Time and money expended in finding the right business is one of the best investments that you will ever make.
Methodology:
There are literally tens of thousands of businesses listed for sale at any one time throughout the North America and it is important for your sanity, to set some initial guidelines or criteria, on what type of business you desire, the amount of actual cash that you are prepared to invest, the geographical area that you either currently live in or wish to live in and any other mandatory requirements which you may have. If you do not set some initial parameters you will be deluged with opportunities and you will never be able to make a decision on which ones to take a closer look at.
Remember that you can always change or modify your criteria parameters if you do not find a business that intrigues you on your initial approach to the market.
Your initial parameter list should look something like this:
- Type of business; High technology manufacturing.
- Cash Investment; $500,000 maximum.
- Location; Phoenix, AZ and surrounding suburbs.
- Mandatory Requirements; Must currently have positive cash flow.
This should be sufficient information and criteria for a Business Broker to identify likely candidate businesses. It is also sufficient information for you to proceed to consider the other numerous methods of identifying companies for sale.
Once you think that you have identified a business acquisition opportunity you should perform some initial investigations prior to investing a lot of time, effort and getting excited over a business that may not be acceptable. In other words, a general credibility check:
You should note that businesses can legally operate under their corporate name and identity and under more than one dba (doing business as) sometimes referred to as a “Fictitious Name”. It is important that when performing this and any other investigation of a business that all names and identities are scrutinized.
- Contact the local Better Business Bureau.
- Contact the local or state office of consumers’ affairs.
- Perform a search on the internet. The internet provides you with access to a wealth of information. However, should you find any negative reports remember that you are only hearing one side of the story, that being the customer’s side. Most large companies, especially retailers, have negative comments about them on the internet and in most cases you can balance the quantity of negative statements with the size of the customer base of the company that you are investigating.
If you identify something that concerns you but it is not enough for you to shelve the opportunity you may wish to make note of the comment or complaint and ask the owner for his side of the story.