Business Brokerage

Business Brokerage

Want to Buy a Business? Have a Plan!You have several financing options to choose from when you are trying to secure finances to buy a business. But all of them involve convincing someone that your idea is so good that they should give you money to implement it. So before anything else- Have a Plan. Not only when you want to buy a business, this is very good business advice in general, perhaps so commonsensical that it is not as meticulously implemented as it might be. 

Careful planning eliminates an enormous amount of risk from even the most uncertain business propositions. And when you are trying to convince someone to give you money, nothing works like a plan, supported by a backup plan, garnished with facts and statistics that are based on market research. Use business jargon, but learn to use it effectively. Don�ft spout terms like Debt-Equity Ratio and Revolving Lines of Credit unless you know exactly what they mean and you are sure that the person you are talking to knows what they mean as well. Buying a business involves far less risk than starting one from scratch, so if you are in a financially strong position in life, securing finances to buy a business shouldn�ft be a problem as long as you can convince a lender that you are capable of running it. Here, supporting information about your career, where you learnt the ropes, other businesses you have been involved in etc. will be useful. The riskier your proposition, the more expensive it is going to be for you to borrow money. Remember that institutions lend money but individuals make decisions. Your challenge is ultimately to convince individual human beings like yourself that your plan is worth investing in, and this human factor can be used to your advantage if you develop your skills in dealing with people. When listening to your plan, some financiers just want to hear what is in it for them and how safe a venture it is, while others are willing to take risks if they see passion and creativity. But all of them look for methodical people who have definite goals and clear ideas about how to attain them.Your ideas may be brilliant and you may be able to make inspiring speeches to sell them. But unless the people you talk to can see, point by point, what you intend to do and how you intend to do it, you are unlikely to get any money out of them. In fact �epoint by point�f is a good phrase to keep in mind. Be concise and talk about one idea at a time before going on to the next. This demands that you know what you are talking about and leaves less space for you to be vague and uncertain, which is what people who don�ft really know what they are talking about tend to be. Being clear precise will reflect well on your business capabilities, and the person you are talking to will pick up on it. If the business you want to buy is an established, profitable one (Positive Cash Flow Sale) then you could base your plan entirely on the model of the earlier owner. If possible, go over the old business plan with the prospective seller, and think about what changes you might want to make if you were to take over and run the business.Then when talking to the financier, mention your ideas for changes, how you would implement them and why you think they would make things smoother. It�fs not a necessary part of your pitch, but it�fll show financiers that you have done your homework, and that they can trust their money to you. When trying to obtain financing for a Break Even Sale (i.e. if at the time of the sale, the business is breaking even or just managing to make a profit) everything hinges on your plan and how you present it.The earlier business plan wasn�ft effective so you have to have very good reasons for why you want to buy it. The earlier owner�fs help will be invaluable here. Identify the reasons why the business didn�ft succeed, and what you will bring to the enterprise that can turn it around. The amount of money needed to purchase a company will be less when it is a Break Even Sale because the company is not profitable at the time of the sale. However convincing financiers to invest in a Break Even Sale requires more work since there is a greater risk involved. Don�ft limit yourself when looking for sources of financing.Conventional bank loans are often hard to qualify for, but are there are plenty of other options available in financing. Your family and friends could be a source of finances. Some landlords lend money to their tenants through rent concessions. Repayment of such loans usually involve a temporary or permanent stake in your business, depending on the exact terms of the deal. When talking to different financiers, anticipate what would interest them most about your plan, and stress on those aspects of it.