2020 sounds like the year to do a lot of amazing things and buying a business should be one of them if you want to become an entrepreneur or grow your business. The seller tsunami is bringing a high volume of incredibly established companies onto the market and financing is still cheap and likely will be well into 2020.
Your Common Business Buying Questions Answered
You may have a lot of questions about how to buy a business in Colorado and Transworld Business Advisors has your answers. In this article, we’ve addressed some of the common questions business buyers ask us to start the conversation about this great opportunity for entrepreneurship.
What Should I Know Before Buying a Business?
One important question to ask yourself is, “What am I looking for in a business?” This question will be different for every professional. Typical answers will center around the following:
- A certain level of cash flow
- Level of owner involvement such as absentee ownership, semi-absentee, full involvement
- A full team to manage, a small team, or even no team at all
- If you’re looking to scale your company, you may be looking in a certain industry or for a service/product to integrate into your business
- Buying a job for the income or buying a business for a second income
- Buying a franchise company with training and support or an established business with training from the owner
How Do I Find an Established Business to Buy in Colorado?
There are a couple ways to approach finding a company to buy in Colorado.
- Search online: there are companies for sale across the US listed on business listing websites like BizBuySell, as well as our website, www.tworlddenver.com.
- Build a relationship with a business broker. Have a conversation about what you’re searching for, your financial capabilities, and the skill set you have to offer as an owner. They will keep you in mind as new listings come on to the market and bring you opportunities as they fit your criteria.
- Engage a business broker as a buyer’s agent. This is an exclusive agreement to work with a business broker where you have the opportunity to retain their services to find you a company to buy. Your business broker will enlist a number of tactics and their network to find a business that is suitable for your needs.
How Do I Learn How to Operate the Business After the Sale?
Typically, small business owners will offer a buyer of their company 2 weeks of training to help with the transition following the sale. So, there is no need to fear a knowledge gap once you own the company. And when buying a franchise business, there will be the additional franchise training included in the transition period where you will have the opportunity to learn more about the history of the business and operations.
What is All This Talk of a Seller Tsunami and How Do I Take Advantage of It?
The seller tsunami has been a hot topic in the mergers and acquisitions world for a while now. Essentially, the largest segment of business owners in the country are baby boomers and now that they have reached retirement age (or will soon), many of them are opting to sell their company to exit. The beauty of this trend is that baby boomer businesses are highly established, so they are a stable investment and especially so when compared to starting up a company. They also often come with unique opportunities to build additional value or merge them with a current business. To take advantage of the seller tsunami, simply engage with a broker to discuss what you’re looking for so you can be ready to make an acquisition when a business opportunity comes onto the market (or hop online to start searching). Business buyers would also do well speaking with their wealth manager or financial advisor to determine the level of investment they can commit.
Are There Any Red Flags to Be Aware of?
The great thing about buying a business is that there is a part of the buying process called due diligence where a serious buyer who has submitted a letter of intent will have full access to the business and the seller of the company to dig in and learn as much as they need to know to be comfortable with the transaction. It is at this time that you will gain access to the full financial statements of the company.
There are a lot of questions Colorado business buyers may want to ask before purchasing a company, a business broker can answer all of these and more. For the opportunity to sit down with a broker and discuss buying a business in 2020, we recommend scheduling a free consultation with one of our team members or visiting our website.
Rachael Holstein has been the Marketing Manager for Transworld - Rocky Mountain since 2016. Her work experience has been largely focused on business development and marketing in business brokerage, finance, architecture, property management, and information technology. A long time resident of Cleveland, Ohio, she attained her undergrad from John Carroll University and her Master’s Degree from Cleveland State University. In 2013, she relocated to Denver with her husband, Joe, and her furry companions to explore the mile high lifestyle!
If you liked this blog and want to receive more content, just like this, right to your inbox, sign up here!