Where can someone find a business to buy?

Generally speaking, people go to business brokers to buy businesses. In most states there are associations of business brokers, where they have their own listing service of businesses having nothing to do with being a realtor. But in most states business brokers are licensed real estate brokers and they have to license and buy by the same rules as a real estate broker who is dealing commercial land or buildings or even residential. The most successful business brokers are ones that do not do anything but business brokerage and who have a great deal of knowledge of profit and loss statements and balance sheets. A successful broker should also have a certain amount of gregariousness that they can talk to perspective sellers and come across as professionals in the buying and selling of businesses. They should be able to help the buyer evaluate the business and bring the business to a successful conclusion of the sale by bringing the intermediary.

If a perspective buyer goes to a seller and asks if the business is for sale and the seller says, "Yes, I want this." Then the buyer says, "I only give you this." In this case, there is no intermediary that can go back and forth and do the negotiations.

In preparing to buy a business, you need a good CPA, and make sure that your attorney looks over all the contracts and has drawn up the proper papers to ensure that you have the right kind of non-complete clause and that the seller has the right kind of note and security agreement. The security agreement on the note (if the seller is going to be the banker) is the single most important thing in the selling contract. You need not just an attorney but you need a contracts attorney, a real business attorney. You can't go to a personal injury attorney or somebody who is a litigator - what you need is a contracts attorney to help.

The third most important person would be an insurance agent to make sure that you get the right kind of insurance for the business. You should have UNO insurance, which is business interruption, use, and occupancy insurance. Foe example, with what has happened with hurricanes in New Orleans and the Gulf coast, those people that had UNO at least could get their gross profit for a period of months and they can keep their employees intact by continuing the pay their employees and pay off the vendors and keep making a living for themselves. If the business is too small, you probably couldn't afford UNO insurance, but in my opinion it's extremely important if the business can afford it.

Another thing that is very important when a perspective buyer buys a business is to have a business plan. Prior to buying the business you should have a business plan which has a mission statement and executive summary, plans for the future, what the competitive nature of the business is, who the competition is going to be, who the key people are going to be, and how are you going to train them. It should be very short and concise - no longer than five to eight pages long. In addition, there should be a three page financial analysis of the future of that business.