7 Reasons to Buy a Good Business
1) Established Customer Base
Do you know how much it costs to build a customer? On average a customer will have to be contacted 7 times before they will buy from you. Does this sound like something that will be easy to do. No, its not, any of you that have tried building Customer Base have found just how difficult it can be. Now when you Buy a Good Business, the building of the customer base is already done. All you need to do is set up the systems that will keep these people happy and use the systems in place to continue to build your customers. Doing this will build referrals which will have your customers getting you more customers.
2) Experienced Employees
They already know the ropes, the systems and players involved. This takes away a training period, leaving more time for maintaining client relationships. Interviewing the employees in the buying process will allow you, the buyer, to see exactly what you are getting into, who the key employees are and how everyone fits together.
3) Position in the Market
Suppliers, Clients, Competitors, they all know the name of your business already, survey all these prior to purchasing the business and you strengthen your ability to take the business from Good to Great!
4) Operating Systems
Systems are what maintain a successful business, managers and employees just run the systems. Steven Covey wrote of this in his book, “7 Habits of Highly Successful People.” In his book, Covey reveals how McDonald’s is able to reproduce the same flavor, service and atmosphere in every restaurant around the world. No matter what McDonald’s you walk into each burger will taste the same and the fries the same consistency, systems design to be run by the lowest level worker, at no point is the running of the business dependant on an individual person, possibly a position, but not a particular person. The systems run the business, setting up systems is crucial to the success any business. When buying a business, these systems may already be in place. If these systems are not in place and you can recognize where and what systems to set up you can take the business from Good to Great!
5) Financing a Business Purchase
OPM (Other Peoples Money) – One of the most powerful ways to use leverage. Most owners are willing to finance some or most of the purchase, they will benefit from the monthly income without having to work the business. This will allow you to keep some money in your pocket and may help you avoid going to a bank for financing.
6) Owner Training
Most Business owners will offer a transition of ownership, showing you the ropes. Can you believe it, they will train you how to run the business. They will show you the ropes, and then, they might be willing to stay on as a consultant afterwards if you have any questions. Now you have a coach who ran the same exact business to help you out.
7) Look at the Books
If you are a serious buyer and are have enough confidence in the business you are investigating, after submitting a Letter of Intent you will be able to inspect their books. The most important part of deciding on the purchase will be when you are able to look at the past performance of the business. Be sure to have your accountant look at all financial records and look for any inconsistencies, this will tell the history of the business, and provide you the most insight whether to buy or not.
The seller is looking to sell on the future value of the business, while you, the buyer, are looking for every excuse to cut the price, based on the past performance. Remember to pay for the past and buy for the future.
As an outsider you have the advantage seeing everything that you would want to change.
Good luck in your businesses buying ventures.
Do you know how much it costs to build a customer? On average a customer will have to be contacted 7 times before they will buy from you. Does this sound like something that will be easy to do. No, its not, any of you that have tried building Customer Base have found just how difficult it can be. Now when you Buy a Good Business, the building of the customer base is already done. All you need to do is set up the systems that will keep these people happy and use the systems in place to continue to build your customers. Doing this will build referrals which will have your customers getting you more customers.
2) Experienced Employees
They already know the ropes, the systems and players involved. This takes away a training period, leaving more time for maintaining client relationships. Interviewing the employees in the buying process will allow you, the buyer, to see exactly what you are getting into, who the key employees are and how everyone fits together.
3) Position in the Market
Suppliers, Clients, Competitors, they all know the name of your business already, survey all these prior to purchasing the business and you strengthen your ability to take the business from Good to Great!
4) Operating Systems
Systems are what maintain a successful business, managers and employees just run the systems. Steven Covey wrote of this in his book, “7 Habits of Highly Successful People.” In his book, Covey reveals how McDonald’s is able to reproduce the same flavor, service and atmosphere in every restaurant around the world. No matter what McDonald’s you walk into each burger will taste the same and the fries the same consistency, systems design to be run by the lowest level worker, at no point is the running of the business dependant on an individual person, possibly a position, but not a particular person. The systems run the business, setting up systems is crucial to the success any business. When buying a business, these systems may already be in place. If these systems are not in place and you can recognize where and what systems to set up you can take the business from Good to Great!
5) Financing a Business Purchase
OPM (Other Peoples Money) – One of the most powerful ways to use leverage. Most owners are willing to finance some or most of the purchase, they will benefit from the monthly income without having to work the business. This will allow you to keep some money in your pocket and may help you avoid going to a bank for financing.
6) Owner Training
Most Business owners will offer a transition of ownership, showing you the ropes. Can you believe it, they will train you how to run the business. They will show you the ropes, and then, they might be willing to stay on as a consultant afterwards if you have any questions. Now you have a coach who ran the same exact business to help you out.
7) Look at the Books
If you are a serious buyer and are have enough confidence in the business you are investigating, after submitting a Letter of Intent you will be able to inspect their books. The most important part of deciding on the purchase will be when you are able to look at the past performance of the business. Be sure to have your accountant look at all financial records and look for any inconsistencies, this will tell the history of the business, and provide you the most insight whether to buy or not.
The seller is looking to sell on the future value of the business, while you, the buyer, are looking for every excuse to cut the price, based on the past performance. Remember to pay for the past and buy for the future.
As an outsider you have the advantage seeing everything that you would want to change.
Good luck in your businesses buying ventures.
