![]() Capital One SavorOne Cash Rewards Credit Card: Best no-annual-fee card for dining and entertainment rewards.Capital One Venture Rewards Credit Card: Best for earning travel rewards with a low annual fee.Capital One Venture X Rewards Credit Card: Best premium travel card.Rosalie Murphy is a small-business writer at NerdWallet. This article was provided to The Associated Press by the personal finance website NerdWallet. “All of a sudden, an opportunity can come to (a buyer) and they say, ‘you know what, I never would have thought of this, but this is a really great business,’” Katz says. These advisors can help you find a deal outside your industry or neighborhood. If you’re casting a wider net, a business broker may be able to help. He adds that small businesses are often well positioned to buy their competitors, especially if they serve similar groups of customers. “Long-term key employees of small businesses are often the ones best positioned to successfully succeed the founder,” Stolz says. You could be working in or around the business you’ll someday buy. Talk to a personal financial planner, too - business ownership is still a risk, and it’s essential to prepare your personal finances as well. Working with an attorney and CPA with experience in business acquisitions can help you stay on top of the complicated legal and tax considerations involved in a business purchase. He also watches out for “single-person management” - situations in which “if the owner leaves, all of the institutional knowledge leaves with them.” And any unethical or illegal activity is a no-go. Zweig cautions against businesses that face pending litigation, businesses with reputations that feel impossible to improve and family businesses that employ several relatives. You can look through an existing business’s books to make sure everything is above board, from classifying workers correctly to complying with sales tax laws. Startups are typically excluded from these types of financing because they lack revenue history - but when you’re buying an existing business, lenders can evaluate its financials and make predictions about the business’s future performance.īusiness sellers may also be willing to finance the business purchase, Zweig says, especially if they’re eager to retire and don’t have a successor. You may be able to use an SBA loan or business bank loan to buy a business. “The main advantage of buying a business over starting a business is that there’s capital and loans available from banks for buying businesses,” says Tim Stolz, a certified financial planner and certified public accountant at Bestgate Wealth Advisors in Maryland. Many business owners rely on their own savings or friends and family to get their business up and running. It can be very difficult to find startup funding for a new venture. Still, “the financial economics just make a lot of sense - if you buy the right business, do the right diligence and are successful in the continuity of the operation.” FINANCING MAY BE AVAILABLE With the same amount of money, he says, you could purchase a business that generates cash flow “right out of the gate.”īuying a business doesn’t guarantee success either, Katz cautions. “I could invest $200,000 and have to grind it out and build the business from scratch with absolutely no infrastructure and no guarantees of success,” Katz says. When you buy a business, at least some of those things are already in place. They also need to create processes, set up software tools, hire lawyers and accountants, and complete other relevant tasks.īuilding that structure takes time and money. They may need to rent space and buy equipment. YOU DON’T HAVE TO START FROM SCRATCHįounders need to find customers, develop relationships with vendors and hire employees. Here are four reasons to consider this path to entrepreneurship. “I like the constraints of an existing business versus a clean sheet of paper,” Zweig says. Think of it like renovating a house instead of building one from the ground up, says Mark Zweig, professor and entrepreneur-in-residence at the University of Arkansas Walton College of Business. ![]() If you want to work for yourself, there may be an easier way - buying an existing business. It’s also notoriously difficult to come up with an original idea, find the right team and fund its growth. Starting a business can be an enticing dream.
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