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Businesses for Sale

One approach to owning your own business is to buy someone else's. Frequently, busineses of all kind and condition are put up for sale. They may be available because the owner is retiring, looking for a change, or unable to make the business work. There can be several advantages to this approach; an existing business can offer:

  • customers, employees, and suppliers that eliminate start up delays
  • established location
  • reputation in the community and/or industry
  • historic perspective on future earnings

Some entrepreneurs look for businesses for sale in particular industries or markets where they have skills or see a bright future; others, with an interest in management, are more interested in finding "broken" or "unrealized" businesses than they are in what the company does. With a little time and effort, you can find the business that meets your requirements.

Once you've identified an opportunity, the more you understand about the business, the better you can determine whether a tantalizing opportunity is really a good bargain. Things you should consider are:

  • the reason the business is for sale
  • reputation with customers, suppliers, and employees
  • assets, debts, and contractual obligations
  • the constraints that have kept the business from growing
  • working capital and financial commitments
  • the accuracy, veractiy, and realism of the financial information
  • potential future competition from the seller
  • any current or foreseeable litigation
  • what skills and ability the seller brought to the business and your ability to perform relative to him

Finally, discuss with the seller the potential for ownership transition -- something available only when you buy an existing business. Even if the seller was the reason for problems, you can still learn a lot about the mechanics of running the business by being able to tap into the seller's prior experience.

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