Let's Sum it all up Again

by Mike Hindle of Aldes Business Brokers

 

That's it, then. If you can't yet buy or sell your business, you haven't been reading carefully enough for the last 21 articles. To end off, here is a summary.

Mr / Mrs Buyer: are you ready to invest sweat equity? Buying a going concern means not having to spend 18 months getting to a profit situation with a new business.

Identify acquisition prospects with a broker or by scanning "business for sale" ads or advertising in "businesses wanted". Get advice from the right people.

Mr / Mrs Seller: making it widely known that your business is for sale sends the wrong message to suppliers and your bank. Tart up the firm to improve price prospects by being liberal with information to a qualified buyer.

Buyer, shortlist good buys and check these aspects:

* Lease on the premises
* Turnover
* Gross profit
* Net profit, bearing in mind these include all owners perks
* Stock check
* Staffing
* List of fixtures, fittings, plant and equipment

A myth in setting a price for a business is that profit is the major determinant. You can't put the same price on two businesses with identical profits if they are otherwise quite different.

The methods I recommended involve the payback period, return on investment and extra earning capital.

Remember, 80% of businesses are purchased on emotion, not logic.
So be careful and do your homework.

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

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