Be an Unreasonable Buyer
When buying a business always start with an Offer to Purchase and a Letter of Intent. Brokers will want you to sign an Offer to Purchase with earnest money down. You don’t have to do this to start the ball rolling. Keep in mind, the Letter of Intent is not as binding and as an unreasonable buyer, you want to be flexible. The letter of intent basically establishes price and terms so you can start serious due diligence. Of course, if it’s in your best interest to do an Offer to Purchase, immediately by all means, proceed. With your contingencies in place, the Offer to Purchase or the Letter of Intent will give you an out, based on your approval.
You want to bind the Seller to the deal as much as possible. Prior to signing the letter of intent, you, the buyer, should clearly think through the terms of the deal. Pay close attention to the language used in the document. You should write the letter of intent and then fax it to your attorney just to have him read it. You don’t let him try to make a 20 page contract out of my letter of intent. You want his legal advice only. Use the Letter of Intent as a leverage tool to be able to go back and re-negotiate different parts of the deal.
Let’s say the lease didn’t go together like you and the Seller agreed upon. The landlord has nothing to gain by subleasing. A lot of times they will try to increase the amount on a new lease for their gain. This will give you an opportunity to lower the price or get better terms. Remember, you are not emotionally involved in the business yet- Right? You can learn the unreasonable ways to buy a business without using any of your own money and a sample Letter of Intent in my book Who Wants To Be The Boss? Your Letter of Intent must include contingencies with “subject to clauses”; subject to accountant or attorney review and approval, subject to lease assignment, subject to state or federal license transfers, etc. Your “subject to” possibilities are limitless.
Of course the business broker will try to get you to eliminate most of these “subject to’s” because they get in the way of an easy sale. But be sure to include enough outs to limit your liability. You will want 2 to 3 weeks to review the books and financial records. The Seller must agree not to look at any other offers doing this time. You will find that most business brokers will want you to lift your contingencies in around 5 days under normal circumstances. Remember, you are not operating under the norm, so go for the longer period, even if you only get 2 weeks. You might need this extra time to put your financing together. Your no money down strategies sometimes takes a little longer.
Once While studying the profit and loss statements, I discovered that the Seller’s accountant had listed the 41/2 years remaining on the lease as a liability! His accountant had actually left this liability on the statements for people to see. Of course if he thinks it’s a liability, who am I to argue. You can be assured that most Sellers will consider a good lease as an asset, unless you are planning to relocate the business. The point is, look for unreasonable strategies that will help you put the deal together on your terms. Don’t just assume because an attorney or an accountant put together the paper work that it is accurate.
By: Dave Meholovitch
Archive for January, 2010
Offer To Purchase A Business
January 30th, 2010Domain Broker – Earn $10,000 From a Single Sale
January 29th, 2010
Are you looking to make a profit of about $10,000 in a single day? You must be wondering what am I talking about but the thing is that there are many ways by which a person can earn from the internet and being a domain broker is such a thing.
The thing is simple and all that would be required to do is make sales of domains. Don’t get worried, all you are required to do is act as a broker; connect two people, one who is ready to sell his domain and the other who wants to buy a domain. What you get? Huge amount of money, at times a single domain sale may make you richer by around $10,000!
There are various other things too that being a domain broker would provide you with and some of the common features include various ways by which you may earn money. How? There are various aspects like commission money, charges that you get when your customers place bid etc. In short if you are looking to make huge money there is nothing better than this option, try it and see how rich a person can get being a domain broker.
Since there are many ways by which you may earn thousands of dollars, there are certain things that you would be required to do like help all your customers, see if you can lessen the amount of commission charged. Well our intention is not to make you decrease your profits, but increasing it by increasing the number of customers. Try it out and see how easy can earning $10,000 a day be!
By: Ante Williams
Second Biggest Myth About Buying Or Starting a Business
January 27th, 2010
Have you ever heard of the concept of leverage? You definitely have. As a matter of fact, you already know how to use it. By using your credit card, you’re actually using other people’s money to purchase a desired item. You’re able to just sign your name to “borrow” for your purchase. So leverage is just a word for the simple idea of using “other people’s money”. It is no more complicated when you buy a business on leverage. Having adequate limits on your credit card can help you with the down payment on your business venture. Make sure you maintain a good credit rating. If not, hope is still there.
Question: What other secret of starting or buying a business is available to the public?
Answer: Information, my friends, is the secret. The more information you have, the more powerful it will make you. You need no business ownership background or fancy education to start or buy a business without cash of your own. In fact, you might be better off without these typical preconditions, which can discourage you in reaching your goals. Research will help you find out more of these secrets. The information you will accumulate through your research will allow you to open your eyes to new opportunities out there. Where other people see obstacles, you’ll see a challenge.
Question: How simple is it to buy a business on 100% leverage?
Answer: It is as simple as A-B-C (under the following conditions):
A: The seller is willing to finance 70 to 100% of the purchase price, a concept that will be explained later.
B: Any remaining amount can usually be financed through the seller’s bank. Financing can also be
handled in a different way, with the bank picking up the largest share and the seller contributing the rest.
C: A business broker or a supplier to the business can also be called on to contribute to your no-cash deal. The idea is to build “stair-steps” of financing to reach your goal. It can be advantageous for a broker to get involved in the transaction. Most of the time, the broker represents the seller; however, if you approach him and request a specific business, he may find it for you. At that point, he’ll search around to see what business will best suit your interests. He will attempt to close the deal and can give you a temporary break on his commission. That doesn’t mean that you are exempt from repaying his hard-earned money. Your broker will give you a time frame in which to pay your dues. Within this time frame, the business will generate enough money to pay for all operating expenses, the first month of the bank loan, and the broker’s fee, including the seller’s advance on the down payment. This amount can be exonerated from the initial purchase of the business. You’re probably wondering when your six-figure salary will appear. Sacrificing income for the next few months will be necessary to get the business running. This applies to start-up Internet companies as well. The Chief Executive Officers are making a mere $200 per week, if they are lucky. However, their goal is to be purchased by a big corporation; and if this scenario happens, their time and effort will be worth their while.
Question: Is the seller going to accept this maneuver?
Answer: Why not? As long as you can make sure that the seller gets what he or she wants, one way or another. Buying a business on no-cash terms doesn’t necessarily mean the seller ends up with no cash. It’s just not your cash. The key is to know the leveraging possibilities you can bring to the table, and which to suggest for a given situation. You’ll discover a number of them in this book, as well as other leveraging techniques available in the program reports. I should point out that it’s somewhat easier to buy a business on leverage than to start one from scratch. As I mentioned earlier, you can often use the assets of the company as “other people’s money” to arrange a none-of-your-own-cash transaction.
Question: But what if I have a great start-up idea and need to start from scratch?
Answer: No problem. Organization will be to your advantage. The article will show you how to approach and win over bankers, prospective suppliers, venture
capitalists, and “Angel investors” as sources of funding for your idea. In addition, we can show you how to get started via a limited partnership, selling companies’ stock, going through the Small Business Investment Companies (SBIC), and using home equity loans. All of these methods will get you much more money than you could by your own means.
The Small Business Development Center in your area can be a great help to your new start-up. You should contact the SBDC (subsidized by the Small Business Administration) in your area and ask to talk to a business consultant.
They will provide you with additional information about the trends and demographics for where you reside. This can be vital information, especially if you desire to cater to the local residents. The government plays a major role in helping new start-ups, depending on several criteria provided in this article
Question: Can you give an example of how I would bring leverage to the bargaining table to buy a business?
Answer: Sure. Let’s take the example of our dear friend, Larry. Perhaps like you, he was more than ready to say goodbye to his day job and was extremely interested in going out on his own. His dream was to own a vending machine route, a business he had found stimulating and exciting. He also thought the business had great potential because of the possibility of servicing the student community. His concept was different.
By: Daniel A Amzallag
Posted in Articles
Tags: Bank Financing Business Broker Business Education Business Ownership Business Venture Buying A Business Challenge Question Credit Card Credit Rating Leverage Matter Of Fact money Myth New Opportunities Obstacles Preconditions Public Answer Reaching Your Goals Stair Steps Transac
