1. Starting Versus Buying a Business

2. John’s Johns
John’s dad owns his own plumbing company. John is considering becoming a partner with his dad and eventually buying the business from him.
What do you feel are the advantages/disadvantages of working for family?
What would you want to know about the business before you bought it?

3. Choose Your Values Adventure Balance Commitment Community Compassion
Competition
Courage
Creativity
Environmentalism
Fairness
Financial Security
Fun
Generosity
Hard Work
Health
Honesty
Independence
Integrity
Kindness
Knowledge
Learning
Loyalty
Physical appearance
Power
Recognition
Relationships
Responsibility
Security
Social responsibility
Solitude
Spirituality
Tolerance
Values: define who you are, shape your attitudes and your choices, and help you identify your priorities. These are usually influenced by family, religious beliefs, teachers, friends, society, and personal experiences.
Core values: beliefs and principles you choose to live by. They do not change in different situations and they endure over time.
*Activity: From this list, choose ten values that matter to you. Ask yourself, who or what has been the greatest influence on your values?
Allow students five minutes. Share when finished.

4. Buying an Existing Business
Why buy an existing business?
Advantages
Less risky—financials available
Employees are hired/trained—training may be provided
Customers are established
Loyalty (goodwill)
Established procedures
Disadvantages
For sale because they are not making a profit.
Serious problems may be inherited.
Capital is required.

5. Family Business Smaller enterprises Grew up with the business
1/3 survive to the second generation
Some families work well together; others do not

6. Advantage/Disadvantage of Family Businesses
Trust/togetherness that members share
Pride
Business remains in family
Enjoy working with relatives
Disadvantage
Can never “get away” from the business
Management positions held by family members regardless of ability
Difficult to retain good employees
Family politics
Separation of family and business life difficult
What if no family member wants to continue the business?
Advantage:
A family working as a team can often achieve more than its individual members alone.
Disadvantage:
Have difficulty viewing the venture and its problems objectively.
Parents sometimes are unable to see their child as a business person capable of making wise decisions and taking responsibility.
What’s Important?
Establish clear lines of responsibility
Be objective about family members’ qualifications
Keep decisions unaffected by personal emotions
Respect individual family members’ needs

7. Evaluating an Opportunity
What would you do to find out information about a business you were considering to buy?
Would you trust what the seller was telling you?
What actions would you take to find out if the business was worth buying?
Visit during business hours to observe the company in action.
Ask the owner to provide you with a complete financial accounting of operations for at least the past three years
Get expert help to determine a price to offer for the business

8. Evaluating a Business Opportunity
Investigate company/industry
Hire an accountant
Hire an attorney
Hire a business broker
Similar to a real estate agent
Point #1:
Don’t rely on what the seller tells you.
Talk to customers, employees and suppliers.
Point #2:
He/she will verify the value of the business’s inventory, accounts receivable and assets.
Point #3:
He/she will advise you and investigate the business for any legal liabilities.
Point #4:
Their job is to bring buyers and sellers together.

9. Assignment Research an existing business for sale.
Choose a business to buy
Explain why you chose that business
Explain which type of organization you would choose: sole proprietorship or partnership
Explain whether or not you would engage in the business with family