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I am just curious how anyone is buying a business.

I keep hearing this is the greatest period of asset transfer in American history. Thousands of business are listing every month and maybe 20 thousand sell total every year. It seems like the baby boomers and some of the x generation is expecting that some of my generation ,the 18-30 year olds today, are somehow suppose to get into these business acquisitions. Trust me, there are quite a few of us that want into this asset transfer. The problem is most of my generation have very little cash savings and because of our "inexperience" most financial institutions will not give us loans. So how are we suppose to buy any businesses?

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Answers (5)
Paul Forsberg
Corporate Business Brokers, Inc
Brevard County, FL
Premium Broker

The answer to your question is this:
Buy an ongoing, profitable business that has "systems" in place.
You might have to pay more than you want, but you need to start somewhere.

An operating business with a track record will kick out enough revenue for you to pay yourself and service the debt.
Additionally, you can get financing via an SBA lender who will look at the past performance of the business more than your experience - and this is where a business with a system comes in because this means the business can pretty much run itself.

I just helped a coaching student of mine buy a Home Healthcare business.
He has absolutely no experience in the industry, and has never owned a business himself.

However, the seller had systems in place and he worked in the business for about 15 hours per week.
Office staff takes care of the rest.

Based on the system and the numbers of the business, my guy got SBA approval (based on info provided) in 6 days.
Don;t get me wrong ..... now the numbers need to be vetted and proven, but we know they are correct because we got them off of the business tax returns.

Long story short, at closing, my student will walk from the closing with about $75,000 in cash for working capital and less than 10% of his own money invested.
The business will kick out a projected $100,000 per year after debt service, and that is if he doesn't grow the business by a dollar.

It can be done - you just need to have someone knowledgable in your corner.

Visit my site - I can help you do it.

Oct 15, 2015
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The BAF Group LLC

I stand by my previous comment.

Oct 6, 2015
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The BAF Group LLC

Andrew, first let me say that this last writer was incredibly disjointed with what he has to say, and in some areas, simply didn't even make sense. The only thing that did make sense with the whole thing is, getting friends and family together is an exceptional way to start.

Beyond that, unless you have friends and family that are going to provide you with 100% of the financing needed by any business, you are still going to have to go to a lender or funding source. And they are not going to lend you any money unless they know that you have the experience to handle the money and the business correctly. Furthermore, why would you want to go into a business where you have no experience and no understanding of how to manage the enterprise? It is almost doomed to failure, unless you are buying something large enough to be able to also acquire management talent that knows how to run the business, in your stead. But that is also incredibly dangerous. I have done some work with a number of professional athletes who have purchased businesses they knew nothing about, hired people they thought were qualified professionals, and lost their shirts because they did not know enough about the business to make certain that the managers were operating honestly and effectively. Experience, in many cases, is more important than money!

As far as credit cards, there are a number of ways to do it. The problem you get into is that many of the credit cards are dealing with Interest rates of 18% to 22%. An SBA loan will cost you less than 6%. Interest rates on credit cards can eat up your entire net profit. It is an exceptional business they can withstand that kind of interest rate.

Again, friends and family are a great way to start. But Even they have to be convinced that you are someone they can trust with their money. I am not talking about honesty and integrity; it is a matter of trusting you to know that you have the knowledge that will safeguard their investment and make it grow.

Oct 4, 2015
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Thank you Don for the response. I was just trying to spur the debate. I would love to see how other people are buying. I work minimum wage for about 20000 in California which is nothing practically. I do have another question for you Don, how do buyer use there credit cards to buy businesses. I can't seem to get a loan but credit card companies are willing to give me high credit limits. make no sense to me.

Oct 3, 2015
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The BAF Group LLC

You say, "most of my generation", but we are seeing a lot of younger people making purchases. How old are you? What kind of work are you doing now? How much are you earning? How much rent are you paying? How many times a week are you eating in a restaurant? I am not asking you publicly the state these things,But they are questions you should be asking yourself. The people that are able to put money away are eating at home. They may be living with their parents for a while. Or they are living with roommates in relatively low rent kinds of areas, all in an effort to save money. And as far as experience goes, you could be a stock boy in a liquor store, and gain experience that would then help you to purchase a liquor store, in the future. Or, you start out as a stock boy, make your way up to a clerk, then to a manager – and as a manager, you start earning the kind of money you need to put savings away – and then have the means to buy a liquor store. And a liquor store is obviously something I am using only as an example. I am not making light of your question, but it simply is a matter of knowing where you are and where you want to be, then taking the small steps in between to reach your objective. Unless your uncle Harry died and left you a ton of money, that's the normal progression you have to follow, in order to get to where you ultimately want to be.

Oct 3, 2015

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