|Do I need an attorney?|
|Why should I go to a business broker?|
|What happens when I find a business I want to buy?|
|What does it take to be successful?|
|What should I look for?|
|How are businesses priced?|
|What is the real reason people go into business for themselves?|
|Why should I buy a business rather than start one?|
|Business Owner FAQ's|
|Why should I use AfricaBrokers.Com?|
|What process does AfricaBrokers.Com follow?|
|What kind of financing is available?|
|What can business brokers do - and, what can't they do?|
|What can I do to help sell my business?|
|What happens when there is a buyer for my business?|
|Why is seller financing so important to the sale of my business?|
|How long does it take to sell my business?|
|Q1.||Do I need an attorney?|
|A1.||It may be advisable to have an attorney review the legal documents. It is important, however, that the attorney you hire is familiar with the business buying process and has the time available to handle the paperwork on a timely basis. If the attorney does not have experience in handling business sales, you may be paying for the attorney's education. Most business brokers have lists of attorneys who are familiar with the business buying process. An experienced attorney can be of real assistance in making sure that all of the details are handled properly. Business brokers are not qualified to give legal advice.|
However, keep in mind the fact that many attorneys are not qualified to give business advice. Your attorney will be, and should be, looking after your interests; however, you need to remember that the seller's interests must also be considered. If the attorney goes too far in trying to protect your interests, the seller's attorney will instruct his or her client not to proceed. The transaction must be fair for all parties. The attorney works for you, and you must have a say in how everything is done.
If you know someone who has owned their own business for a period of time, he or she may also be a valuable resource in answering your questions about how small business really works.
You have to make the final decision that "leap of faith" between looking and actually being in business for yourself is a decision, that only you can make!
|Q2.||Why should I go to a business broker?|
|A2.||A professional business broker can be helpful in many ways. They can provide you with a selection of different and, in many cases, unique businesses, including many that you would not be able to find on your own. Approximately 90 percent of those who buy businesses end up with something completely different from the business that they first inquired about. Business brokers can offer you a wide variety of businesses to look at and consider.|
Business brokers are also an excellent source of information about small business and the business buying process. They are familiar with the market and can advise you about trends, pricing and what is happening locally. Your business broker will handle all of the details of the business sale and will do everything possible to guide you in the right direction, including, if necessary, consulting other professionals who may be able to assist you.
Your local professional business broker is the best person to talk to about your business needs and requirements.
|Q3.||What happens when I find a business I want to buy?|
|A3.||When you find a business, the business broker will be able to answer many of your questions immediately or will research them for you. Once you get your preliminary questions answered, the typical next step is for the broker to prepare an offer based on the price and terms you feel are appropriate. This offer will generally be subject to your approval of the actual books and records supporting the figures that have been supplied to you. The main purpose of the offer is to see if the seller is willing to accept the price and terms you offered.|
There isn't much point in continuing if you and the seller can't get together on price and terms. The offer is then presented to the seller who can approve it, reject it, or counter it with his or her own offer. You, obviously, have the decision of accepting the counter proposal from the seller or rejecting it and going on to consider other businesses.
If you and the seller agree on the price and terms, the next step is for you to do your "due diligence." The burden is on you - the buyer - no one else. You may choose to bring in other outside advisors or to do it on your own - the choice is yours. Once you have checked and approved those areas of concern, the closing documents can be prepared, and your purchase of the business can be successfully closed. You will now join many others who, like you, have chosen to become self-employed!
|Q4.||What does it take to be successful?|
|A4.||Certainly, you need adequate capital to buy the business and to make the improvements you want, along with maintaining some reserves in case things start off slowly. You need to be willing to work hard and, in many cases, to put in long hours. Unfortunately, many of today's buyers are not willing to do what it takes to be successful in owning a business. A business owner has to, as they say, be the janitor, errand boy, employee, bookkeeper and "chief bottle washer!" Too many people think they can buy a business and then just sit behind a desk and work on their business plans. Owners of small businesses must be "doers."|
|Q5.||What should I look for?|
|A5.||Obviously, you want to consider only those businesses that you would feel comfortable owning and operating. "Pride of Ownership" is an important ingredient for success. You also want to consider only those businesses that you can afford with the cash you have available. In addition the business you buy must be able to supply you with enough income - after making payments on it - to pay your bills. However, you should look at a business with an eye toward what you can do with it - how you can improve it and make it more productive and profitable. There is an old adage advising that you shouldn't buy a business unless you feel you can do better than the present owner. Everyone has seen examples of a business that needs improvement in order to thrive, and a new owner comes in and does just that. Conversely, there are also cases where a new owner takes over a very successful business and not soon after, it either closes or is sold. It all depends on you!|
|Q6.||How are businesses priced?|
|A6.||Generally, at the outset, a prospective seller will ask the business broker what he or she thinks the business will sell for. The business broker usually explains that a review of the financial information will be necessary before a price or a range of prices can be suggested for the business. |
Most sellers have some idea about what they feel their business should sell for - and this is certainly taken into consideration. However, the business broker is familiar with market considerations and, by reviewing the financial records of the business, can make a recommendation of what he or she feels is what the market will dictate. A range is normally set with a low and high price. The more cash demanded by the seller, the lower the selling price; the smaller the cash requirements of the seller, the higher the price.
Since most business sales are seller-financed, the down payment and terms of the sale are very important. In many cases, how the sale of the business is structured is more important than the actual selling price of the business. Too many buyers make the mistake of being overly-concerned about the full price when the terms of the sale can make the difference between success and failure.
An oft-quoted anecdote may better illustrate this point: If you could buy a business that would provide you with more net profit than you thought possible even after subtracting the debt service to the seller, and you could purchase this business with a very small down payment, would you really care what the full price of the business was?
|Q7.||What is the real reason people go into business for themselves?|
|A7.||There have been many surveys taken in an attempt to answer this question. Most surveys reveal the same responses, in almost the same identical order of priority. Here are the results of a typical survey, listed in order of importance:|
to do my own thing, control my own destiny,
don't want to work for someone else,
to better utilize my skills and abilities,
to make money.
It is interesting to note that money is not at the top of the list, but comes in fourth.
|Q8.||Why should I buy a business rather than start one?|
|A8.||An existing business has a track record. The failure rate in small business is largely in the start-up phase. The existing business has demonstrated that there is a need for that product or service in a particular locale. Financial records are available along with other information on the business. Most sellers will stay and train a new owner and most will also supply financing. Finding someone who will teach you the intricacies of running a business and who is also willing to finance the sale can make all the difference. Having said this though, if you have a unique concept, idea or have identified a niche market, then a business start up may be right for you. Speak to one of our professionals on business start ups versus buying an exisiting business.|
|Q1.||Why should I use AfricaBrokers.Com?|
|A1.||Confidentiality, as well as establishing the right selling price, is crucial to the success of the deal. As business advisors, AfricaBrokers.Com has the ability to maintain your confidentiality, properly research highly qualified buyers, utilize a worldwide network to advertise your business and establish the right selling price. We require that a prospective Buyer review and sign a non-disclosure statement outlining his responsibility in having access to a Seller's confidential information. This occurs before any detailed information concerning a specific opportunity is released. We are committed to protecting the confidentiality of the business sale. We understand that public knowledge of a potential sale can affect the attitudes and actions of customers, employees, competitors, lenders, suppliers, or investors, and thus the value of the company. We also want to safeguard the employment status of a potential Buyer while he considers a very important change for his future.|
Our service, dedication and drive is your guarantee that if you are prepared to sell your business, we are ready to sell it for you.
|Q2.||What process does AfricaBrokers.Com follow?|
|A2.||At AfricaBrokers.Com we have one objective...To ensure that there is a win/win transaction between business buyers and sellers.|
Your time should be spent doing what you do best...i.e. running your business. Our time is spent on strategising the successful sale of your business when you are ready to sell. This is a summary of our high level process:
Step 1 Comprehensive business analysis.
As your business advisor, we analyze your operation, finances, market potential and trends. We generate a business profile that represents your company in the most attractive way possible.
Step 2 We strucure the sale.
We then identify the best possible price range for your business. This is based on solid facts, the condition of the market, projected growth, sales potential and the sale of similar businesses within your industry. We apply sophisticated, time proven valuation techniques to ensure that your price is appropriate for the current market condition. The price must not be too high or too low. Yet, it must represent an attractive investment potential.
Step 3 We network the sale.
We utilize the latest technology to present your business to potential buyers locally and all over the world. This greatly multiplies the effort in your favor.
Step 4 We advertise your business.
Our aggressive marketing program ensures your confidentiality and provides maximum exposure for your business. Your listing is placed in various industry databases and publications which are constantly updated.
With AfricaBrokers.Com, you have literally thousands of industry professionals selling your business, yet your confidentiality is always respected.
Step 5 We organize all necessary documentation.
As part of our service, we gather and organize all documentation that is relevant to the selling of your business. Buyers are pre-qualified and required to execute a confidentiality agreement before receiving any sensitive information concerning the sale.
Step 6 We qualify the buyers.
We prepare and present all offers. Buyers are qualified for financial ability to meet the offer. Many times a negotiation is doomed to fail because of lack of proper qualifying. As your business advisor, we can approach potential buyers without weakening your position.
Step 7 We negotiate for you to achieve the best price.
Appropriate negotiation is crucial to achieving your price and terms. We have the expertise to establish sound and resourceful negotiating techniques on your behalf.
Step 8 We provide exceptional support to you.
We take pride in our exceptional service. We realize that you depend on us to guide you through the sale of your business. We make the transition simple and easy for you. We know when an opportunity may arise and are always there to take advantage of it.
Step 9 We are there from beginning to the closing.
We manage all administrative procedures that may be required. We work closely with your advisors to ensure a smooth transition.
Step 10 We are there for the transitional phase.
Because we are in the business community, you have the option to consult with us at any time after the sale. We will provide you with any assistance you may require after the closing. We always remain in your corner!
|Q3.||What kind of financing is available?|
|A3.||Seller financing is usually the cheapest and easiest to obtain. It also tells the Buyer that the seller has confidence in the business. There are no loan fees and the interest rate is usually lower than the bank rates, but the term of the loan is often shorter. Seller notes make up the majority of Buyer financing. Banks will loan money on businesses that show a strong earnings history on the tax returns. They require a lot of documentation and the payment of upfront fees. In recent years, bank loans, which are guaranteed by Khula in South Africa as an example, have become very popular and more readily available. If all else fails, family or friends will sometimes offer to help out. They can either provide funds or sign a guarantee for a bank loan.|
Unfortunately in most countries, South Africa in particular, entrepreneurs find it very difficult to meet bankers and other lending institutions criteria for business finance.
Seller financing is therefore one of the best methods to sell your business fast and easy.
|Q4.||What can business brokers do - and, what can't they do?|
|A4.||Business brokers are the professionals who will facilitate the successful sale of your business. It is important that you understand just what a professional business broker can do -- as well as what they can't. They can help you decide how to price your business and how to structure the sale so it makes sense for everyone -- you and the buyer. They can find the right buyer for your business, work with you and the buyer in negotiating and every other step of the way until the transaction is successfully closed. They can also help the buyer in all the details of the business buying process. |
A business broker is not, however, a magician who can sell an overpriced business. Most businesses are saleable if priced and structured properly. You should understand that only the marketplace can determine what a business will sell for. The amount of the down payment you are willing to accept, along with the terms of the seller financing, can greatly influence not only the ultimate selling price, but also the success of the sale itself.
|Q5.||What can I do to help sell my business?|
|A5.||A buyer will want up-to-date financial information. If you use accountants, you can work with them on making current information available. If you are using an attorney, make sure they are familiar with the business closing process and the laws of your particular state. You might also ask if their schedule will allow them to participate in the closing on very short notice. If you and the buyer want to close the sale quickly, usually within a few weeks, unless there is an alcohol or other license involved that might delay things, you don't want to wait until the attorney can make the time to prepare the documents or attend the closing. Time is of the essence in any business sale transaction. The failure to close on schedule permits the buyer to reconsider or make changes in the original proposal.|
|Q6.||What happens when there is a buyer for my business?|
|A6.||When a buyer is sufficiently interested in your business, he or she will, or should, submit an offer in writing. This offer or proposal may have one or more contingencies. Usually, these contingencies involve a detailed review of your financial records and may also include a review of your lease arrangements, franchise agreement (if there is one), or other pertinent details of the business. You may accept the terms of the offer or you may make a counter-proposal. You should understand, however, that if you do not accept the buyer's proposal, the buyer can withdraw it at any time.|
At first review, you may not be pleased with a particular offer; however, it is important to look at it carefully. It may be lacking in some areas, but it might also have some pluses to seriously consider. There is an old adage that says, "The first offer is generally the best one the seller will receive." This does not mean that you should accept the first, or any offer -- just that all offers should be looked at carefully.
When you and the buyer are in agreement, both of you should work to satisfy and remove the contingencies in the offer. It is important that you cooperate fully in this process. You don't want the buyer to think that you are hiding anything. The buyer may, at this point, bring in outside advisors to help them review the information. When all the conditions have been met, final papers will be drawn and signed. Once the closing has been completed, money will be distributed and the new owner will take possession of the business.
|Q7.||Why is seller financing so important to the sale of my business?|
|A7.||Surveys have shown that a seller, who asks for all cash, receives on average only 70 percent of their asking price, while sellers who accept terms receive on average 86 percent of their asking price. That's a difference of 16 percent! In many cases, businesses that are listed for all cash just don't sell. With reasonable terms, however, the chances of selling increase dramatically and the time period from listing to sale greatly decreases. Most sellers are unaware of how much interest they can receive by financing the sale of their business. In some cases it can greatly increase the amount received. And, again, it tells the buyer that the seller has enough confidence that the business can, indeed, pay for itself.|
|Q8.||How long does it take to sell my business?|
|A8.||It generally takes, on average, between five to eight months to sell most businesses. Keep in mind that an average is just that. Some businesses will take longer to sell, while others will sell in a shorter period of time. The sooner you have all the information needed to begin the marketing process, the shorter the time period should be. It is also important that the business be priced properly right from the start. Some sellers, operating under the premise that they can always come down in price, overprice their business. This theory often "backfires," because buyers often will refuse to look at an overpriced business. It has been shown that the amount of the down payment may be the key ingredient to a quick sale. The lower the down payment, generally 40 percent of the asking price or less, the shorter the time to a successful sale. A reasonable down payment also tells a potential buyer that the seller has confidence in the business's ability to make the payments. |