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    4 Replies Latest reply on Sep 15, 2011 1:24 PM by trevburdett

    Purchasing a business

    trevburdett Wayfarer

      I am looking to purchase an already established business. It is a computer service and retail shop and has been in the same location for the past 7 years. It is slowly declining in business and I think this is a perfect time to pick it up and transform it to offer better services and more options. I have some great ideas to increase the revenue and am already working on building my own customer base.

       

      My problem is trying to get the financing to purchase the business. Unfortunately, I do not have access to any money from friends, family, or my own finances. My credit is basically shot because of my stupid teenage years.

       

      Is there any ways to get financing to help with the purchase? I am not needing a significant amount of money, around 200k and can easily make monthly payments. I have looked at the businesses books and their profits alone could pay the loan back.

       

      Any help would be great.

       

      Thank you,

       

      Trevor

        • Re: Purchasing a business
          LUCKIEST Guide

          Trevor, the easiest solution would be to talk to the present owners and see if they will hold the notes on the business.

          Nice that 200k is NOT a significant amount of money.

          Good luck

          • Re: Purchasing a business
            phanio Pioneer

            Have to agree with Luckiest.  With no cash flow and poor credit - no lender will provide you money.  Plus, based on the size of the deal and the small return potential - very unlikely that you could find an investor.

             

            Offer the owner 10% down and finance the rest for 18 years with a five year balloon payment.  Then, you can use the business to pay for itself.

             

            If the business is in decline - why $200K?  Seem really high to me given that you could start the same business from scratch for one-tenth that amount.

             

            Business Money Today

            www.businessmoneytoday.com

              • Re: Purchasing a business
                trevburdett Wayfarer

                The business is in decline basically because of the management. The owner wants to get out of the business and has expressed this to me. I used to be an ex-employee.

                 

                However, the business itself is stable. Has a good customer base, in a prime-retail location, and has about 50-70k in inventory and assets. I honestly wouldn't offer 200k for the business if I could buy it outright, I would be closer to 130k. I know the owner wants 250k for it at least for his initial offer.

                 

                The reason I figured 200k, was because of the hassle of the financing part. But after reading more about seller financing, I understand more about it and could probably offer him less. I would be comfortable offering around 150 for it, with the financed part.

                 

                18 years of financing seems like a long time. Is that a normal time frame? I haven't seen much about the actual terms of seller financing other than the interest rates.

                 

                Trevor

              • Re: Purchasing a business
                Tracker

                Hello Trevor, my best suggestion is find an investor to help you out.  I'm sure you can but you need to put together a good business plan and show that you are a hard working to be able to find one.  The keyword in that is business plan.  Without one it will be incredibly hard to convince any investor that you are serious about this. 

                 

                You can look at sba.gov for help on that if you don't know how.  Good luck!

                 

                ~Paul