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03 - Buying a Business Making a Business Investment or Acquisition
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  #1  
Old 02-29-2008, 09:11 AM
kurkapan
 
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Question buying a business with 100k

Hi. I just saw this forum and I think you can help me. I decided to buy a business in NY or long island with around $80-100-120k. I think of buying a car repair store or a beauty salon or a cafe or something like that. I have never bought a business before and am not that sure how it all works. I don't know is that capital enough to buy a good business? and also - how is it all done with the financing? Can I put my 100k and say I want 150k more and buy something for 250k? What price range should I look at approximately? What do you think about it all? Any advice is welcomed.
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  #2  
Old 03-03-2008, 02:22 AM
tareceadboo tareceadboo is offline
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you should definitely speak with a business lawyer. there are many details that some needs to know before answering your questions.

good luck
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  #3  
Old 03-03-2008, 11:27 AM
David Staub
 
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Normally, I would say that talking to a business attorney is good advice. In this case, I think you need to first educate yourself on the process by reading a book or two on buying a business. Your questions are so basic that you will be paying a lawyer to provide you a fundamental education on the subject of buying a business. A good business lawyer can help with the specifics, but I don't recommend hiring a lawyer just to teach you how to buy a business.

A good place to start is the website of the Small Business Administration. They have a good set of materials on how to buy a business.

Good luck.
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  #4  
Old 03-03-2008, 11:54 AM
wizardofy
 
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It would also be good to talk to a couple of business brokers.
They are experts in your neck of the woods and would likely
know the answers to all your questions. You need to talk
to two to be able to sort some of the wheat from the chaff.

best regards
wiz
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  #5  
Old 03-03-2008, 12:01 PM
wizardofy
 
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Also talk to a couple of bankers, get their criteria for loans
for the purpose of buying a business. When I bought a
business the banks told me that I would not be able to
get a loan for two years.

Another deal that I was trying to put through owned the
building. I was financing part of the purchase of the business
by taking a loan out on the building. When the owner
decided he wanted to keep the building and rent it out to
me, that was the end of the negotiations. 9 years later he
still hasn't sold his company.

best regards
wiz
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  #6  
Old 03-05-2008, 10:27 AM
kurkapan
 
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nice answers thanks a lot ...i will definitely talk to lawyers and bankers... but still what do you think about it?
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  #7  
Old 03-05-2008, 11:07 AM
successmentor successmentor is offline
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The way the question is phrased, there is no good answer. In terms of a "good" business, that depends on what you're looking for. Some people think a good business is one that let's the owner live comfortably, while others think a good business should go IPO some day. In general, a good business should give you a return on investment that you're satisfied with. Meaning pure profits make it worthwhile to have done the business in the first place, that it fairly compensates you for the time you put into it, and is better than alternative uses for the money.

As far as financing, talk to banks who may finance you. They'll have set criteria to loan money. In general, they're going to want to see that the business can generate enough revenue to pay off all expenses, the loan itself, and give you a reasonable salary. If it can, then you're probably in business. Other issues they will look at are collateral (how much equipment can they repossess if your business fails), and how much capital you're putting in, and what your working capital is.

Finally, you're picking a lot of different options for business. A cafe will be run much different than a car repair store. Unless you know how the business is run, you're going to run it inefficiently, not see when problems arise, and not know what do do when they arise. Or you'll have to hire someone who knows how to run it, which will then incur even greater expenses.

In short, do a lot of homework before signing anything. One of the places I highly recommend is a Small Business Development Center. They provide free consulting to those who are contemplating stating a business. They'll be able to answer your questions in a lot more detail since you'll be able to explain the context in which your question applies. Good luck.
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  #8  
Old 03-05-2008, 08:50 PM
markslf
 
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Red face

There is quite a difference between running and owning a car repair store versus a beauty salon. A good starting point is trying to figure out what you want to do. If you have a hobbie or any special interests this is a good place to start. Second educate yourself on running the business that you have a special interest in. A great place to start is talk with a business owner that ownes the same type of business. You would be pleasantly surprised on how open some business owners are when it comes to sharing information about their business. Learn from their experiences and see if you still want to pursue that business.
As for the financing your personal credit will be a huge impact on how much financing you can get. A general rule of thumb is to expect to put down 20% cash on the business and finance the rest. It definitely helps if the business you are buying has assets and generates enough cash flows to pay all monthly expenses including your salary and has enough left over to make the loan payment. Remember that most businesses that fail due so because they can't cover the cash flow shortages on slow or seasonal months. Make sure you plan, plan, plan your cash flow management.

Good Luck
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  #9  
Old 03-09-2008, 08:49 AM
kurkapan
 
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my interests are money. i don't care what it will be. i am currently exporting cars from us to europe so i know a lot about the business with cars. but of course i am no mechanic. thats why i was thinking a car repair shop is good as i buy salvage cars and fix them and resell them and if i have a repair shop it will be cheaper for me to fix my cars and will have a better revenue when i resell the cars in europe. (besides the money the repair shop will be already making on the side) this is what i was thinking. but of course i am willing to buy any other business like a cafe or beauty salon as i know they are easily manageable. overall all i want is money no matter how i can make it. this is my goal. and i have a 100k budget so i have to figure out how to make a million out of the 100k. so probably i should start the car repair store and buy the most expensive one possible with financing?
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  #10  
Old 07-12-2008, 04:59 AM
Jasper
 
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It is really an important issue to know about the work records from business point of view so that you do not face any back log in your business. I feel that it is good to have a look at the investigation services for knowing the work by your employees.
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