Buying an Existing Business F or some, the idea of embarking on a new career by purchasing an existing business is appealing. For one thing – there’s an existing customer base, there is some sort of track record – and hopefully, 3 years of P and L’s and tax returns to prove it. In other words there are existing records to help make your decision as to the “value” of the business. The downside, though, is that there may be intense capital costs like equipment replacement or improvement, a lackluster location, or inheriting problems that weren’t disclosed during the negotiations. If the business is so great – why are they selling?

EVERYONE says they want to retire. Another issue is that in any given city there are maybe a very small handful of businesses that are in great shape that are for sale. So very little selection. I frequently talk to people looking for an existing business and ask them how long they have been looking and the answer is along the lines of “2 years.” It is hard to find a GOOD existing business that is in an industry you’re interested in, in an area that you’re interested in; where the seller has a good reason for selling (i.e., the business isn’t going down the tubes) AND, the way, one in which the seller has reasonable expectations (rather than listing the business for $ 1 M when it’s worth $800K).

FYI … statistics show that only 18% of all businesses listed in the under $1 million range ever sell…and the reason is mostly that sellers DON’T have reasonable expectations (either it’s a “let’s throw it out there and see if anyone bites or frequently because brokers come along who tell them, “oh, you want to sell for $1 million, we can list it for that” just to get the listing … so when someone comes along with what is actually a reasonable offer… their expectations are so unrealistic a deal

never gets done) … So what that means is that 80% of what you are looking at on the market is just “junk” – and overpriced junk at that.

One way to think about this is to ask yourself – when you bought your first house, did you buy one that was ready to move in or did you put some sweat equity into it? This is a little the same…You may not get the existing cash flow right away with a new franchise, but when you look at getting the return on your investment, you have far more upside potential. Not to mention, we have a multitude of industries available in the area of town you want to be in so you have far greater selection and a higher likelihood of finding something fun or exci ting that you can feel passionate about.

Not to mention, we have a multitude of industries available in the area of town you want to be in so you have far greater selection and a higher likelihood of finding something fun or exciting that you can feel passionate about.