Business Buying – How Much Does An Owner Have To Work

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Many business buyers have the idea that they will buy a small business to create a second income. The idea is to put in 10 hours a week, or less doing the management functions such as, posting the quick books, making sure the employment forms are filled out correctly and are complete. Lastly they know they have to Read more

Case Study: Laundromat

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This is a true story of one of my assignments regarding a Laundromat in Los Angeles County. This story has turned out to be one of the most fascinating tales I have ever heard.

I was not brought in before the purchase but 3 years later when problems arose to be an expert witness. Read more

A Fresh Way to Find a Business to Buy

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In my seminars, I have been talking about the various options to people that want to own their own business.

They are:
A. Start a business from scratch and build it slowly while maintaining your existing job.

Doing this allows you to learn all about the industry you are going into. There will be few surprises by the time the business hits its break-even point. Look at all the people that go on TV shows to raise capital for their expanding business. They have a solid direction, and will succeed if they have good business basics.
B. Buy an existing business that claims it is making a profit level that you can support your family and your life planning. Read more

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When I was in college, 1965-1969, we talked about the $200,000 billion underground economy. Now 50 years later it must be 10 times that big. A high percentage of small businesses I look at have some cash payroll or some undeclared cash sales. Because of the competitiveness of the market, those that are not paying some or all of the required payroll taxes or sales taxes can quote better prices then those that are paying union wages and benefits or are paying all of the required payroll taxes. This is fraud in business. Read more

Business Buying Techniques: “The Back Door”

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The battle cry of investing is “Reduce risk while at the same time increase the yield.”  This is the game that people with money to invest try to do everyday.  In the end it is difficult if not impossible to measure risk, so many decisions are made based on emotions or feelings about an investment or stock.

One of your friends, comes to you with a new business start up

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Business Valuation Pitfalls: How to Qualify for Financing

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The financing of a business is a relatively straight forward process, if you are aware of what lenders are looking for and generally what they will and will not do.  They will be looking at your credit, your experience and the sort of down payment you have and information about what sort of note the seller is willing to take back when selling you the business.  Read more

Who Can I Trust?

When Making a Business Acquisition, Whom Can You Trust?

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When a business broker tries to play both sides of the buying and selling process, it can mean trouble for the buyer, seller, or both. Don’t get had by a “dual agent” broker.

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Do It Yourself Business Due Diligence

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Okay, you’ve made the decision to buy a business.

Okay, you’ve made the decision to buy a business. You have a lender lined up; an attorney is on the ready line and your CPA is standing by; now you just have to complete the due diligence work. It would be convenient to have either your CPA firm; or law firm perform the due diligence work; however, they have quoted hourly rates at $250/hour (or more) with no cap on the number of hours it might require to complete the work. Who knows what the total bill could be…$8,000…$10,000…$12,000?

So you decide the most cost effective approach is to perform the due diligence yourself.

There is just one problem. You’ve never performed due diligence before and questions keep rolling around in your head. “Where do I begin? What information do I ask the Seller to provide? What am I looking for? How do I interpret the information provided by the Seller?” Read more

Should I Buy a Corporation?

Business Buying Advice: Do You Want to Buy the Seller’s Corporation?

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Business Buying Services tells you everything you need to know about whether or not you should buy a corporation.

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How to Appraise an Auto Body Shop

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The Three Ways to Appraise a Business

1. The ASSET VALUATION METHOD.

This method is basically used when a body shop does less than $400,000 a year in gross income and the seller is making wages, but no real profit above what he would be paid if working for another. On this size business, a buyer is willing to pay for the assets of the business but little or nothing for goodwill. The equipment is usually worth between $50,000 and $100,000, depending on how many frame machines the business owns and how nice a spray booth the business owns.

I have seen some specialized shops sell for more than the above number because they have a truck spray booth or another business attached to the main business. Examples of attached business might be an auto repair shop or towing operation.  Also the location, size and real estate rental amount will influence the value of any business, to some degree.

2. The second method, I call the GROSS SALES METHOD.

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