Buying A Business Is Better Than Starting the Business
Many people will say to buy a business then to start a business. Existing business provides better choices than starting a new business from zero. There are many advantages of buying a new business such as it will be having already established customer base, trained employees, existing cash flow, vendor relationship and an established business location. All of these are the important factors, which a new business will lack. It will take a lot of time and efforts to get a new business started from a scratch. In addition, those who are starting a new business will be literally burning a huge amount of the cash in the initial year. The choice is very easy but depends upon you. If you go with an established business, it will be having a cash flow, which will help with immediate income.
If you are financing with an existing business it will take some time but you will always have choices on routes you are deciding to go through. In the initial stage, you should get and try the seller to take a part of the financing fist. This is the simplest method of getting a deal done. If the seller of the business will not carry large part with the down payment then you will have other options for alternatives of the finance.
With small business loans, there is a common misconception that it is easy to get loans. There is no such thing as any money down loans. They never existed even before the credit crisis. You will require ten percent of the total purchase cost as a down payment to get back financing.
Financing business needs
The business will require providing two of the latest returns and the existing years’ loss statement and profit. The business will also require showing that it has enough cash flow after the debt service of the loan and the buyers financing requirements, which are personal.
Other sources of financing
There are varying few other methods by which you can finance your business but it will need refinancing private resources such as real estate.
What type of business should a person buy?
You should look at a business that has some link with your past work experience, skills you must have developed through hobby, classes you must have taken or you think you are interested in and can handle it. Many people make a very big mistake when they go with the business without having sufficient knowledge. It does not matter how good that business looks but you should always have a sense of running that business. You can look for the business you are interested and excited in. In such cases, a buyer will enjoy the work, which will offer productive results.
Brokers are the best way to find deals in the business. Although, they take fees and commission but they will find you the business of your interest. Make sure you are going with a professional who will have the expertise in getting this type of deals