Financing A Business Purchase
Q: I have very little in the way of capital, other than home equity, to invest in a small business. I want to buy a small business but don't want to use home equity, which will be used later to…
Sales Taxes And Net Profit
Q: When you say that taxes can be added back to get a "net profit" number would that also include sales taxes for a retail business? A: You bring up an excellent point. When you add back taxes, along with…
Financing A Small Restaurant/Cafe Purchase
Question: I have been searching for about 6 months for a business. I have looked at some deli / cafes and restaurants, but have found that banks do not want to finance these types of businesses. Some of these businesses…
Absentee Owner Businesses
Question: Please explain absentee owner offers and what to believe. How often should the owner visit, how to manage, etc. Answer: Absentee businesses may sound like an ideal situation; however, it is very rare to find a highly-profitable, well-run absentee…
Buying Assets Vs. Shares – None
Q: I am not sure whether to buy assets or shares? What's the difference? A: You want to buy assets NOT shares.Sellers will want a stock purchase because it will eliminate their future liability. As a buyer you will want…
Adding Back Owner Benefits – Depreciation And Interest Expense Explained
Question: I have a question about Owner Benefits when they "add back" certain expenses. Why does Interest and Depreciation become "cash flow to owner/Owner Benefit"? I understand why the owner's salary that's considered "excessive" and Net Income do but Depreciation…
Protecting Yourself During A Business Purchase – Clauses In The Contract Can Help Alleviate Some Risks
Q: I'm considering the purchase of a distributor business I've seen and like. My only worry is that one of their customers generates about 40% of the business. How can I protect myself?T. Jones - Aurora, CO A: The seller…
Dealing With “Cash” Business
Question: The seller tells me there's about $25,000 a year in cash business. How can I verify this? The seller is insisting it exists and he is factoring it into the price. I'd like to believe him but what happens…
Valuing Inventory – The Best Way — Review The Previous Year’s Sales
Question: I am involved in a transaction and I'm having trouble valuing the inventory that is part of the deal. The seller says it's all good but is there really a way to measure this or should I take their…
Putting Up The House To Finance The Acquisition
Q: My wife is flipping out that we are going to have to put up the house to finance the business but isn't there a way for me to buy a business without risking my home? I really don't think…