You may be thinking about purchasing a business that's already on the market or maybe selling your own business for profit. However, deciding when to purchase or sell a business is much more harder than whether you should or shouldn't, as told by Entrepreneur.
A small-business mentoring and education company, called Score, has partnered with photo company Canon, to tell everyone about this conundrum. The article goes on to explain that when buying a business, buyers should know that 40% of the business costs should come out of their own pockets. And when it comes to sellers, they should create a two-year plan before they officially hand over their company to a buyer.
An infographic explains the typical prices of businesses in nine different industries. It also describes 2016 as a great time to buy or sell businesses. According to the data collected, sales from selling businesses have been stable since 2013.
Firstly, if you are wondering why some businesses don't sell it's because 58% of brokers cite unrealistic expectations. For example, owners are asking too much, didn't prepare, or underestimated the sale time. In addition, 31% cite bad financial health of the business.
So if you're thinking about buying a business, remember to not invest more than 15% of your net worth. It's also wise to keep at least 10% of liquid assets free for future needs. Expect to pay a minimum of 20% out of pocket cost and a maximum of 40% when acquiring that business.
But if you're planning to sell your business, research is required as part of due diligence. The infographic also suggests to consider seller financing as an assistance whic can raise your price by more than 15%.