into the facility or conducts business with the enterprise, what are all of the possible challenges that may arise and can they be handled properly by someone outside of the owner, and at what cost?

As such, if your objective is to buy the business, hire a manager, and have a decent profit left for yourself, a pizza parlor may not be the right choice. The only time it will work is if you're generating at least $60,000 in profit. You can pay a manager $30 - $40k and be left with $20,000. As a passive investment, that is a reasonable return. But, there are other considerations:

• Can you trust the manager to operate the business as you would?
  
• A pizza parlor generates a lot of cash sales. This can be very tempting for any employee and more so when the boss is not around.
  
• What if the manager quits, or gets sick for an extended period? Do you have the flexibility in your job to jump in?

Personally, I am not a fan of absentee businesses. I think part-time work equals part-time profits. Plus, there's no ongoing effort to build the business. Once again, I think you need to look more at businesses that really can operate without a manager. Or, simply be prepared for lower returns initially until the time comes that you're ready to work the business full time.

How Much Working Capital Should a New Business Owner Plan on Having?

Question:
If you buy a business and you're getting a loan, how much capital should you have available until the business starts generating income? For example, if I have $100,000 should I be looking for a business that's $50,000 keeping some back or should I look for a business that's over and try to find financing for the overage.

Answer:
Thank you for your excellent question. Believe it or not, many buyers overlook this and wind up in trouble soon after they acquire a business. What you are trying to determine is known as the "working capital" requirements of the business. This is the amount of money you will need available to fund the business after you take over until it becomes self-sufficient, meaning that there is enough inflow of cash to pay the bills.

Unfortunately, there isn't a standard answer, but it is something that you can easily calculate. Keep in mind that every business scenario is different. For example, if you acquire a business where clients pay immediately (i.e. a retail store), then you will have an inflow of cash the first day that you take over. On the other hand, if it's a business where you grant payment terms to clients and the average time to collect is 30 days, then at a bare minimum, you will need at least one month of working capital (although I don't think that 30 day's worth is enough, but I'll explain in a moment).

The other thing to consider is inventory. If you will have to purchase products to sell prior to seeing payments form clients, here too your cash flow will be affected.

The best way to approach this for any business is to do a forecast for the first six months after closing. Generally, you should take the average monthly revenue for the past 2 - 3 years. Then, factor in any seasonality to the business. For example, if you are buying a water sports equipment rental business on the beach in Florida in May, you can certainly expect sales to be far lower than they will be in December.

Once you determine the average sales, then you must calculate all of the fixed costs that you will incur from day one. These are all of the expenses that the business will have that are not related to the sales. For example, if you have sales people on commission, their costs are only incurred when revenue is generated. On the other hand, rent is a fixed expense. You have to pay this regardless of what the business revenues may be. Other fixed costs include: utilities, payroll, insurance, taxes, etc.

Always add a cushion of at least 10% - 15% to cover miscellaneous costs that always arise for new business owners. Let's assume that the fixed costs are $5,000 per month. Add another $750 to be comfortable.

Once again be certain that you include any anticipated inventory purchases into the equation if applicable to the business you are buying.

Then, you will need to factor in the revenue and how it is collected. If you sell products and don't collect for 30 days, you know that you will be in the hole for at least the first month's fixed expenses and catch up in month two. However, I have found that most businesses show a slight decline after a new owner takes over for the first 90 days or so. Each business is different but figure on about 15% - 20% decline.

In summary, here's what to consider:

• Complete a forecasted profit and loss statement.
  
• Be ultra-conservative in both revenues and expenses.
  
• Discount prior year's revenues.
  
• Increase fixed costs to give yourself a cushion.
  
• Don't forget about inventory.
  
• Don't panic if the business declines a bit after you take over.
  
• Do not allow yourself to get into a cash crunch.
  
• If possible, try to have three months of working capital available.

Fall in Love with the Profit NOT the Product

Question:
I found a business that is very interesting. I just love the product it sells. Unfortunately, it is not profitable. However, this product (which I can't disclose - sorry) seems like a winner. The seller has been trying to break into the market for three years without much success. Am I crazy to pursue this business?

Answer:
This is a great question. In fact, one of the 10 Commandments of my course for business buyers (How To Buy A Good Business At A Great Price©) deals with this issue specifically.

The Commandment is: "Fall in Love with the Profit NOT the Product". Here is the more detailed explanation:

A product or service without a customer is just excess inventory. When looking at a business, focus upon how much profit you can generate from the business and not on how "exciting" the product is. You would not believe the number of people who buy a business for the product and forget about profit. Here's what happens: they find an interesting listing. They visit the business. They like what they see (but haven't seen the right things). They then spend the next few hours, days, etc., dreaming about all of the wonderful things about the product, and they completely overlook whether or not they're in the real world about the business' profitability.

The most likely candidates to make this mistake are those that decide to turn a hobby into a business. For example, imagine that you are an avid golfer and you decide to buy a golf equipment store because of your love of the sport. For one thing, I guarantee that you will be playing much less golf (too busy working). Second, if the business goes sour you will quickly learn to dislike the sport and golfers themselves.

Profit, not product, is what pays the bills. The owner of any profitable business loves their product while the opposite holds true for a money-losing operation.

At times, the most profitable businesses are those with the most drab product lines (i.e. valves or shoelaces). I love the least sexy businesses imaginable. Conversely, a wonderful product that has limited demand is meaningless. Be certain that the product that any business offers has a ready market available to sell. In other words, do not get into a business where you have to create the demand and awareness for the product or service that you offer. This is a daunting and expensive undertaking (see dot-coms).

So when all else fails remember one thing: profit, not product, is what pays the bills.

Skeptical Buyer: If the Business is So Great, Why is the Owner Selling?

Question:
I am highly suspicious of business listings that I come across. If the businesses are running so great, why does the owner want to sell?

Answer:
Although skepticism is a wonderful trait for a business buyer, I think you may be misreading this situation entirely. There are many reasons why someone sells a good business. These can include retirement, illness, death, divorce, partnership issues, or just plain boredom. While there may be cases whereby a seller is trying to pass a poor business off to someone else, the research that you do, and the level of knowledge that you have when beginning the process of buying a business will make the difference between being able to identify a good business that is "legitimately" being sold versus one that you reference.

Your question also brings up an excellent point which is trying to determine why someone is selling. This is one of the key questions to ask a seller and to validate.

The average small business changes hands every five years or so. As such, it is not uncommon for plenty of good ones to be on the market. Once again the key is to be a well-informed buyer so that you can pounce on the right opportunity. I can assure you that good businesses sell very quickly in today's market.

Buying a Business in the U.S. While Living in another Country

Question:
I am interested in buying a business in the United States. Currently I live in Columbia. It is very difficult for me to travel each time I find a business I'm interested in. Would you recommend hiring someone to perform the due diligence on my behalf?

Answer:
I can certainly understand the difficulty that you face in buying a business in the U.S. while residing in another country. Obviously, it just makes good sense economically to do as much as you can during this process without having to travel each time. However, there are certain aspects to the business buying process that cannot be performed successfully unless in person. These include meeting with the seller, and being involved with the due diligence. While you can engage an accountant who can review the financials, you should involve yourself in the process so that you are also comfortable with the numbers. A CPA can conduct the review but it is an important phase and I would strongly recommend that after you have an accepted offer in place and the financial review commences, you should be here to participate in organizing/overseeing this important stage.

Absentee Owner Businesses

Question:
Please explain absentee owner offers and what to believe. How often should the owner visit, how to manage, etc.

Answer:
Absentee businesses may sound like an ideal situation; however, it is very rare to find a highly-profitable, well-run absentee business. There are no hard rules for how often the owner should visit or how to manage. Each situation is different. There are a few things that you must be aware of to have a successful absentee run business: you need above average, highly trustworthy employees. You'll want a manager who treats the business as their own. Consider having a profit sharing plan or even giving them a small amount of equity. Do whatever you can security-wise however; no matter how good the employees, or the manager, you'll probably have a higher than average theft rate. It's simple: if you're not there to police the business, it's going to happen.

Having said all this, let me state that I am not a fan of absentee run businesses. In my experience, part time effort means part time results. If you're going to invest your hard-earned money in a business then you should learn it, run it, build it, and manage it. Once you have this down pat, then you can bring in others to take over slowly so you can spend time away from it.

How To Separate Good Versus Bad Listings - Finding what you want is easier if you look for a few items

Question:
Some listings have a lot of relevant information and others seem to have almost nothing. How do I separate the good from the bad ones? What should I be looking for so I don't waste my time?

Answer:
Insofar as the detail of the actual information or lack thereof, please understand that you cannot buy a business off a listing. Quite often the initial information you'll see online is akin to a classified ad. Further investigation is always warranted.

A lack of information is not a reflection of the viability of the business nor does an abundance of information mean it's good. As a general rule, if the business is of interest to you send in an inquiry to learn more. In a detailed listing, there are over 70 things to look for but, in the initial listings, at the very least you'll want to examine the following:

Business Description:

First and foremost, make sure the business interests you. Look for key points that would make this business a solid candidate for growth (i.e. exclusive territory, large repeat client base, double digit revenue/profit increases, growing industry, etc).

Confidentiality is the key for a seller so the description may be generic but it will provide enough information so you can determine the industry that the business is in specifically. Good businesses sell very fast in today's market so by identifying the precise category of the business (if it's specialized) will allow you to begin gathering industry and competitive information. 

Assemble some specific questions relative to that particular business to ask of the include seller/broker when you hear back from them.

Asking Price:

My favorite term; to me it's an invitation to negotiate. So don't worry about the price but of course be reasonable. You won't buy a million dollar business for ten bucks but there is room. Likewise, don't chase listings that you know are beyond your reach. The average small business sale over the past seven years has been within 14% of the asking price. Of course, there are other ways to creatively structure a deal where the actual price plays less of a role. It's all in the terms!!

Seller's Discretionary Cash Flow:

The terminology may vary from site to site but you need to determine more than just the business' profit. As the new owner, you need to know precisely what cash you will have available (assuming everything remains the same) to service the debt, generate a salary for you, and fund the business/ growth.

As such, find out exactly what's included in the number being represented. Pay attention to "add backs" to be sure they are reasonable.

Down Payment:

The selling of businesses is most often a down payment driven transaction. The asking price is far more flexible. Every seller has an amount that they want "in their pocket" after closing which is the down payment amount. Again, this will prove to be far more rigid that the purchase price.

Many listings will list the price only, or the price and the down payment as the same, but rest assured EVERYTHING is negotiable. A seller listing the willingness to finance, or if the business has pre-qualified for financing, is usually well worth investigating further.

Skills Required:

These may not always be shown initially. A seller will usually put the most simplistic, "idiot proof" and basic skills in this section because the more specialized the greater the buyer base. As an example, they almost always mark: "general business/sales/marketing/administrative" which doesn't mean much but if they list a specific skill pay attention!

Reason for sale:

Personally, I like all the morbid ones: death, divorce, etc. They usually mean a more motivated seller. However; relocation and retirement are also good indicators. I'm always leery about "other business interests" as a reason. I can never understand what someone's other interests can be if this is such a good business! But, you never know.

Miscellaneous:

Some listings will include financing terms, asset values, lease information. Others may not. Regardless, the seller/broker will have more information beyond what's been posted.

Reply Information:

You'll have an email address to reply to the ad and often a link to the broker/seller site. Remember confidentiality is important to the seller so your initial inquiry can ask a few basic question but the most important thing is to ask them to forward a non-disclosure agreement to you to sign. Then, you can begin to ask the real pertinent questions. Check it out as it will give you an idea of their professionalism plus they may have additional listings on their site which are usually more detailed

Why Buy an Existing Business? - An existing business or franchise will have a history from which you will be able to make certain decisions

With so many options available to you, the question will become which vein of the business ownership arena should you pursue? Between franchises, existing businesses, start-ups, home based businesses and MLM's, it does become a bit overwhelming. When reviewing all of the possibilities you have to decide what will work best for you however, your chances of success are clearly best when you buy an existing business or franchise resale for many of reasons. With any new business you have two challenges: developing the product or service and then seeing what if anything, people are willing to pay you for it.

Regardless of a company's past performance, an existing business or franchise will, at the very least, have a history from which you will be able to make certain decisions. Even if the company was not profitable in the past, your strengths may lend themselves perfectly to turning it into a viable venture. Furthermore, you have the ability to verify what the company did in the past that resulted in the current status of the operation.

Ease of Investigation
In order to buy the right business or franchise, you will be required to do a thorough investigation of its past activities, its operations, its current status, the competition, the industry and its future potential. You will accumulate this information and then you will have to determine how it measures up with you at the helm. Clearly, this information gathering will be substantially more accurate and easier to obtain when dealing with an existing business or franchise, as you will have the resources available from which to get the details.

Infrastructure
You will have the benefit of purchasing a company that has an infrastructure including customers, suppliers, employees, equipment and systems. This will allow you to focus on building the business as opposed to a start up or new franchise where everything begins at ground zero.

Purchase Price Differences
Buying an existing business or franchise does not mean that it will cost you more. In fact, many times it's less expensive than building a new franchised location or launching a start-up. Even in those cases where it may require a premium, at least you know what you are getting if you investigate it properly. With a new franchise, a good Master Franchiser will do demographic studies on population, drive by traffic, potential customer base and a whole series of studies that will indicate that "theoretically' the business should do well. However, the only thing they cannot guarantee either by law or in reality is whether or not you will be successful. Also, new locations can take a year or more to build. You can avoid all of this when buying a resale.

Flexibility in Negotiating
You will have far more flexibility when negotiating the purchase of an existing business or franchise versus any other options available; it's not even close! Everything from the purchase price to financing is open to negotiation. Doesn't it more sense to put yourself into an environment where you have the greatest number of options available?

The Right Business for You - Businesses that you don't want is a good starting point

If you're going to do one thing right during the buying process make certain that you buy the right business for YOU! For most people, this is the biggest concern when it comes to buying a business. After all, on YOU can determine what business is right for you!

Don't be alarmed, most people have no clue. At the initial stages of the process, the amount of businesses for sale can be daunting; the choice enormous. If you find yourself unable to focus on a particular type of business or if you really have no clue what you want, but you do know that you want to buy a business then sometimes you have to work in reverse.

Start out by noting all of the businesses that you don't want. If for example you're not interested in a restaurant, gas station or retail store, you can probably eliminate 50% of all listings. Next, note the level of capital that you have a available as your cash investment. Then, write down, in order of priority, what the business must have in place (i.e. less than x number of employees, in business for 3 years, no weekends, high margins, exclusive products and or territory, etc). Check off these conditions against every business you consider.

Next, get a true grip on your skills. Don't pretend to be something that you're not. The rule here is that whatever it is that you do best (sales, marketing, operations, etc), must be the single most important driving factor of any business you consider purchasing. With business ownership, one of the main goals is for you to control your own destiny. Don't put yourself in a position where if one employee leaves, you're in big trouble. Your skills must be the fuel that drives the engine.

The right business for you is one that will thrive from your strengths and not suffer from your weaknesses. Take a long, hard look at yourself. Picture yourself in the business. Of paramount importance is that you must perceive yourself as enjoying the business. If you can't, then there's just no way that you can be successful. The business that you choose has to be one that you'll be proud to own.

Another key factor is to avoid falling in love with the product; rather, you must fall in love with the profit and the lifestyle that it can deliver to you. Many buyers begin to dream about all of the exciting things about the business and they become delusional about what can realistically be achieved. The product that the business sells, or the service that it offers, unless offensive in nature, is meaningless in the overall scheme. If the business does not produce the income you need, or provide you with a satisfactory return on your investment, then rest assured, you will learn to detest the product quickly. Likewise, a bland, boring product line can become very attractive if the business is growing and you're enjoying the work.

During the search phase, it's easy to become discouraged by the vast amount of available businesses. Don't get overwhelmed. Approach this methodically. If necessary, rule out the ones that you know that you don't want. Search through listings paying attention to asking price versus profits. Understand that listings do not always portray the whole picture. Send inquiries to the listed contact. Arrange meetings with sellers. Prepare the questions you need to ask. You cannot by a business from a listing. Visit businesses. With each meeting you'll get closer to knowing what is and isn't right for you. Above all, get into the game. Once you own the right business, you'll never look back!