Selling Or Buying A Business
One of the important financial transactions in business is buying a business otherwise called as acquiring a business or selling a business.
If your business is a good success, you must have put your heart and soul in it with most of your life time spent in it. On the other hand, your business could be marginally successful or you may have thought of selling your business because you thought of your business as a short term opportunity.
Your situation could be any of the above; you get only a single chance to attach a price tag for selling a business where you have put your heart and soul. Selling business ends once you sign your sale deed.
Below are some matters that you might want to think about before selling a business:
1. Initial decision making
2. Valuating your business
3. Searching a buyer
4. Finding implications of your deal
5. Financing the deal
6. Completing the deal
7. Post sale support
If you try to understand the above steps and plan carefully, and take time to think about the terms and negotiate a price, you end up selling a business and come out with vivid colours both personally and financially.
Building a business from scratch is time consuming and sometimes risky. In this case, buying a business that's already well-established is a safer alternative. This safety comes with a price. You may have to spend more money in buying a business than to kick start it yourself. But if you got enough funds or a sponsor, this is an excellent option.
If you have a sponsor you are in a better position in buying a business that is well established. Many sponsors will fund around 50% to 75% of the acquisition cost depending on the assets, revenues and other factors.
The statistics show that only less than 60% of the start-ups are able to sustain themselves after 3 years. In addition to this, it takes another two years to become profitable on an average. Buying a business reduces this risk significantly. Below are the few advantages of buying a business compared to owning a start-up.
1. Risk of failure is less
2. Generates cash flow from the date it is bought
3. Proven products and profits
4. Well established customers
5. Established vendors
6. Availability of trained employees
Considering the above factors it's easier to secure sponsors while buying a business when compared to start-up where everything is unknown.
If your business is a good success, you must have put your heart and soul in it with most of your life time spent in it. On the other hand, your business could be marginally successful or you may have thought of selling your business because you thought of your business as a short term opportunity.
Your situation could be any of the above; you get only a single chance to attach a price tag for selling a business where you have put your heart and soul. Selling business ends once you sign your sale deed.
Below are some matters that you might want to think about before selling a business:
1. Initial decision making
2. Valuating your business
3. Searching a buyer
4. Finding implications of your deal
5. Financing the deal
6. Completing the deal
7. Post sale support
If you try to understand the above steps and plan carefully, and take time to think about the terms and negotiate a price, you end up selling a business and come out with vivid colours both personally and financially.
Building a business from scratch is time consuming and sometimes risky. In this case, buying a business that's already well-established is a safer alternative. This safety comes with a price. You may have to spend more money in buying a business than to kick start it yourself. But if you got enough funds or a sponsor, this is an excellent option.
If you have a sponsor you are in a better position in buying a business that is well established. Many sponsors will fund around 50% to 75% of the acquisition cost depending on the assets, revenues and other factors.
The statistics show that only less than 60% of the start-ups are able to sustain themselves after 3 years. In addition to this, it takes another two years to become profitable on an average. Buying a business reduces this risk significantly. Below are the few advantages of buying a business compared to owning a start-up.
1. Risk of failure is less
2. Generates cash flow from the date it is bought
3. Proven products and profits
4. Well established customers
5. Established vendors
6. Availability of trained employees
Considering the above factors it's easier to secure sponsors while buying a business when compared to start-up where everything is unknown.
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