Buyer's Top Questions
 Additional Value Attributes?
In addition to the cash flow of a business, you may wish to appraise some of the following as either High, Medium or Low:

* What's the historical performance over the past 3-5 years?
* How steady and predictable is the income?
* How flexible are the purchase terms...does the seller require all cash or are there exceptional terms available?
* Is growth on the decline or is it explosive?
* Is the location and facility marginal or highly desirable?
* Is there a large market for potential buyers if you decide to sell in the future?
* Where would your rank the environment...from rough and dirty to upscale and attractive?
* Can new competitors show up any given day or are there severe impediments to market entry?
* What are the trends within the given industry....healthy and growing or all relocating to India and China?

What are the steps in buying a business?
There are many individual steps that will arise as you proceed to evaluate and purchase a business. Some of the major issues involve:

* Confidentiality: Most buyers don't want suppliers, employees and customers to know the business is for sale until it is a virtual certainty
* Buyer's Due Diligence refers to whatever information or proof the buyer wants or needs in order to confirm that the business is actually as has been represented. As such, each buyer may come up with unique milestones for due diligence, even if they involve the same business
* Will the seller agree to not open or work at a competitive business? How long and in what location?
* Financing involves what down payment may be required, how much of a loan will a bank or financial institution offer, is it possible or necessary for the seller to offer a note for a portion of the purchase price and at what rates and terms will the loan/note carry


Who will I need help from along the way?
Purchasing a business is normally a substantial commitment of both time and money. In order to insure that you enter into a business transaction fore-armed with the necessary knowledge, you should plan on obtaining the advice of:

* A Business Broker
   (this should not come as a surprise)
* An Accountant
* An Attorney
* A Banker or Loan Broker
* A bartender

Why Buy a Business?
While there is no best or worst answer, some of the most common reasons for wanting to buy a business include:

* Be your own boss
* Earn more money
* Can't find a suitable job
* Want to help out family members
* lifestyle flexibility....decide when and where you work
* Tired of taking direction, ready to give direction

While not every business may satisfy each of these motives, some businesses can come very close, depending on what makes you tick.

What type of business is right?
1/2 what makes you tick and 1/2 what makes the business tick.....such as:

* Industry Experience
* Personal Interests/Hobbies
* Individual Skills/Aptitudes (i.e. Sales, financial, mechanical, outdoor)
* Business suitability for hands-on vs. absentee management
* People skills- managing small groups or large
* What is available within an affordable time frame

Business Value?
The Value (Beauty) of a business is in the eyes of the beholder. Besides whether the business seems neat, fun, or enjoyable, it is often critically important to understand how much cash the business can generate for the owner.

Owner's Discretionary Cash Flow (ODCF), also known as Seller's Discretionary Earnings (SDE) is the most generally accepted approach to valuing small businesses. ODCF is comprised of the earnings before expenses such as interest, taxes, depreciation and amortization. It also considers those expenses and perks that were for the direct personal benefit of the owner such as a personal wages, health and life insurance, auto, travel, meals, etc.

Businesses within different industries will typically sell for different multiples of their cash flow, typically based on risk and investments in assets (i.e. equipment) that are required

When is the Best time to buy?
It depends Dahhhhhhhhhh. But it really can vary substantially based on things like:

* Motivation of the buyer or seller (How desperate/interested is each party in the sale?)* Is the business a cash cow or a rescue mission?
* How much time do you need for: Negotiation, Financing, Training?
* Seasonality....is there a high volume/high profit period that you don't want to miss?
* Are there any tax ramifications that are motivating the seller or the buyer?

The most important single central fact about a free market is that no exchange takes place unless both parties benefit.
- Milton Friedman