The Basics of Buying a Small Business

For both buyer and seller finding the answer to this question is the most difficult and at the same time the most important step in the buy-sell process. But this final decision reflects many other decisions made while the transaction is being considered. In other words, the buy-sell process is a flow of decisions. It would be impossible to point out every decision that must be made, but the basic ones are as follows:
•Motivation: a decision to attempt the sale or purchase of a business.
•Contact: a decision on how to find a buyer (or seller) for a business with specified characteristics.
•Information: a decision on what information must be gathered or given to buy or sell a business.
•Sources: a decision on how, where, and at what cost the needed information can be obtained.
•Analysis: a decision on the meaning, importance, and reliability of the information gathered.
•Value: a decision on what the business is worth. Price: a decision on how much money to take or give for the business.
•Financing: a decision on how to pay or receive the purchase price.
•Contract: a decision on the form and content of the contractual relation.
•Implementation: a decision on how and when to effect transfer of ownership.
Does the prospective owner have the ability to manage successfully?Effectiveness with people (customers and employees), eagerness to tackle difficult problems and make decisions, and intelligence about general business operations are key ingredients in management ability. Most people can learn to manage if they recognize the need. This requires room to make mistakes, however, and the self-discipline to undertake self-improvement programs.the program are:
•Value
•Price
•Sources of Financial Information
•Financial Statements
•Risk and Return on Investment
•Compliance With the Bulk Sale Act
•Financing and Implementing the Transaction
•Financing the Buy-Sell Transaction
•Putting a Value on Goodwill
Source by ezinearticles.com