An entrepreneur is defined as “a person who organizes and operates a business or businesses, taking on greater than normal financial risks in order to do so.” That’s right, taking risks is within the job description. However, a risk does not have to come with fear or even because of a blind decision. A wise entrepreneur equips themselves with a team of experts in the areas where they may be weaker or lack the knowledge. If you are an aspiring entrepreneur or an existing one looking for the next investment, here is a guide to what you need to know when buying an existing business.
Step 1: Take Charge
The first step is to hire a business broker. If you want to take control of your financial future, you are going to need to make smart business moves – which is easier done with the right team. A business broker has extensive knowledge of both the buying and selling of businesses, and therefore has the insight you might need to better strategize during a purchase.
Step 2: Evaluation
The next step is to undergo an extensive analysis with your broker. By better understanding your current financial capabilities, skills, and experiences – along with your aspiring goals, they can better serve you. With this information, they can find the right business for you to purchase.
Step 3: Education
Your business broker will make sure you are knowledgeable in how to buy a business before you take another step. Knowledge is power.
Step 4: Search
Transworld has a network of pre-vetted buyers and sellers to streamline the process. Not only will you have access to these listings, but you will be supported every step of the way. Transworld can serve as a neutral location for negotiations, handle NDA agreements, and set up showings – to name a few.
Step 5: Make an Offer
Once you have found the business you want to purchase, it is time to make an offer. Your advisor will help by drafting a contingent offer and then will present a purchase and sale agreement to the seller on your behalf.
Step 6: Due Diligence
Due diligence is vital and an important step to protect you – the buyer. A deep dive into the financial statements of the business will prove whether the seller has been forthright about their books. Once all has been sorted, you will be approved by the lender for the loan to purchase the business.
Step 7: Closing
During closing, the final details are sorted – for instance, lease assignments, utility transfers, financing, merchant service accounts, inventory counts, etc. As your business broker, we will work with your advisors, banks, escrow, and you until the details have been ironed out and finalized.
Step 8: Post-closing
Finally, the business is officially yours! Now it is time to meet with employees, suppliers, clients, and other individuals who need to get to know the new owner. If you have any questions about what happens after the business is yours, we are here to help. We are with you at every stage, until you feel you are ready to be on your own.
If you have questions or concerns when you’re buying a business, feel free to contact Transworld Business Advisors San Diego North to schedule a consultation.