Buying a Business Q&A:
What business is right for me? Know yourself. Not everyone is cut out to
be an entrepreneur. Ask yourself what do I enjoy doing? What have I done in the
past that I was good at? Start by making a self evaluation of your strengths and
weaknesses and writing them down. If you want to be successful,  do something
that you enjoy. Being a business owner is not the calling for everyone. Be
prepared to have twenty four months of cash in the bank to carry you through the
lean times of the transition. Ask yourself, am I self disciplined, am I a people
person, can I manage employees, what organizational skills do I possess, can I  
manage money in order to optimize cash flow, how will I react under stressful
situations, and am I able to control my own destiny? The key is to identify what
you enjoy doing the most and then find a business opportunity that makes use of
your skills and interests.    
Buying a Business Q&A:
What business is right for me
Do I need an Intermediary? Would you diagnose your own medical
condition? You surely wouldn't represent yourself in a court of law. Do in life what
you know how to do and hire competent and ethical professionals to help you
through situations you are unfamiliar with. A Business Intermediary is a trained
professional with the knowledge and experience needed to guide you through the
complex process of buying a business.
Do I need an Intermediary
Assembling my acquisition team
Do I need a business plan
Obtaining financing
How do I assemble my acquisition team? Selecting your team could be
one of the most critical decisions you make. It takes accountants, bankers,
lawyers and intermediaries with experience and knowledge of the process to
enable you to acquire what is often the largest financial decision of a lifetime.
Before you begin your acquisition search, interview the prospective candidates to
determine their experience,  knowledge of the process,  negotiation skills and
integrity.
How do I determine value
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Do I need a Business Plan? A business plan defines your business,
identifies your goals and serves as your firm's resume. The importance of a
comprehensive, thoughtful plan cannot be overemphasized. A business plan
provides specific information about your company and how you will repay
borrowed money, a plan is a crucial part of any loan application. A business plan
is one of the critical first steps in a business acquisition and is a necessity.  
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How do I obtain financing? Understand that your primary responsibility is
the proper use of capital and you are in business to make a profit. The first step is
to prepare a personal financial statement for yourself showing income, expenses
and capital or equity to invest. Be conservative, the bank will. Develop a realistic
three year forecast of what cash flow you will require. Be prepared to offer the
bank collateral if it's available. Know the cash flow of  your  target acquisition by
preparing a cash flow analysis. An experienced Business Intermediary can be
great help with the cash flow analysis and expediting the financing process. The
Intermediary has experience working with lenders of business loans that have
typically few assets for collateral and the requirements.   
How do I determine value? Valuing a company is a very complex process.
Generally, business value is determined by using cash flow multiples to
Discretionary Earnings (earnings plus depreciation, amortization, interest
expense and owner compensation/perks), industry formulas to revenue and cash
flow multiples to EBITDA (earnings before interest, taxes, depreciation and
amortization). Some of the eliminates considered in determining value are
business location, the industry, lease terms, historical income, gross profit
margins, employee turnover, skills required, inventory value, licensing issues,
tangible and intangible assets to purchase and does the seller require all cash
or is it a bankable transaction.  Determining value is a very important step to the
buyer and should be determined by one who is familiar with current market
conditions and has experience and training in business valuation.
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