900 N. Kings Highway, Cherry Hill, New Jersey 08034
856.667.4100 ·
215.563.0276 ·
Fax: 856.667.3652
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Business Tip |
Don't let the stars get in your eyes.
More often than not, individuals setting out to
buy a small business are so taken by the glamour of getting into business that they don't take time to properly
investigate what they're buying.
Many small business buyers are first-time buyers. They are either first-time buyers of a given type of business
or it is their first time to be in business for themselves.
Many of these buyers are not qualified to evaluate the merits of a specific business. They need qualified assistance
in determining the price to pay, the feasibility of the business or products, the competition, the financial past
performance of the company, and the best way to finance the purchase.
Most buyers don't ask enough questions nor require enough financial history to make a proper decision. Any business
worth buying should have maintained records adequate enough to allow the buyer to review the success or failure
of that business. The inability or the unwillingness of the seller to provide the proper financial information
is an indication that the business may be overpriced.
Many small businesses are not profitable enough to give an adequate return on both the buyer's time and money.
If the buyer wants $60,000 per year for working 60 or 70 hours per week and wants an 8% return on his or her $200,000
investment, the business must net $76,000. A determination should be made before purchase that the business, based
on its past performance, can satisfy those requirements.
If you are willing to take a reduced return on your time and money for the sake of self-employment, do so with
your eyes open. Know the facts.
The need for professional assistance
when buying or selling a business cannot be overemphasized. Please contact us. We will review aspects of your proposed
purchase that you are likely to overlook.
