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Thread: Buying an existing business

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    Default Buying an existing business

    What are your thoughts on buying an existing business? My husband always says that no successful business owner would sell their business. I've came across a clothing boutique and the owner is claiming family/ medical issues that is causing her to sell her business. Of course, before moving any further, her book keeping and inventory would be checked. Just wondering what you guy's thoughts were. Why would a successful business owner sell if they're doing so good?

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    Businesses get bought and sold all the time for lots of reasons, none of which have to do with the success of the business. Sometimes the person just doesn't want the hassle of the business any more. Sometimes there's a medical issue that prevents them from spending enough time on the business. The only things that matters to the buyer is:

    1) are the books accurate (TEST every number in the receivables and payables to make sure they match reality, check bills to make sure they match the books, call their vendors to make sure that they aren't hiding bills or changing vendor conditions; look for places where the numbers could be faked);
    2) do you want to own that type of business and the headaches that go with it;
    3) and do you have the right money to not only buy it, but also to sustain it through some rough times if those come along?

    To get through #1, you might need to hire an accountant to audit everything. For #2 and #3, really step back and consider your situation and what it will take to run the business for the next 20 years through any kind of life change (new kids, divorce, etc.) before committing, because "the only constant in life is change", right?

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    Freelancier pretty much covered everything. I want to add to his list:

    4) Does the business have any "low hanging fruit" that when harvested will result in quick profits for you?

    I bought my business rather than starting from nothing as it was the only way that I would be able to afford it. The previous owner wanted to retire and it is/was a labour intensive business (working on changing this).
    Brad Miedema
    Fulcrum Saw & Tool

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    Depending on the nature of the business, a 5th consideration might be the existing clientele -- if the business gets a lot of repeat customers, you might try to ascertain whether their loyalties are to the business itself or to the owner of the business; in other words, will they be likely to stay with you when you acquire the business, or will they scatter when the current owner leaves?

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    i do think a small mom/pop type business would sell, even if successful....if your sick or retiring what else are you going to do with it....


    i dont see any mega successful ones doing it though....why not hire a manager and let it run itself

    your going to have to do your research and decide

  6. #6

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    There are in fact a number of reasons why someone may sale a business. I have known many successful businesses ending up calling it quits for personal issues, family issues, etc. As the above posters have stated, make sure they are not getting out of the business due to a business/financial issue, that would the effect your future if you end up buying.

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    Your husband is wrong. There are plenty of reasons that owners sell businesses. One of our sister offices actually has a program aimed at getting owners to sell instead of close at retirement. I've seen at least four businesses in town close down because the wife owned the store and the husband had a day job and got transferred. They were viable stores...not making millions type...so it depends on your definition of successful.

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    Many times people sell to parlay into something bigger and better for themselves. Somtimes its an unforunate reason to sell because they need cash for some other purpose or emergency. Sometimes a family dispute, a divorce or other reason not related to the business. I know a guy who had to sell his profitable business because the wife didn't like him working with young girl employees! Sometimes it's just their plan to work so many years then cash out and move to the beach.

    It's all in the numbers. Don't assume a business for sale is a loser. Even the biggest most successful businesses get bought and sold.

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