Sound advice is critical - contact:

*	Accountant with experience in business sales
*	Attorney specialising in business agreements
*	Business Consultant who knows the industry you are interested in

The final decision is yours - ask the seller for:

*	Monthly turnover figures for the last 12 months
*	Breakdown of monthly expenses
*	List of assets with valuations
*	Copy of lease on premises
*	List of staff/salaries/service/contracts etc.
*	Write up on a business (a business broker will have this)
*	Management files up to date

Never feel intimidated by sellers or be afraid to ask questions. Your broker will help you and ensure you receive the right answers to all your queries. The majority of buyers' in today's market will raise finance on their homes.

The following criteria will apply:

The bank will not finance goodwill

The bank will require that you have the necessary expertise to run the business. That you have the security to cover the loan required. The net profit from the business. That the net profit from the business can repoay the loan plus provide you with a liveable income. That the net profit is provable. That the business assets are fairly valued.
Be aware that 80% of businesses are purchased on emotion, not logic.
So don't be hurried, do you homework

What can you exect to pay:

As a rule the income/profit you require relates directly to the price you will pay. You would also require working capital to cover the initial outlays of rent plus rent deposit, electricity deposit as well as other running expenses until the income starts rolling in.

Factors to consider:

*	When buying a business will it fit your criteria, look carefully at the type of business.
*	Does it fit your capabilities?
*	Lease on premises - remember no lease - no business
*	Net profit / salary - can it be proven and how
*	Price - how was it determined
*	How long established - the longer the track record the more secure
*	Stock must be at cost - be careful of old obsolete stock
*	Debtors and creditors - examine age analysis and bad debts - seller to collect and settle
*	Rental of premises - is it market related
*	Trading hours - remember your leisure time
*	How long has seller owned - why is seller selling - could hold the key
*	Manager run or not - choice - more time or more profit
*	Terms available - never pay cash - gives confidence
*	External factors - could affect business - road change, new centres
*	Location - How far to travel - relocate

Mike Hindle of Aldes Business Brokers, www.aldes.co.za

Back to www.bizland.co.za