There is a high degree of success in purchasing an existing business. Existing businesses have established cash flow and success that can be seen. You will have customers and cash flow day one of ownership. The sellers provide training that helps the continued success of the business. Many sellers of successful businesses sell because of retirement, health reasons, family reasons, relocation, etc.
The following are some of the most common questions potential purchasers have.
Where do we get money to buy a business?
Although it is possible to get SBA financing for some opportunities, most businesses sell with seller financing. The down payment usually comes from a line of credit, second mortgage or refinance of a home. The seller-financing amount is structured to make sense for a purchaser. In other words, after paying the debt service to the seller there should be plenty of money left for income to the purchaser.
Is there an advantage in purchasing an established business vs. starting one up from scratch?
Yes, a huge advantage. Over 80% of all new business start-ups fail. On the other hand, most all businesses we have sold at David Keith and Associates has experienced growth. Many times a seller of a well established business has got the business to a point where they are making a good income and comfortable. Sometimes it only takes 10% more effort to take a successful business to the next level.
Why would anyone want to sell a good successful business?
It is a fallacy to think that people only sell bad businesses. We see many people purchase bad businesses, however, we only take on businesses that are profitable and make sense to purchase. Owners of businesses sell good companies for a variety of reasons some of which are retirement, health reasons, change in family situation, entrance into another company, desire to try something new, relocation, etc.
What are the best types of businesses to purchase?
1. The best type of company to purchase is a successful company that will support your lifestyle and meet your current and future objectives.
2. Equally important is purchasing a company that fits you. Just because a company is successful and has great cash flow doesn't mean you should buy it.
At David Keith and Associates we can recommend the best companies for you to purchase based on your objectives and strengths. Many people have no idea the types of businesses they would be best at. We can determine this very quickly. Whether you want to purchase a business now or in the future, call for an interview today.
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