Knowing that Sound Business Brokers is working with the company you are thinking about buying should give you confidence in certainty of closing…”
JAROD Pierce
Bought Mercurio’s Heating & Air Conditioning in 2017
buy a BUSINESS
Buying a Business
Buying a business is a huge decision and we are committed to finding the right match for you as the buyer.
At Sound Business Brokers, we will take the time to understand what type of business you are looking for and work tirelessly to find the right fit. We have a proven process to ensure the opportunity matches what you are looking for.
Should I Start a Company or Buy an Existing One?
You want to be your own boss, for various reasons, and you consider your options – work as an independent contractor, start your own business, or buy an existing company. There are pros and cons for each option, but we feel that once you do a careful analysis with us, you’ll see why many seasoned entrepreneurs buy instead of starting from scratch.
Starting a business of your own can pay great dividends, but it’s important to understand that the risks are significant. The vast majority of start-up businesses falter and eventually fail. An uncomfortably high percentage of businesses fail within the first 5 years of business (+50%) and only ⅓ make it to 10 years.
Purchasing an existing business, however, reduces an entrepreneur’s risk while creating opportunities for tremendous profit. But how to purchase a business that fits what you’re looking for? Searching for a company within the industry you’re interested in and that fits your budget is a difficult search to do alone, which is why business brokers are here to help. And when you’re making such a monumental decision, you want a broker with experience and expertise you can trust—you want Sound Business Brokers.
Sound Business Brokers can walk you through the complex process of how to buy a company so that you end up with a business that suits you and your goals. From the initial search to the final negotiations, we’ll be with you every step of the way to offer expertise that only years spent as brokers can offer.
Here are some reasons to consider buying a business instead of starting one from scratch:
Proven Concept
Brand
Relationships
Focus
People
Cash flow
Risk
Proven Concept
Proven Concept
Buying an established business is less risky – as a buyer you already know the process or concept works. Financing a purchase is often easier than securing funding for a start-up business for that very reason—the business has a track record. A bank will be able to look at the historical results for the business, not just rely on projections.
Brand
Brand
You’re buying a brand name. The on-going benefits of any marketing or networking the prior owner has done will transfer to you. When you have an established name in the business community, it’s easier to place cold calls and attract new business than with an unproven start up. That’s an intangible benefit that’s difficult to put a price on.
Relationships
Relationships
With the purchase of an existing business, you will also be buying an existing customer base and vendor base that took years to build. It’s very common for the seller to stay on and transition with the business for a short time to transfer those relationships to the buyer.
Focus
Focus
When you buy a business, you can start working immediately and focus on improving and growing the business immediately. The seller has already laid the foundation and taken care of the time-consuming, tedious start-up work. Starting a new business means spending a lot of time and money on basic items like computers, telephones, furniture, and policies that don’t directly generate cash flow.
People
People
In an acquisition, one of the most valuable and important assets you’re buying is the people. It took the seller time to find those employees, develop them and assimilate them into the company culture. With the right team in place, just about anything is possible and you will have an easier time implementing growth strategies. Plus, with trained people in place you will have more liberty to take a vacation, spend time with family, or work on other business ventures. When start-up owners and independent contractors go on vacation, the business goes too.
Cash flow
Cash flow
Typically, a sale is structured so you can cover the debt service, take a reasonable salary, and have some left over to take the business to the next level. Start-up owners, on the other hand, often “starve” at first. Some experts say start-ups aren’t expected to make money for the first three years.
Risk
Risk
Even with all these advantages, some entrepreneurs believe it is cheaper, and therefore less risky, to start a business than to buy one. But risk is relative. A buyer may pay $1 million, for example, for an established business with strong cash flows of approximately $200,000 to $300,000. A lending institution funds the transaction because historical revenues show the cash flow can support the purchase price. For many people, however, that is far less risky than taking out a $300,000 loan with an unproven concept and projections that may or may not be realized.
From Start to Finish—Your Trusted Advisors
What Is Required for A Buyer?
Every buyer must realize that business owners selling their business often do not want anyone to know about their decision to sell and have directed their business broker to safeguard their information and maintain a high level of confidentiality. It is for this reason that we must obtain a signed non-disclosure (NDA) from each buyer before sharing any information concerning the business being inquired about.
Non-Disclosure Agreement
A Non-Disclosure Agreement (NDA) is a way for the buyer to give the seller their word that they will keep all shared information confidential and will not use anything obtained for competitive purposes. Signing an NDA and then breaking the promised confidentiality can have serious consequences, however, most sellers will refuse to share details of their business without a secured NDA. You can get a copy of our NDA here.
Buyer Profile
There are always things to enjoy and tasks to endure with each option. Once you do a careful analysis with us, you’ll see why many seasoned entrepreneurs buy vs. starting from scratch.
Personal Finance Statement
Some sellers may require an extra level of qualification before sharing their business details. A Personal Finance Statement (PFS) is generally required when the business being sold involves delicate agreements or has Government contracts where damage to the business is likely if the word gets out that they are thinking of selling. In these cases, sharing information with a financially unqualified buyer is too risky. You can get a copy of our Personal Financial Statement here.
Confidentiality
If you are an owner attempting to sell your own business, it’s important to recognize the steps involved in this process will begin to reveal that your business is up for sale. Employees, customers, suppliers, and bankers can all get nervous, and competitors can look to take advantage of an opportunity. Sound Business Brokers protects the identity of your company and contacts only owner-approved buyers through a blind profile – a document describing the company without revealing its identity.
Business Continuity
When a broker is working on the sale of your business, you, as the business owner, can maintain focus on running the business. You’re probably already wearing many hats for the company. We gladly take on the time-consuming additional load of selling your business and give you space to keep your energy directed towards the essential functions of your business.
Reaching Potential Buyers
We have the tools and resources to reach the largest possible base of buyers for your business. We then screen these potential buyers for financial resources which would support the potential acquisition.
Marketing
Sound Business Brokers wants to present your company in the best light to maximize the sale price of your business. We have a trusted understanding of the key business metrics buyers are looking for, and can assist you in identifying changes that can result in a better selling price.
Valuing Your Business
At Sound Business Brokers, we know that every business is different, with a substantial amount of variables that have an impact on the value of your business. Sound Business Brokers has access to business transaction databases which we used as guidelines and reference points in providing valuations. We make sure your business is professionally well presented to better attract bidding between multiple financially viable parties so you can feel truly comfortable you received the best deal.
Balance of Experience
Most corporate buyers have acquired multiple businesses while sellers usually have only one sale. Sound Business Brokers can help level the playing field for business owners experiencing the one and only business sale of their lives.
Closing A Deal
The long duration of a business sale can increase the risks of employee problems, customer defection, and predatory competition as well as potential business erosion during the sale process. Since our sole function is to sell your business, we provide great opportunities for deals to be closed in less time.