Purchasing a profitable going concern has advantages over starting from scratch. Having an existing customer base and predictable cash flow gives you a strong advantage. Start by defining your target business. Assess your skills, financial resources and form a picture of the ideal target to acquire. Make a list of all the businesses that meet the profile even if they're not advertised for sale. Contact every owner on your list to let them know that you may be interested in buying and have the financial resources to close the deal. If you decide to use the services of a business broker be sure he or she represents you as a buyer's agent -- not the seller. The broker's track record negotiating sales of businesses that fit your target's profile should also be investigated. Valuing a business is not easy. Even professional business appraisers often disagree. Market value is the most probable price that a typical knowledgeable buyer and typical knowledgeable seller would use to transact a sale if neither are under undue pressure to sell or buy. Of course, it takes only one buyer and one seller and it's unlikely that either will be typical. Additionally, it's unlikely you'll find exact, comparable, recent sales. Value is determined by historic cash flow (revenues less operating expenses) and potential for increased revenue. Sellers want to price the business based on the future but buyers want to buy based upon the past. If they can compromise, a sale takes place. Rather than getting too hung up on the value, I recommend that you dwell on the process for gathering documentation that will tell you if the business is profitable enough to justify your investment. Hire an experienced business acquisition lawyer. Ask for a checklist of all the documents you'll need to get from the seller. Your lawyer will draft the definitive purchase agreement and structure the transaction. Retain a competent accountant. Your accountant will perform due diligence - the process of determining if the documentation provided by the seller is accurate. Review the financial documents. Determine how much cash flow you can expect in the near term after giving yourself a modest salary. Divide the cash flow by your cash investment to get your return on investment. Is the ROI acceptable for your perceived risk? If it is, make an offer. Rely on the process work and you'll find the business that's right for you.

In my opinion, leasing is usually a better option for most business owners than owning. Sometimes, local situations may justify owning. We all know stories about the small business owner who's real estate was in the path of growth and was bought out by a developer for substantial profit. The romance of owning real estate can be compelling and hindsight is 20-20. But in other circumstances real estate proved burdensome and inhibited the growth of their core business. A lesson can be learned from major corporations who rarely choose to own their buildings. Often they sell or sell and leaseback their real estate to get it off their books. Here are some of the reasons. Leasing affords more flexibility to expand or contract. It's a lot easier to renegotiate lease terms than have to dispose of a building in a soft market. Buying and selling real estate is a matter of market timing that professionals are better at than novices. Too often novices buy at the top of the market and sell at the bottom. Business owners often make real estate buying or selling decisions based upon the needs of their business rather than the real estate market. One of the 2 will suffer. The business may be neglected because of real estate management distractions. Real estate management is best done by professionals. Selling a business may be more difficult if the buyer is required to buy the real estate as part of the transaction. The seller is negotiating on 2 fronts and one will have a diminished outcome. Precious working capital is tied up in financing the real estate. You can only write off interest expense (not amortization) on a mortgage while lease payments are 100% deductible. You can end up with phantom, taxable income when selling a depreciated building. You should be spending your time making your business great and not having to deal with the day-to-day maintenance and management headaches of owning a building. Let the landlord do it. Income to asset based ratios are improved by not owning real estate, which may help public companies compare better to others in the same industry

For good "characters", business loans just got a bit easier. Cherie Ketchen is the owner of My Sisters Closet, a lady's clothing boutique on Shamrock Boulevard in Venice, and is also employed full time as a nurse. As such, she says there aren't enough hours left over to churn out all the exhibits needed to apply for a small-business loan. "The process seems so long and intimidating for such a small amount", she said. What's more, most local banks won't consider amounts under $100,000 because they make more money doing larger loans that require as much effort. Bankers also want substantial collateral and meaningful investments of your own cash, unless you've already established a solid track record of increasing profitability over several years. Additionally, a few dings on your credit report can easily stand in the way of your getting the money you need to pursue your entrepreneurial aspirations. Even if you can overcome these obstacles, lenders require business plans, income and expense projections, and considerable documentation to accompany your application. Because of these deterrents, the U.S. Small Business Administration decided to change all that for under-served borrowers by offering a new loan guaranty program based upon "character". The approval process is less complicated. "After the initial application was submitted, it was only a week to 10 days that I was approved", Ketchen said about the SBA Community Express loan she received through BLX, a lender based in Panama City. "The loan process was so smooth". BLX and Innovative Bank of Oakland, Calif., are the only lenders making these loans. They told me that they are eager to do more in Southwest Florida. Both lenders will consider loans as low as $5,000. Innovative Bank goes up to $25,000, while BLX recently increased its maximum loan amount to $50,000. They don't require business plans, collateral or filling out lengthy forms. Approval is based on credit scoring, and a few blemishes in previous years won't necessarily disqualify you. Even though the two banks don't require business plans, their outsourced "technical assistants" will ask you to write one. Technical assistants provide free business counseling and help you fill out the application. Meeting with one is a requirement of the program. All Small Business Development Centers and many SCORE chapters are approved to perform the assistants' function. After she requested business counseling from SCORE's Manasota chapter, "I had a call from Jim Martin, who became my SCORE mentor. He led me step by step through the business process", Ketchen said. "I left her with the Retail Start Up Business Plan (outline) and encouraged her to go through it in detail to nail down expected costs and anticipated revenue", Martin said. Growing up with four sisters at home, Ketchen was used to sharing her clothing with them. It was as if they all shopped in her closet. Hence, she named her new business, "My Sisters Closet". The store sells "gently worn, name brand and designer women's clothing and accessories", she said. You can read more details about the loan program, get a list of technical assistants and download loan application forms from the BLX and Innovative Bank Web sites, www.blxonline.com/community_express.cfm and www.innovativebank.com/site/loan_soho.html respectively. Or call them toll-free at (888) 211-2911 and (888) 960-0700, respectively.

Often the choice to buy or lease space is ego driven rather than making the best business decision. In my opinion, leasing is usually the better option. We've all heard stories about fortunes made in real estate. But real estate can also be burdensome and may distract you from their primary mission -- to make your business successful. A lesson can be learned from major corporations who choose not to own their buildings. Here are some of the reasons. Flexibility. Leasing affords more flexibility to increase or reduce space as needed. It's a lot easier to renegotiate your lease than dispose of a building in a soft market. Market fluctuation. Timing the market is essential when buying and selling real estate. Professionals are better at it than novices. Too often novices buy at the top of the market and sell at the bottom. Business vs. real estate needs. Business owners often make real estate buying decisions based upon the needs of their business rather than the real estate market. The best time to liquidate real estate may not coincide with the time to sell the business. Managing real estate. Your business may be neglected because of real estate management distractions. Real estate management is a skill best left to professionals. Your exit plan. Selling a business and real estate together may be more difficult. One will have a diminished outcome. Working capital is compromised. Precious working capital will be tied up in the real estate. Lenders require a substantial down payment that could otherwise be used in your business. Better tax break leasing. You can only write off interest expense (not amortization) on the mortgage while lease payments are 100% tax deductible. Cash crunch. You may incur phantom income when selling your depreciated building. Phantom income is taxable profit without corresponding cash flow. Financial ratios. Income to asset ratios are better when leasing than owning real estate. Some lenders consider that important. The romance of owning real estate can be compelling but leasing may be best for you.

Buying multifamily and commercial income producing properties can be rewarding investments. At the beginning, you should avoid owning property outside of your immediate area. That way you can know every property in the neighborhood that fits your investment profile and jump on opportunities as soon as they become available. By being in close proximity, you can also maximize your maintenance and management control to increase asset values. Successful real estate acquisition professionals inventory every property in the marketplace that meets their profile. To help, you can subscribe to lists compiled from the county courthouse records. Alternatively, drive the neighborhoods and search the records yourself. Some of the best acquisition candidates are not advertised and may not be listed with real estate agents. By contacting owners, you might persuade them to consider an offer. Three things have to happen for you to negotiate successfully. Establish credibility. Get the word out that you have the desire and financial ability to offer a purchase contract and close the deal. Sellers rarely agree to sell on the first visit so be prepared to make several calls. Form relationships with owners of properties that fit your profile. Negotiate. Gather enough information about the property and the seller to make an offer. Get the rent roll, historical operating statements, physical details, copy of maintenance contracts, real estate tax bill, copy of the hazard insurance, condition of depreciating components (HVAC, roof, etc.). Don't tell the seller what you're willing to pay. Whomever mentions price first, loses. Instead, explain why you feel the net operating income (NOI) is lower than the seller's estimate. Allow negotiations to be over interpretation of the Gross Possible Income (GPI), operating expenses, reserve for replacement and the NOI. Then, ask the seller what he would think the property is worth with the NOI being lower than he thought. Close the deal. All the major business points (i.e. purchase price, seller financing, etc.) should be agreed upon before making a written offer. Then it is up to the lawyers. The contract has to withstand a process known as "due diligence" before the seller gets paid and an actual transfer of title takes place. Your accountants, property inspector (engineer), lawyer and you, pour over the books and the physical structures to make sure that everything the seller told you is accurate. If it's not, the deal may be renegotiated. Buying multifamily and commercial real estate takes more effort than single family homes but the rewards can be greater.

The words "market research" are often scary to entrepreneurs. They don't need to be. Your challenge is to determine if there are customers for your product or service and how will you get them to buy. Furthermore, how many customers are there, how much will they pay and how quickly will they write you a check. Please understand, this is not an academic exercise. Its objective is to generate meaningful operating numbers that can be used for your proforma (projected income and operating expenses). Relate the data to your company. Market research should not look like a generic chamber of commerce report. Demographics, census tracks and traffic counts are meaningless without explaining how it will get customers in your door. Growth in your industry is only beneficial if you can relate it to your increased revenues. Market research lends 3rd party credibility to your proforma. Start with a wide base of information available from the chamber of commerce and your local library. While there, ask for the Encyclopedia of Associations. Industry trade associations collect extensive data and operating statistics. Perhaps they can introduce you to companies willing to share information with you. Many trade magazines also publish industry statistics. The more corroboration you obtain from various sources the better. Footnote the sources used to produce your proforma. Avoid fluff that doesn't directly relate to your business and its proforma. Make the data relate to the uniqueness of your company. Your own experience may help in the narrowing process but it's not nearly as credible or objective as a third party source. Talk to prospective customers and salespersons with competing companies. How do they like the product or service? What would they do differently? What do they think of your idea and how much are they willing to pay? If possible, test the market by making actual sales calls and trying to close deals. Go to a similar market elsewhere if confidentiality is a consideration. This is a hands-on process. Don't hire a professional to produce a slick, generic product. It's important that you struggle through it, step-by-step. Internalize it and commit it to memory when telling the bank how you will repay their loan. Your accountant can help create the proforma financial statements. But be sure its based on you own research and you internalize the numbers. You may have to explain them to your lender.

The best way to start a new business is to create a Business Plan. Another way to look at a Business Plan is to consider it a story about what you expect to happen during the first year of business. The story has to include how you will acquire customers (or clients), how much money you expect to collect and spend each month, how much profit you expect to make during the first year, and last but not least how many hours these efforts will take. Here are three of the many web sites that have outlines of Business Plans to help you get started: wsj.miniplan.com/ www.quicken.com/small_business/ www.sba.gov/starting/indexsteps.html I would suggest that you start with the Projected Monthly Cash Flow Analysis in the plan. By starting here it will make you aware of all of the potential income and expense items you might encounter. After you have completed the Cash Flow you should prepare the Projected First Year Profit and Loss Statement. As you try to determine the projected monthly income you will be faced with the major question: "How can I project how many customers I will sign up that month?. This will expose you to the real world of starting and running any business. That is, "How do I make customers aware of my services, how do I get them to purchase these products or services, and how do I get more customers?". A web site alone will not create customers. However you can direct the potential customer to go to your web site for more information or to purchase your products or services. To accomplish this you need to develop a marketing and sales promotion plan. This might include presentations to selected groups, running advertisement in selected publications and distributing printed advertising material. With this information you will be well on your way to understanding what might happen in your new business during the first year. Although the Analysis may not be what actually happens during the first twelve months, it is far less expense to face the problems on paper then to find out about them after the "doors are opened" in your new business. If you need a further explanation of anything I have suggested, please don't hesitate to ask for help.

There are no guarantees, but the risks of being a victim of misleading claims and statements can be minimised if you: insist that all-important representations made to you by the seller or agents are put in writing; check as many of the statements and claims that you can; get independent advice from appropriate people (for example, your solicitor, accountant, or suppliers to the business); and make sure that you do your best to understand the information you receive.

When assessing a franchise opportunity, it is necessary to make sure that the franchise documents comply with the regulations set down in the Franchising Code of Conduct. This covers all the issues such as the franchise agreement, the disclosure document, the lease requirements, marketing guidelines, franchise territory, supplies, franchisor and franchisee obligations and termination of the franchise agreement. An investment into a franchise can represent a large financial outlay, so there should be adequate steps taken to ensure that you have had independent professional advice about the proposal and about the franchisor and the product or service. You can contact the Franchising Council of Australia and New Zealand for further assistance, or visit their website at www.franchise.org.au. Franchising information can also be obtained from the Australian Competition and Consumer Commission website, click here to access.

The value of the tangible assets, plus an estimated value of the intangible assets such as goodwill, usually determine the value of a business. A potential buyer examines the ability of the business to earn a reasonable return on the funds invested, after an equitable salary for the owner has been deducted. The seller, having put much time and money into forming the business, seeks to recover time and cost outlays by asking a premium over and above the asset value of the business. Goodwill may be seen as the capitalised cost of taking over an established business with established suppliers, clientele, cash flows, trained employees and systems of operation – compared with starting a business from scratch.

It is possible to franchise any type of business, regardless of what the product or service is. You must have a successful business before you contemplate franchising it. It would be advisable to engage a professional consultant to assess your business and determine what it has to offer prospective franchisees. It is necessary to comply with the regulations set down in the Franchising Code of Conduct, and it is also advisable to join the Franchise Association of Australia and New Zealand, and make sure that you comply with their regulations.

The Franchise Association of Australia and New Zealand is responsible for liaison with Government and commerce, industry ethics, education, industry developments and the promotion of franchising in general. Also the Franchising Code of Conduct sets out guidelines for self-regulation in the Australian franchise sector.

There are many industry-specific business organisations that offer membership to individuals, partnerships and companies operating within certain industries. These provide businesses the opportunity to interact with other businesses to further their industry knowledge and to keep abreast of market and industry trends. Some associations also provide consulting and advisory services, they can offer professional help or access to technical, legal or economic advice. Associations are also useful in giving small businesses a voice with Governments or statutory authorities.

In effect, if you purchase the Freehold Fixtures & Fittings and Goodwill you will own the property as well as the business. If you purchase Leasehold you will own the business and fixtures and fittings and the right, usually for a given period, to occupy the business premises for an agreed rent.

SAV means Stock at Valuation. Most businesses sell a product and to enable their customers to have a choice they hold a certain amount of stock. When you buy a business this stock is not usually included in the asking price for the business. For example, a ladies or gents clothing outlet will have a certain amount of stock which includes what is on display and what is in the store room. When you buy the business you may need the stock to carry on trading while you introduce your own lines. So the value (cost price) of the stock is calculated and paid for when you take over the business.

We are able to assist buyers with finance, our lenders can often put together a financial package when other lenders (high street banks, building societies etc) fail. If you are looking to buy a business, leasehold or freehold and your credit rating is less than perfect or you have been turned down elsewhere then contact your local Adams & Co Office, we just may be able to help.

Yes, our service is free. We are happy to offer Buyers professional advice on many aspects of buying a business; from helping to identify the business that is right for you, explaining the various methods of financing your investment, choosing a solicitor or simply explaining the transaction process through to completion in an easy-to-understand and "jargon-free" manner.

The transaction starts with arranging an appointment with us to view your chosen business. Once you have met the Owners, we will provide you with the latest profit and loss account information on which you can base your offer. Once your offer has been accepted, you should allow 6 to 8 weeks for both sides' solicitors to agree the draft Sale and Purchase contract details. Once both sides are in agreement an Exchange of Contracts can take place. During this period, buyers generally sort out their funding requirements. If it is a leasehold business, this period is also used to gather references for the Landlord. Once the Landlord is satisfied, a licence to assign the existing lease is granted and the transaction can then move to an Exchange of Contracts and Completion.

Unfortunately for Vendors it can happen that after accepting an offer, secured with a refundable deposit, the buyer withdraws from the transaction. This can happen for a whole host of reasons. For example, unexpected health or family problems can arise which force buyers to change their plans. In that event, we would contact other intersted buyers registered on our database and let them know that the business is "back on market". By registering your interest in a business that is shown as either "Sold - Subject to Contract" or "Under Offer", you may find that you can still make an offer for your preferred business should negotiations betwen the parties fall through. You may have experienced this unexpected turn of events in the residential property marketplace for example.