The following is a discussion of 16 common mistakes made by first-time or novice Buyers in their search for a business to purchase. Use this checklist to help you from making the same wrong moves. (1) Inadequate Assessment of Capital Resources When a business broker attempts to QUALIFY A NEW BUYER in terms of his financial resources, the primary Buyer capabilities of interest are: cash on hand available for a down payment additional funds available for working capital credit or borrowing capacity From experience, brokers recognizes the necessity of having a reserve of funds for working capital including, operating costs, transition costs, changes desired by the Buyer after purchase, additional advertising and a safety margin. The BUYER'S ASSESSMENT of his financial resources should be made prior to searching for a business to buy in order to focus efforts on acquisition candidates that fit financial capabilities. (2) Unrealistic Expectations Owning your own business ...

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Some people are just born with it!

These are traits that successful business owners commonly share. Above all, however, business owners need to have strategic thinking skills, time management skills, and know the job.

No one can embody all these traits if they are part of the human species, but varying degrees of these characteristics is the stuff that success is made of.

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The following are factors that can have a negative impact on the value of a business and some are issues that can rear their ugly head during the due diligence investigative period. Keep in mind that this list is a compilation of potential problem areas and do not apply to all types of businesses. Accidents New competition in the market Changes in technology Equipment obsolescence Facility obsolescence Market shifts Declining Revenues Poor Financial Records is one of the biggest reasons businesses do not sell or sell at a value considerably less than market value. Interest rate flux Low margins Capital improvements needed Lack of Supplier Diversity Lack of Customer Diversity - If too much business is concentrated in too few customers, the risk factor is increased. Should one or more of the customers discontinue patronage of the firm, revenues will be seriously impacted. Uncollectible receivables Low backlog Restricte ...

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THE SUCCESSFUL CLOSING

Now that all of the contingencies have been satisfied and removed from the Contract, it’s time to draft the final closing documents. These documents may be prepared by the Seller’s attorney, Buyer’s attorney or a third party attorney employed by the business broker.  The basic documents associated with the transfer of a small business generally include:

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Due Diligence is the last phase in the buying process. This is the time when you will have access to all of the company's books, records and files. You will have a pre-determined period of time to investigate the information that you have been given so far to verify its accuracy.

The goal of an effective due diligence is to validate what the seller has represented and to allow you adequate time to review all of the other key issues of the business. The following is a checklist of information and documents that a buyer may wish to review during the due diligence period:

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It can be difficult to determine which kinds of insurance is needed for a small business. Different types of insurance have confusingly similar names. Your state, town, or county may have its own insurance requirements and many industries have coverage specific to them. To assist in determining which kind of insurance a business should have, you might want to check with the following agencies: The county or city clerk A local chapter of your industry association The state insurance office Here are three great website resources that provide helpful information regarding regulatory requirements: The Official Business Link to the U.S. Government The Official Site of Houston Texas Business Portal The basic business insurance package consists of four fundamental coverages--workers' compensation, general liability, auto and property/casualty--plus an added layer of protection over those, often called an umbrella policy. In addition to these basic needs, you may also w ...

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