Before delving too deeply into the technicalities of due diligence when buying a business, remember the following point: Always focus on finding the right business before concerning yourself with the right price. Don’t base your search solely on finding a good deal or a steal. The price has to be considered secondarily to your personal preferences relating to how you want to spend your time and energy – this is important considering you will be spending anywhere from 40 to 80 hours a week at your chosen business.

 

Finding the Right Business
The decision as to what type and size of business you purchase requires serious introspect, which any VR Business Intermediary can help assist in guiding you down the right path. Every VR Business Intermediary has dealt with many people in similar situations, giving them a unique position to match customers with businesses and their associated lifestyles.

 

Evaluating the Business Opportunity
After you have decided on the general type and size of business, i.e. retail computer supplies with $50,000 to $70,000 cash flow, you must evaluate specific opportunities looking at the all the minor and major aspects.

 

To properly evaluate a specific business, i.e. Smith’s Computer Supplies, Inc., you must combine the intuitive side with the analytical side. On an intuitive level, you should begin to visualize yourself running the business day in and day out. Does it feel right? Can you see yourself coming to this business every day for the next few years?

 

At the same time, you should begin brainstorming with your significant others (spouse, friends, CPA, banker, attorney and your broker) and the seller about possible changes which would increase revenues, reduce expenses or otherwise improve the business. Ask the seller what he or she would do to improve the business. If your visualizations of coming to work here and implementing changes are favorable, you might have found the right business.

 

Working Your Way towards the Right Price
After finding a business that feels right, you must make an offer and work your way towards the right price. In practice, evaluation of the business and the asking price will be occurring simultaneously. Stress the relative importance of finding a business that feels right as opposed to simply finding a good deal on price and terms. Do not buy a business simply because it is a steal!