1. Run an Existing Business

2. Objectives
Identify the advantages and disadvantages of purchasing an existing business
Explain the steps involved in buying a business
Recognize the advantages and disadvantages of joining a family business

3. Purchase an Existing Business
Owners of businesses sell due to:
insufficient sales or profits
worry about new competition
fear of new economic conditions
retirement
a dispute between partners
death or illness of a partner
desire to do something different

4. business broker- person who sells businesses for a living
Sources for knowledge of businesses for sale include people in your industry, landlords, lawyers, bankers, management consultants, the SBA, local Chamber of Commerce offices, and bankruptcy announcements.

5. Advantages of Buying an Existing Business
The existing business already has customers, suppliers, and procedures- businesses also have goodwill or customer loyalty
the seller of a business may train a new owner- experienced employees may be available to help the new owner
There are prior records of revenues, expenses, and profits- financial planning will be easier and more reliable
Financial arrangements can be easier- seller may accept initial partial payment and allow the rest to be paid in monthly installments

6. Disadvantages of Buying an Existing Business
Many businesses are for sale because they are not making a profit- owners frequently try to sell businesses that are not financially viable
Serious problems may be inherited- businesses have poor reputations with customers, trouble with suppliers, or poor locations
Capital is required- many entrepreneurs don’t have the money to purchase the business so starting their own is the only option

7. Checkpoint>>
Personally, what do you feel is the greatest advantage and worst disadvantage of buying an existing business? Explain your answer. A- D-

8. Steps to Purchase a Business
Buying a business is a complicated process that requires a lot of thought. If you are considering buying a business, you will want to follow these steps:
Write specific objectives about the kind of business you want to buy, and identify businesses for sale that meet your objectives- this will help you find the right business for you
Meet with business sellers or brokers to investigate specific opportunities- ask about the history of the business, reason for selling, financial performance, and the price the owner is asking
Visit during business hours to observe the company in action- inspect the facility to ensure it meets your needs

9. Ask the owner to provide you with a complete financial accounting of the operations for the last three years- this will help see how much profit you can make and how much you will be paying for expenses
Ask for important information in written form- get a list of all assets to be transferred to the new owner, a statement of past or pending legal actions, copy of the mortgage, and a list of all suppliers
Determine how you would finance the business- contact lending institutions, ask the seller if they’re willing to finance part or all of the purchase
Get expert help in determining a price to offer for the business- valuator- expert on determining the value of a business

10. Checkpoint>>
In your own words, why is it important to follow the above steps when purchasing a business?

11. Enter a Family Business
As many as 90% of all businesses are owned by families

12. Advantages of a Family Business
Enjoy pride and sense of mission
Business remains in the family for at least one more generation
Enjoy working with relatives

13. Disadvantages of a Family Business
Senior management positions held by family members regardless of their ability
Poor business decisions can be made
Difficult to retain good employees who are not family members
Family politics enter into decision making
The distinction between business life and family life is blurred

14. Checkpoint>>
Personally, what do you feel is the greatest advantage and worst disadvantage of entering a family business? Explain your answer. A- D-

15. Assignment
THINK CRITICALLY
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