How does a seller price his or her business?

Typically, a seller will come to a Provest for advice on what a business' selling price should be.  After carefully reviewing financial information, we suggest a range of prices.  We take market considerations into account.  While a seller may already have a figure in mind, we will recommend a price range.  When more cash is required by the seller, the price will be lower.  In contrast, when there are lower cash requirements, the price is generally higher. In today’s market, many business sales have a seller-financed component.  As a result, the down payment and terms are essential. In many cases, the structure of the sale is more important than the actual selling price.  The fact of the matter is the terms of the sale can mean success and failure. … [Read more...]

What makes people decide to go into business for themselves?

Researchers are often looking into this topic.  However, it turns out that most surveys reveal similar answers.  The following list details what buyers typically are seeking.  (This list is 1-4 with the most important elements listed first.) 1. I want to do my own thing and control my own destiny 2. I no longer want to work for a boss 3. I have skills and abilities I'd like to take advantage of 4. I'm interested in making more money *As you can see above, making money is not the top reason that people want to run their own business! … [Read more...]

Should I buy a business or start one from scratch?

One main reason that buyers often purchase businesses is due to the fact that they have track records.  Most business failures take place in the start-up phase.  When a business is preexisting it shows that there is a need for its products and/or services.  Further, there will be viable financial records to prove that fact. Another advantage to buyers is that sellers will often stay and train the new owner.  When a buyer can find someone who will train them and also offer financing terms, it can be tremendously attractive. … [Read more...]

A Buyer’s Quandary

Statistics reveal that out of about 15 would-be business buyers, only one will actually buy a business. It is important that potential sellers be knowledgeable on what buyers go through to actually become business owners. This is especially true for those who have started their own business or have forgotten what they went thorough prior to buying their business. If a prospective business buyer is employed, he or she has to make the decision to leave that job and go into business for and by himself. There is also the financial commitment necessary to actually invest in a business and any subsequent loans that are a result of the purchase. The new owner will likely need to execute a lease or assume an existing one, which is another financial commitment. These financial obligations are almost always guaranteed personally by the new owner. The prospective business owner must also be willing to make that "leap of faith" that is so necessary to becoming a business owner. There is also … [Read more...]

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