Seller Financing Is How Businesses Get Sold

How wonderful it would be if the banks welcomed business buyers with open arms and an open vault. Sure, all those feel good TV ads from the banking industry like to convey a story of how customer friendly they are – just walk right on in and they’ll lend you the money to realize your dreams.

Guess what? It won’t happen. Never has, never will.

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There’s A Ton Of Incorrect Information About Buying A Business

I try to read every article about business buying and selling and specifically in regional markets across the globe. If one were to believe the contents of each one, you could go crazy. I have read ones that state: Valuations should be done on a certain basis and another article suggests an entirely different approach. One suggests that business sales are up and the next that sales are down; one states banks are financing, and then banks are not lending. There are more buyers, there are less buyers. And on and on the list goes.

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If You Can’t Buy The Whole Business, Buy Part Of It

A common challenge for prospective business buyers is coming up with enough capital to purchase a business. This can be an issue related to either the down payment or total purchase price, or perhaps both.

One of the most important assets a buyer can have is the ability to be creative in order to get a deal done since there are always so many twists and turns in these transactions. Many buyers are faced with the reality that they simply cannot come up with adequate capital to close the deal.

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Narrowing Your Search When Buying A Business

A few years ago we did a survey with over 1000 prospective business buyers classified as those who were actively searching to buy a business. One of the questions we asked was to identify the single biggest concern they had. The answer choices were: finding the right business, getting a good deal, arranging financing or not finding out certain issues before closing the deal.

Before revealing the results, what’s your single biggest concern from the choices offered?

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Set Reasonable Rules When Buying A Business

One of the biggest problems that many prospective business buyers have is to set unrealistic or too many hard rules about what business they will consider. While a buyer must have guidelines, it’s equally important that these criteria can be met.

For example, if you determine you will only buy a business that has been operational for ten plus years, or has shown at least five years of growth, or has only had one owner, or retirement is the only acceptable reason for selling, you’re going to be disappointed.

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Don’t Fall For The “Other Offer” Trick When Buying A Business

This is an important lesson in negotiating you have to keep in mind while buying a business. Let me give you an example of what happened to me recently in a very similar situation and I will explain how you may need to employ a similar strategy.

I’m in the process of looking for retail space for a company I invested in recently. It’s been a real pain simply because we need a larger space in a specific demographic area. Last week, I found a very solid potential location. I visited the space and met the landlord’s broker. The space has been vacant for two years however; that’s of no concern because we don’t need the plaza to drive business.

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“Looking” To Buy A Business Rarely Results In A Purchase

One of the big problems with buying a business is that it costs nothing to look. There are hundreds of thousands of businesses listed for sale, lots of business brokers and countless other resources one can tap into while in the stage of looking for a business. In addition to online resources, one could network with accountants, attorneys, bankers, investors, chambers of commerce and on and on the list goes.

Unfortunately, many prospective buyers get into the trap of turning the goal of buying a business into an endless search process because it is so easy to do. Simply looking at business for sale listings is not buying, and one’s attitude towards the entire business buying process and overall urgency will dictate whether or not you ever close a deal.

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