Prospect, evaluate, purchase, and grow an existing business
Buying a Business For Dummies guides you through the process of becoming an entrepreneur without starting from scratch. Before you purchase an existing business, you’ll need to know what types of opportunities are out there, how to identify the right fit for your goals, and which strategies to use as you negotiate the deal and manage a smooth transition. This book gives you step-by-step advice on all of that. What about actually running the business successfully? You’re covered there, too, with clear information on executing a smooth ownership transition and growing your new business. Let this friendly Dummies guide be your mentor as you embark on your business ownership adventure.
- Know what’s involved in buying a business and see if it’s for you
- Evaluate your risk tolerance and identify businesses worth buying
- Negotiating a great deal and managing a seamless handover
- Making changes to your new business —without making enemies
Buying a Business For Dummies is a great starting point for entrepreneurs interested in a lower-risk route to business ownership.
İçerik tablosu
Introduction 1
About This Book 1
Foolish Assumptions 3
Icons Used in This Book 3
Beyond the Book 4
Where to Go from Here 4
Part 1: Deciding to Buy a Business 5
Chapter 1: Preparing to Buy a Business 7
Figuring Your Financial Fitness 8
Assess your financial position and goals 8
Measuring your net worth 9
Telling good debt from bad debt 10
Reducing debt 10
Buying insurance 12
Planning for the long term 12
Shrink your spending 14
Build up your cash reserves 14
Stabilize income with part time work 15
Assessing and Replacing Benefits 16
Retirement savings plans and pensions 16
Health insurance 17
Disability insurance 18
Life insurance 18
Dental, vision, and other insurance 20
Social Security taxes 20
Time off 21
Understanding Your Time and Financial Commitments to Buy 21
Stepping Toward Buying a Business 22
Enlisting Help from Top-Notch Professionals 23
Start with free/low-cost industry resources 23
Finding and interviewing reputable professionals 24
Estimating the Cost of Your Search and Business Acquisition 25
Calculating a down payment amount 25
Tallying search expenses 26
Finding funding 27
Chapter 2: Is Buying a Business for You? 29
Understanding Why to Buy a Business 30
To reduce start-up hassles and headaches 31
To lessen your risk 32
To increase profits by adding value 32
To establish cash flow 33
To capitalize on someone else’s good idea 34
To open locked doors 34
To inherit an established customer base 35
Knowing When You Shouldn’t Buy 35
You dislike inherited baggage 35
You’re going to skimp on inspections 36
You lack capital 38
You think you’ll miss out on the satisfaction of creating a business 38
Recognizing Prepurchase Prerequisites 39
Business experience and training 39
Down payment money 41
Do You Have the Right Stuff? 42
Getting started with the instructions 42
Answering the questions 43
Scoring the test 45
Analyzing your results 46
Part 2: Picking the Business That Fits Your Situation 49
Chapter 3: Determining Your Niche 51
Why You Don’t Need a New Idea to Be Successful 52
Choosing Your Business 54
Consider your category 54
Take advantage of accidental opportunities 56
Inventory your skills, interests, and job history 56
Narrow your choices 59
Go in search of fast growth 60
Take advantage of government resources 62
Chapter 4: Finding the Right Business to Buy 65
Defining Your Business-Buying Appetite 66
Generating Leads 68
Perusing publications 68
Networking with advisors 69
Knocking on doors 69
Enlisting business brokers 70
Considering a Franchise 73
Franchise advantages 74
Franchise disadvantages 75
Evaluating Multilevel Marketing (MLM) Firms 76
Being wary of pyramid schemes 77
Finding the better MLMs 78
Checking Out Work-from-Home Opportunities 79
Chapter 5: Evaluating a Business to Buy 81
Examining Owners’ and Key Employees’ Backgrounds 82
Finding Out Why the Owner Is Selling 84
Surveying the Company Culture 87
Deciding on Terms 88
Inspecting the Financial Statements 89
Interpreting the profit and loss statement 90
Reviewing the balance sheet 95
Understanding key ratios and percentages 101
Uncovering Lease Contract Terms 106
Evaluating Special Franchise Issues 106
Thoroughly review regulatory filings 107
Evaluate the franchiser’s motives 107
Interview plenty of franchisees 108
Understand what you’re buying and examine comparables 109
Check with federal and state regulators 110
Investigate the company’s credit history 110
Analyze and negotiate the franchise contract 110
Part 3: Negotiating Terms and Sealing the Deal 113
Chapter 6: Figuring Out How Much the Business is Worth 115
Exploring Valuation Methods: Multiple of Earnings and Book Value 116
Getting a Professional Appraisal 118
Tracking Businesses You’ve Explored That Have Sold 119
Tapping the Knowledge of Advisors Who Work with Similar Companies 119
Consulting Research Firms and Publications 120
Turning to Trade Publications 120
Enlisting the Services of a Business Broker 121
Chapter 7: Financing Your Deal 123
Outsourcing Financing 123
Taking advantage of seller financing 124
Banking on banks 124
Getting money from nonbanks 126
Financing Yourself: Bootstrapping 131
Chapter 8: Preparing a Purchase Offer 133
Writing a Letter of Intent or an Indication of Interest (IOI) 134
Drafting an Indication of Interest (IOI) 134
Writing a Letter of Intent (LOI) 135
Developing Purchase Offer Contingencies 135
Allocating the Purchase Price 137
Doing More Due Diligence 138
Think about income statement issues 139
Consider legal and tax concerns 140
Part 4: Managing a Smooth Transition 141
Chapter 9: Moving into Your Business 143
Getting Important Things Down on Paper 144
Considering the Business Entity 145
Sole proprietorships 145
C corporations 147
S corporations 153
Partnerships 155
Limited liability companies (LLCs) 155
Gaining Insight from Others 157
Chapter 10: Business Owner Basics 159
Minding the Details of Business Ownership 160
Buying insurance 160
Paying federal, state, and local taxes 163
Negotiating leases 163
Maintaining employee records 164
Getting licenses and permits 165
Signing the checks 165
Outsourcing: Focus on What You Do Best 166
Surveying the most commonly outsourced tasks 166
Figuring out what to outsource 168
Simplifying Your Accounting 169
Introducing some common systems 170
Choosing the system that’s right for you 177
Controlling Your Expenses 178
Looking at fixed and variable expenses 179
Understanding zero-based budgeting 181
Managing Vendor Relationships 182
Dealing with Bankers, Lawyers, and Other Outsiders 184
Bankers 184
Lawyers 186
Tax advisors 189
Consultants 189
Governments 190
Chapter 11: Handling Regulatory and Legal Issues 191
Navigating Small-Business Laws 192
Complying with Small-Business Regulations 194
Complying through licensing, registrations, and permits 194
Protecting ideas: Nondisclosures, patents, trademarks, and copyrights 202
A business prenup: Contracts with customers and suppliers 206
Laboring over Employee Costs and Laws 207
Part 5: Creating a Growth Trajectory 209
Chapter 12: Keeping and Attracting Superstar Employees 211
Motivating Top Performers to Stay 212
Revisiting the Compensation Plan 214
Reviewing the types of compensation 215
Creating a compensation plan that works for your business 216
Introducing Changes to Employee Benefits 217
Including insurance and other benefits 218
Seeing the real value in retirement plans 222
Deciding whether to share equity 224
Bringing in New Talent 228
Training: An Investment, Not an Expense 232
Parting Company: Firing an Employee 233
Designing Flexible Organization Charts 236
Valuing Employee Manuals 238
Characterizing Successful Employers 240
Flexibility: The bending of rules 241
Accountability: Where the buck doesn’t get passed 242
Follow-up: The more you do it, the less you need it 243
Chapter 13: Keeping Your Customers Loyal 245
Retaining Your Customer Base 246
Getting it right the first time 246
Continuing to offer more value 247
Remembering that company policy is meant to be bent 247
Learning from customer defections 249
Recognizing and practicing customer service 251
Dealing with Dissatisfied Customers 255
Listen, listen, listen 256
Develop a solution 257
Expanding Your Customer Base 258
Marketing defined 259
Mastering the key elements of marketing 260
Part 6: the Part of Tens 261
Chapter 14: Ten (or So) Ways to Learn from the Experiences of Others 263
Utilize Mentors 264
Network with Peers 264
Form a Board of Advisors 265
Find a Partner 266
Join a Trade Association 267
Locate a Small Business Development Center 269
Give SCORE a Try 269
Tap into Small-Business Information 270
Chapter 15: Ten Ongoing Tax Jobs 271
Keeping Track of Your Small Business Revenues and Costs 272
Separating Business from Personal Finances 272
Documenting Expenses and Income in the Event of an Audit 273
Keeping Current on Income, Employment/Payroll and Sales Taxes 274
Reducing Your Taxes by Legally Shifting Income and Expenses 276
Ensuring a Complete and Accurate Tax Return 277
Tracking Tax Information on Your Computer or Smartphone 278
Deciding When to Stash and When to Trash 278
Replacing Lost Business Records 279
Index 281
Yazar hakkında
Eric Tyson, MBA is a nationally-recognized personal finance counselor, writer, and best-selling author of Personal Finance For Dummies. Jim Schell is an accomplished serial entrepreneur, nonprofit founder, and executive. He spent twenty-five years as an entrepreneur and thirty years as a nonprofit founder and executive. Eric and Jim are co-authors of Small Business For Dummies.
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