Business Buying Guide

Accountancy Resources

Business Buying Guide

Uncategorised Author: Admin


Business buying process is made easy with following step by step business buying guide.

This simply means that it is always good to check things out before the purchase. Consider now the business buying process steps.

Business Buying Process 

  1. Determine your investment.  Usually minimum down payment made by the buyer is 30% of the purchase price.  For example, if the business purchase price is $100,000 and loan amount is $70,000 (70%), then the buyer’s down payment needs to be $30,000 (30%).  Other possible expenses are inventories, supplies, escrow fee, license and permit fees, franchise transfer fee (if applies), etc.
  2. Set criteria of desired business. This includes location of business, type of business, price range of business and desired income of business.
  3. After you decide your investment amount and criteria of business, you will need to find a right business that fit your needs.  Here, you can search business through online business listing service site. An example of this is BusiMarket. The local newspapers, local business brokers or real estate agents are also other means.
  4. Evaluate the business through current owner’s income information and project income for short term and long term
  5. Make decision to purchase business or not.  If the business is right for you, you need to write a very descriptive and detailed contract (Purchase and Sale Agreement).
  6. As time goes on, suppose you will need to write any offer, ensure that the contract includes the followings: Your offering price, Initial deposit amount, financing terms, closing date.   Other terms and conditions that can be added to the contract is buyer’s loan approval, lease and lease approval from landlord, buyer to obtain all necessary licenses and permits, franchisor’s approval of ownership transfer, the buyer’s Satisfaction of books and records, closing cost allocation, buyer training session, business equipment and fixtures in good working condition, inventories and supplies amount, seller’s agreement not to compete, etc. After you finish writing an offer, you need to present your offer to seller.  Negotiate the price, terms, and conditions and settle with final price and terms and condition.
  7. Now you will need to allocate the purchase price of business that you are buying.  After you done purchase price allocation, you can then apply for loan, license and permits. Therefore, you will need to obtain a lease or sublease and get an approval of lease assignment before close of escrow no matter what happened.

And then on or the day before the closing date, you will need to review the equipment list that is provided at the time of the acceptance of the Purchase and Sale agreement and buy inventories and supplies. And finally do the closing on the closing date.

These are the step-by-step protocols to follow for a successful business buying guide.