1. What is a Fair price for a business?

Like any other product, a business is worth whatever a willing buyer will pay a willing seller in a free market. However, the value of most businesses is determined by what someone can afford to pay for it. Typically, this price will usually be 2 to 3 times the annual cash flow of the business with a one-third down payment and a note to the seller paid off over 5 to 10 years. If the business can earn you the income you want and make the note payments, then it's worth the price.
 

2. What is Goodwill and what should I pay for it?

Goodwill is the difference between the total value of a business and the value of inventory, equipment and other "hard" assets. Every business has goodwill, unless it is closed down or failing badly. The amount you pay for goodwill will depend on the cash flow of the business and its general attractiveness. If buyers didn't pay for goodwill, sellers might as well sell off their equipment and close down rather than sell as an on-going business.
 

3. What is Cash Flow?

We analyze the cash flow of each business to put it on an even footing with every business, no matter how the owner takes the profits out of the business. We usually define cash flow as profit before income tax, depreciation, interest and owners compensation and benefits. This is the amount of money the owner has available to pay himself, invest in additional equipment and make the note payments on the business.
 

4. Are there Tax Benefits in buying a business?

Definitely! You can take a tax deduction for depreciation on the fair market value of all the furniture, fixtures, and equipment at a much faster rate than real estate. And the Covenant Not To Compete and the value of training are tax deductible, frequently at high levels. Finally, most businesses have deductible expenses that add to the owner's cash flow. To Find out about all the Tax Benefits for buying a business We Recomend Talking To a Tax Attorney.
 
  FAQ for financing

Can I Buy A business For Zero down?

The sort answer is no, the long answer is also no. Unlike Buying a house, where a bank can easily take the home back and resell it. Banks loan very little on Business equity this is becouse ALL BUSINESS VENTURES ARE HIGH RISK and need someone to run the business, banks don't like risk and donot have the time to run a business. when a business defaults on a loan the assets are auctoned off or sold to recover the money often at a loss to the bank. According to the Small Business Adminastration's (SBA) Guide line for lending on businesses the Maximum 7(a) Loan is 75 percent of Total business price. with a maximum of $2 million on the loan. so even if you can get a loan approved you still need to have 25% to put down, plus working capital.

Do all Businesses Qualifiy for a Bank Loan?

Again the Answer is no. The best way to find out if a business type you looking at will qualify is talk to your banks' Small business Loan officers. also look at the SBA's guide lines on their website here________

Do I qualify for a SBA or other Bank Loan?

The answer may Vary from one Bank to another. As We Are Not a Lending Institution, we can not answer if you qualify for a bank or SBA loan. The best way to find out if you will qualify; is to talk to your banks' Small business Loan officers.

I don't Qualify for a SBA or other Bank Loan to buy a business, will I qualify for Seller Financing?

The answer may be Yes. If you have the Money for a down payment, and can Provide collateral such as equity in a home; You may qualify with a seller to be financed. the First Step in Qualifying to buy a business is filling out a personal Finacal statment which you can find in the Buyers' Packet

I have money but I would Rather use Most of that monay for other things can I still get a SBA or other Bank Loan without useing all my money?

The answer for and SBA Loan is a resounding NO. as stated on the SBA website: AVAILABILITY OF FUNDS FROM OTHER SOURCES. The Federal Government does not extend credit to businesses where the financial strength of the individual owners or the company itself is sufficient to provide all or part of the financing. Therefore, the utilization of both the business and personal financial resources is reviewed as part of the eligibility criteria. If business and personal resources are found to be excessive, the business will be required to be use those resources in lieu of part or all of the requested loan proceeds.

The Answer for a conventonal Bank Loan may be yes. The best way to find out if you will qualify; is to talk to your banks' Small business Loan officers.

Q: Why do we have a real estate license to sell a business?

A: Because most Businesses have interest in Real Estate that is included in the sale, from a lease to ownership of property. Unless the transaction we are negotiating does not transfer an interest in real property or the Sale of the business is not contingent upon such a transfer (i.e. there is no lease or sale of real property involved: a homebase business or new franchise opportunity) which would be highly unusual; a real estate Licence is required.