Where to begin?

**texaspreneur** · 07-15-2008 08:33 PM

There's a small business in my neck of the woods that my wife and I have been eyeballing for some time now. I wrote the owner a letter last year asking if there was an interest to sell the business. I got a response yesterday from his widow, yes he died last year, and she wants to sell the business.

I have not requested income statements or an appraisal of the property, but it can't be good as she makes it sound as though the business is floundering due to her inability and desire to run it.

My question(s) is/are:

-How and where do I begin the valuation process on this business?
-Where and how do I learn more about the funding options for this business?
-How do I pay the employees and loan to start the business before we get revenues back up to a point to feed the business expenses?

I would maintain my full time job and my wife would be the primary runner of the business as she knows the business...so we would not depend solely on this as our single source of income.

This is my first serious post, so please excuse me if I missed some of these questions in a previous thread somewhere, or if I'm in the wrong forum.

Thanks folks...

Wade

**rogercbryan** · 07-15-2008 08:43 PM

Originally Posted by texaspreneur

My question(s) is/are:

-How and where do I begin the valuation process on this business?

Call a professional broker. If you have a CPA they should be able to recommend someone to you. DO NOT try to do this on your own.

-Where and how do I learn more about the funding options for this business?

Call a banker... but DO NOT do that until you read the answer to the next question.... (see below)

-How do I pay the employees and loan to start the business before we get revenues back up to a point to feed the business expenses?

A question like this makes me nervous. I can tell you have done no planning, no market research, you have not written a business plan, nor have you put any thought into this other.... then .... hey lets buy a business.

This isn't totally a bad thing... if you stop and get organized right away! Before you make a single phone call to anyone you need to write a business plan. This doesn't have to be anything super formal (unless you are going to need financing). You need to have a plan... you need to understand your market, your financials, your competition, your supply, your marketing.... blah blah blah... you need to do your homework my friend.

What type of business is it?

If you are going to need financing then you are going to have to take your business plan one step further and maybe even visit the SBA or SCORE to have them help you with this. There services are free and there is an office in almost every major city.

To write a business plan go to Google and search for 'how to write a business plan for free' or visit www.sba.gov

Hope this helps!

**eliz4biz** · 07-15-2008 08:51 PM

Have you gone here www.sba.gov? It is a great resource for gaining knowledge on what you will need to get started, free courses, and even small business loans.

**eliz4biz** · 07-15-2008 08:53 PM

RCB, were you in my brain?

**texaspreneur** · 07-15-2008 08:53 PM

Roger,

You're absolutely right...I have not done any planning...which is why I asked these questions, because I'm not sure where to begin the planning. There are a few things I wanted to get straight in my head before going down the route of building a business plan and the associated due diligence.

I'm really using this business as a launching point for a business I've had in my sights for years now, mainly because I believe it will make money given the demographics in this area and allow me to build the cash to invest in the larger venture...which could/would ultimately be a related company.

Both are in the entertainment sector...the first is a gymnastics/cheerleading facility the other a more traditional family entertainment type facility, but requires a significant investment in land and capital equipment.

I know quite a bit about the demographics and market as I've done research for the other business and my wife is involved in this one currently with a competitor.

So, before the business plan is done, is there anything I can do/get from the current owner? Is it fair to request the income statements and an appraisal from them before having that completed?

Thanks again for your quick response...I'm green and any suggestions/feedback is MUCH appreciated...

Wade

**rogercbryan** · 07-15-2008 10:06 PM

Originally Posted by texaspreneur

Roger,

You're absolutely right...I have not done any planning...which is why I asked these questions, because I'm not sure where to begin the planning. There are a few things I wanted to get straight in my head before going down the route of building a business plan and the associated due diligence.

I'm really using this business as a launching point for a business I've had in my sights for years now, mainly because I believe it will make money given the demographics in this area and allow me to build the cash to invest in the larger venture...which could/would ultimately be a related company.

Both are in the entertainment sector...the first is a gymnastics/cheerleading facility the other a more traditional family entertainment type facility, but requires a significant investment in land and capital equipment.

I know quite a bit about the demographics and market as I've done research for the other business and my wife is involved in this one currently with a competitor.

So, before the business plan is done, is there anything I can do/get from the current owner? Is it fair to request the income statements and an appraisal from them before having that completed?

Thanks again for your quick response...I'm green and any suggestions/feedback is MUCH appreciated...

Wade

You should request copies of any and all facials they have available to include: P/L, Cash Flow, Income Statement, Bank Statements, Credit Card Bills, Lease Agreements.... anything they have. Getting this info may go a long way toward helping you to write your business plan. Just make sure you don't totally rely on their records in making decisions. They could have bad books... cooked books.. or they may be in order... you never know... so they should only be a guide toward everything else you do.