Help please. I want to buy a business, but...

[ihaveaquestion]

I've never owned one before and I have no idea where to start.

How do I know the business is a money maker? I think it might be, but what do I ask the current owners?

How do I go about getting the money together? A bank loan vs. money from family/friends?

And that's all I've thought of so far. There's got to be much, much more!

All advice gratefully accepted!

[GOPisEvil]

1. I'd contact the Small Business Administration.

At worst, it's a starting point for answers to some questions. Good luck!

[ihaveaquestion]

2. Do you have any experience with them? Are they really helpful?

[GOPisEvil]

3. Not a lick.

I work for the man. But a friend of mine got help with writing his business plan, and a loan from them. He didn't curse them to hell, so I guess they were some help.

[Bonhomme Richard]

10. SBA would be a good place to start.

I had to deal with them when I applied for a line of credit with the bank. I think they are really geared up to help people like yourself. You have nothing to loose, just don't let them scare you too much. The guy I dealt with was trying to be helpful I guess, but I was impatient to get on with the paperwork as I have already been working in the industry for about 20 years and was jumping through hoops for the bank.

[matcom]

4. need more details

what kind of business?

where would it be located? (geographically)

how much overhead?

[ihaveaquestion]

9. It's a small campground.

Opps. They're kicking me out of work - system maintenence. n/t

[Bonhomme Richard]

11. Uh, Oh......be very careful

The husband of my niece bought a campground and is now trying to get out of it.
It requires you to be hands on 24/7 and you have to be able to do a lot of the work yourself. That means carpentry, plumbing, electrical, landscaping, etc, etc.. If you have to pay someone there goes your profit.
Some questions to think about:
Is the business (income) year round?
Do you want more tents or more RV's? Hookups?
Can you get corporate/private business (like picnics)?
Do you have or can you build pavilions in order to get that business?
Is some guy going to start a hog farm next door?
Are you reasonably close to main highways?

Just some things to think about.

[ohiosmith]

5. SCORE and SBA may be able to help with what you need to know.

If you have an attorney or Accountant get their advise. Get copies of the financial statements and tax filings for the last several years from the current owner. If your bank has a small business division they can help.

[Bonhomme Richard]

6. If you are buying a business........

Without knowing what type of business and a 100 other questions here's something anyway.

1. You (and an accountant) have to look at their books. The current owners obviously have a price in mind. That price will need to be backed up with business records, sales, expenses, etc. etc.
A rule of thumb is the business should pay for itself in 10 years. That means that the profit that the business earns (that means profit after all expenses including salaries) will pay back the cost in 10 years.
You need to talk to an accountant, lawyer and people that know that type of business.

2. For money you go to the three F's. Family, Friends, and fools. Without any experience your chances of getting money from an institution is about nil unless you are willing to put up the house etc.. Some have used credit cards but I wouldn't recommend that.

Good luck.

[Raven]

7. Benn there, done that!

It's much easier that it seems. I don't know where you live, but contact the nearest college or university that has a business school or business program. Often they will help you analyse an existing business and develop a business plan. The business plan is the most important thing that you will do. It will help you identify your market, determine your expenses and define how much money you will need to get going.

Even if you are buying someone else's business, you need a business plan and you need to see the current owner's business plan. Check with the local Chamber of Commerce about this business and the Better Business Bureau of your State. Also check with the Attorney General's Office of your state...it's consumer protection division...to see if there have been any complaints.

Determine why the current owner wants to sell. Is he/she just getting older, is the business in trouble?

If I were you, I'd try to use my own money as well as money from close relatives. I would try to stay away from the banks and from friends if I could. Commercial lenders are scum and they will close you down in a New York minute. They will also probably want you to pledge everything you have, sometimes including your house.

Last, but not least, get a very good business lawyer...don't skimp on this!

As I said above, I've done this and it was a wonderful experience but alot of work. If you have any other questions PM me. :-)

[Gothmog]

8. Find a good attorney and CPA

There are a number of pitfalls in buying a business and you need good legal advice. In addition, unless you understand the numbers and financial statements of the business, you need a good CPA. Most solos and attorneys in the smaller firms do not have a great deal of experience in this area and so you need to make sure that the attorney has done plenty of acquisitions and sales. A mid size firm is a good bet.

Before you buy a business make sure you know and understand the business and its financial statements. Try to look at a year or two of monthly financial statements to make sure you understand the trends and who cyclical the business is.

Good luck.

[amazona]

12. a couple of quick thoughts

Before you do anything, investigate to see if you will be able to buy affordable health insurance for yourself and your family. In many states, after age 40 or 50, you won't be able to. Being self-employed can mean if you get a serious illness, you lose everything you have. I've been 20 years self-employed, and if I'd known that I was shutting so many doors by walking down this path, I never would have done it. The situation with insurance is getting more and more frightening. When I started out, it was reasonable to believe that if I made enough money to buy a house, etc. I would always be able to afford health insurance. Not any more....

If you have a spouse who can provide insurance for your family through their job, and that spouse's job is very secure, then it may be do-able. But I would never advise any single person I care about to get involved in their own business unless it has the real potential to be a million-dollar business, such that you could always afford your own health care/insurance.

While on the topic of insurance, I might as well mention that I've had several friends shut down their small businesses just over the cost of liability insurance. In my state, you are required to have a $1,000,000 policy if you're dealing with the public.

Sorry to be so negative but I've never seen the insurance climate so bad for business and all signs I've seen are that things are only going to get worse, as there is no will to rein in the industry's greed.

[ihaveaquestion]

13. Thank you all!

I see some very good advice here and I will be following it.

Thanks to those who offered personal contacts especially. I may take you up on it.

I'm so grateful this group is so knowledgeable and helpful.