Bill Bartmann Wealth Strategies: Buying A Business The Right Way
Bill Bartmann Wealth Strategies: What To Consider When Buying a Business
First and foremost before you start this process, you have to figure out what your passion is, give yourself permission to be the person that you want to be, and know you dont have to follow all those rules, youre free to pick and choose a business or industry to be in.
Youre not following these wealth strategies for the money youre going to make, but rather youre doing it for other reasons, knowing if you do it well and for the right reasons, the money will follow like the tail on the dog. They will always show up together.
Now that we know that, we have some choices: we can either buy a business or build one. The first one well cover is buying a business. You dont have to start a company from scratch. You dont have to say, Im now in business, so I need to hire my first employee and get my first office, and Ill start from the kitchen table.
Bill Bartmanns done that a lot of times, but theres another methodology that well talk about because its legitimate, valid and it works for some people.
If you think buying a business is right for you, you have to know the advantages and disadvantages. One of the clear advantages when you buy a business rather than build one from scratch is youre getting a proven track record.
Youre buying a business thats in existence. They already have a history. Youve already tested it. It isnt like starting one from your own kitchen table, hoping this works and that works. When youre buying an existing business, you get to see their track record.
Sometimes, that removes a lot of the uncertainty and a lot of the questions like Are there really customers, do they really want this product, and will they really pay this much for the service? In a business that is already in existence, thats already proven, there is a track record.
In the series of advantages, an existing company already has a customer base. Thats wonderful from a business point of view because when you start a company by yourself, youve got to go find customer number one then youve got to go find customer number two.
When Bill first graduated from law school, he decided he wanted to practice law by myself; he didnt want to work for a firm. He didnt want to be a corporate lawyer, and he didnt want to work for the government. He wanted to hang up his shingle, be a lawyer and attract a clientele.
Well, he didnt realize how hard that really was. When he first hung up his shingle he had this nave idea that everybody would be knocking his door down. There was no activitynobody even knew he was there. It was a long time more than 30 days before he got his first paying customer which made buying groceries and paying the rent really difficult.
So buying an existing business takes one of those considerations out, you already have a customer base. You already have people who are using that business, coming on a regular basis and most of them are probably going to be predictably coming back in the near future. Thats an important question to get out of the way.
Another advantage of an existing business is it already has a marketing plan in place. They already have a marketing plan that is working to some degree. You might think you can make it work better, but their marketing plan is producing something. Its producing customers; its producing revenue. Its selling whatever it is they sell in that organization.
In a brand new start up business, youll have to create that all by yourself. Sometimes, you rely on hope that it works, because, it is untested.
Yet another advantage of buying an existing business is companies already in existence already have not just a customer base, but an employee base.
The employees are already there, already trained, and already good at whatever it is they do. When we start a business by our self, we have to teach everyone what we want them to do and the way we want them to do it. Sometimes, we dont know how yet, so that becomes a concern.
When you buy a business that question is already taken care of because theyre already there. You also get their operating cash flows, their revenues, and the business coming in already is predictable. These things are already assured unless there is a traumatic change overnight, and you wouldnt buy a business if you had any worry that the business wouldnt continue thereafter.
The number one disadvantage of buying a business is you can end up suffering a misrepresentationyou may end up on the wrong side of a statement or a fact that isnt really factual.
To put it delicately is people who are selling a business are involved in what is probably the largest single transaction that they will ever be involved in through the course of their life. It might be the last transaction they will be involved with in their life. They may be retiring or quitting. They may be getting out of the business to go sit on the front porch.
But, we know human nature is still human nature. I can talk about how were all good, honest and honorable and how 90% of the people in the world are all good and only 10% are not. But we change the way we view the world and start thinking differently when money is involved.
We need to understand this concept. When people are selling a business, it is not in their best interest to tell you what is wrong with the business. So, sometimes they wont tell you what you really need to know. Sometimes, and this comes back to misrepresentation, they wont tell you something by not uttering words.
We sometimes think words have to be uttered in order for there to be a misrepresentation, but you can sometimes create a greater misrepresentation by not telling somebody something they should have expected you to tell them had you been more honest. Again, dont think that people are evil or bad, but know youre about to agree to a financial transaction which at some magnitude will probably have a very serious consequence for you if you get it wrong.
You need to do due diligence. You need to really understand what youre buying; you need to be sure youre hiring professionals to help you make the decision. You made the decision you want to be in the business and thats is a good one for you, now get some professional to help make sure the decision you made gets implemented and executed prudently so you dont end up wasting your investment by buying a pig in a poke.
Get a good lawyer, a good CPA, and a good business consultant. Its not about spending a lot of money; but this will definitely save you a lot of money. You can hire a competent professional to help you analyze the business youre interested in buying. The number one problem most buyers of a business run into is something told to them by the seller that isnt quite so, or something the seller didnt tell them. The number one disadvantage of buying a business is you have to deal with people on the other side of the transaction, and sometimes theyre less than candid with you.
by: billbartmannopportunity
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