Users' questions 

What factors should be considered when purchasing for a small business?

Leia Doyle

What factors should be considered when purchasing for a small business?

The following considerations can help a person to reach a conclusion about whether buying an existing business is the best option or not.

  • The Seller’s Motive.
  • The Sales Blueprint.
  • Financial Mileage.
  • Legal Agreements.
  • Standing Liabilities.
  • Business Framework.
  • Business Alliances.
  • Buyer’s Interest.

What are the main steps involved in a typical business purchase transaction?

So, if you’re planning a business purchase, here are some important steps to follow.

  • Selecting the right industry.
  • Sourcing the right business.
  • Initial viewing.
  • Preliminary negotiations.
  • Heads of agreement.
  • Performing due diligence.
  • Conducting a closing negotiation.
  • Further reading on buying a business.

What to know about a business before buying?

Before buying a business, make sure to examine its past few years of financials, including:

  • Tax returns.
  • Balance sheets.
  • Cash flow statements.
  • Sales records and accounts receivable.
  • Accounts payable.
  • Debt disclosures.
  • Advertising costs.

    What numbers should I look for when buying a business?

    They are:

    • Revenue. Gross revenue is a major concern for business buyers.
    • Seller’s Discretionary Earnings.
    • Earnings Multiple.
    • Valuation.
    • Asking Price.
    • Net After-Tax Sale Proceeds.

    What documents are needed to buy a business?

    Here are some of the must-have documents when doing due diligence in the process of considering whether to buy a business:

    • Business licenses and permits.
    • Organizational paperwork and certificate of good standing.
    • Zoning laws.
    • Environmental regulations.
    • Letter of intent.
    • Contracts and leases.
    • Business financials.

    What is business buying process?

    The stages of business buying includes recognizing the problem, developing product specs to solve the problem, searching for possible products, selecting a supplier and ordering the product, and finally evaluating the product and supplier performance.

    What are the 5 stages of consumer buying process?

    According to Philip Kotler, the typical buying process involves five stages the consumer passes through described as under:

    • Problem Identification:
    • Information Search:
    • Evaluation of Alternatives:
    • Purchase Decision:
    • Post-purchase Decisions:

      How many steps in business buying process?

      The five stages of the business buying-decision process are awareness, specification, requests for proposals, evaluation and, finally, placing the order.

      What happens if my boss sells his business?

      If your company is taken over, merged or sold to another employer – or your job is transferred out of a local authority to a private contractor for example – your contractual terms and conditions of employment go with you to the new business. Your employment is continuous – your service is not broken by the transfer.

      What multiple should I pay for a business?

      Bizbuysell says, nationally the average business sells for around 0.6 times its annual revenue. But many other factors come into play. For example, a buyer might pay three or four times earnings if a business has market leadership and strong management.