Miller’s Management Minute

Simply stated, time tested ideas and concepts that will improve your small business

Buying a Business


Going into business is a major decision and it will affect you, your family, your finances and your lifestyle.

Surveys have shown there are four main reasons why people want to own their own business:

  1. They want to do their own thing and control their own destiny.
  2. They are tired of working for someone else.
  3. They want to better utilize their skills and abilities, and
  4. They want to make money.

If you plan on being the owner/operator of the business, versus buying a business for an investment return only, there are many things to consider.

You might be asking yourself whether you should start a new business or buy an existing one.

There are many advantages to buying an existing business.  For one, it will have a track record.  In most cases, the failure rate in small business is in the start-up period.  An established business has shown that there is demand for the product or service in the specific market.

Additionally, financial records will be available showing past performance as well as other vital information on the business and the market.

A professional business broker can provide you with a selection of different and, in many cases, unique businesses, including many that you would not be able to find on your own.

When you find a business you are interested in, the typical next step is for the business broker to prepare a Letter of Intent (or LOI) based on the price and terms you feel are appropriate, and then present the LOI to the Seller.

When both you and the seller agree to terms, then the LOI leads to the preparation of a formal Purchase Agreement (PA) with the assistance of your advisors.  There is a period of time designated in the PA for you to do your “due diligence,” where the burden is on you to do the final investigations into the business operations.  The final step is the Closing where ownership of the business is transferred.

The Advisors at Comprehensive Business Brokers can lead you through the process and help you achieve your goal of being successfully self-employed!