WHAT SHOULD I LOOK FOR?

Look for a business that allows you to use your life and business skills in areas that interest you. Be open to looking at various businesses that might serve your needs. Obviously, you want to consider only those businesses that you can afford with the down payment you have available. In addition the business must be able to supply you with enough income after making payments on it to pay your bills. However, you should look at the business with an eye toward what you can do to improve it. There is an old adage advising that you should not buy a business unless you feel you can do better than the present owner. Everyone has seen examples of a good business that needed some improvement in order to thrive, and a new owner comes in and takes it to a new level. Conversely, there are also other cases where a new owner takes over a very successful business, and not soon after it either closes or is sold. It all depends on you!

WHAT DOES IT TAKE TO BE SUCCESSFUL?

Certainly, you need adequate capital to buy the business and to make the improvements you want, along with maintaining some reserves in case things start off slowly. You need to be willing to work hard and, in many cases, to put in long hours. Unfortunately, many potential buyers are not willing to do what it takes to be successful in owning a business. A business owner has to sometimes be the janitor, errand boy, employee, bookkeeper and chief bottle washer! Too many people think they can buy a business and then just sit behind a desk and work on their business plans. Owners of small businesses must be doers.

WHAT HAPPENS WHEN I FIND A BUSINESS I WANT TO BUY?

When you find a business you are interested in, the business broker will be able to answer many of your questions immediately or will research answers to them for you. Once you get your preliminary questions answered, the typical next step is for the broker to up set up a tour of the business and meet the owner.

If you decide to pursue the business the next step is to prepare an offer based on the price and contingent terms you feel are appropriate. Contingencies could include such things as a further review of the books and records supporting the figures that have been supplied to you, acceptable financing, inspections and/or other items.

The main purpose of the offer is to see if the seller is willing to accept the price and terms you offered. There is not much point in continuing if you and the seller cannot get together on price and terms. The offer is then presented to the seller who can either approve it, reject it, or counter it.

If you and the seller do agree on the price and terms, the next step is for you to do your due diligence. You may choose to use outside advisors to help you with the due diligence and we encourage you to do so. Professional business advice can help assure that things go smoothly and your interests are protected. Once all contingencies are removed and financing is arranged the closing documents are then prepared for review. Once final drafts are approved the final documents are prepared for closing. The date and time are set and the closing takes place. Meetings between the parties can be arranged prior to close to discuss transitional issues.

While the due diligence process is taking place you also need to arrange financing with a banker or other financial resource. Nothing happens without a successful effort in this area. One of the keys to our success as business brokers is our assistance in creating a professional bank packet for review. The packet includes all of the information a financial resource needs to make a decision on you and the business you want to purchase. We then contact multiple bankers and present the packet on your behalf. This normally leads to multiple favorable financing proposals for you to choose from. We offer this valuable service free of charge as an accommodation to you and receive no compensation for providing it from any financial resource.

DO I NEED AN ATTORNEY OR ACCOUNTANT?

Midwest Business Group has worked with many attorneys and accountants throughout the area and always encourages buyers and sellers to seek out professional advice. It is important, however, that your advisors are familiar with the business buying process and have the time available to handle the paperwork on a timely basis. We have lists of legal and accounting firms who are familiar with the business buying process that we have worked with in the past, and would be happy to share them with you. An experienced attorney or accountant can be of real assistance in making sure that all of the details are handled properly. Your professional advisors will be, and should be, looking after your interests. You also need to remember that the sellers interests must also be taken into consideration. The transaction must be fair for all parties.