Buying a business is a bit like playing poker. A good player makes an educated guess as to what’s in the other player’s hand, and then decides whether to place a bet. Putting together a thorough business plan, however, is how a prospective buyer makes the decision about a business acquisition.
Most businesses for sale aren’t included in the Fortune 500. The prospective buyer will be personally dedicated to the success of any business purchased, and will go all-in on the deal.
You Need Your Own Business Plan
The seller will have some financials available for review, including financial statements and tax forms. A well-prepared seller might have also prepared a business plan. That’s excellent, but not good enough to bet your future on. It’s essential to prepare your own business plan before buying a business, especially if outside financing will be needed.
Writing a Business Plan
Putting together a business plan helps organize and clarify your thoughts about the business. Investors will want to know how and when the business will show a profit; and, assembling the data forces an intense focus on every aspect.
- First, be clear as to the purpose behind buying the business. Will the business be a long-term commitment, or resold in the future?
- Detail several key strategies for achieving that goal.
- Build and test a business model. Consider “what ifs” for sales, hiring, acquisition costs, and different growth rates. Much of this information will be used in the business plan.
- Ensure that the company name you will be using is legally available before using it on legal documents.
- Look at the target market and think about how it could be expanded. Talk to some potential clients and see what they think about your ideas.
- Conduct an analysis of the strengths, weaknesses, opportunities, and threats presented by the business.
- Now you’re ready to sit down and work on a business plan. You have the information to develop a plan of action, demonstrate cash flow management, project growth based upon realistic testing, and demonstrate how you will achieve your goals.
Del Lingco International has been brokering businesses since 1958, specializing in privately held companies with sales up to $100 million annually. They can help you locate a suitable business for sale and guide you through the process. If you’re interested in learning more about buying a business, call 713-783-5800.Tags: business plan, buying a business