There are many tips for business buyers on buying a business. Most business publications have articles that serve as guides so a buyer avoids making costly mistakes. These articles dwell on the various stages or phases when buying a business – making the correct valuation of the business for sale, knowing why the business is being sold, getting information from the seller about the business, reviewing the financial and work records, doing due diligence, seeking legal and financial advice, etc.

Only a few articles touch on the personal or social “fit” a buyer should have with the prospective business. It is not always all about profitability. One big mistake made by buyers is not having the personality and skills to create a harmonious and effective work environment with his or her employees, suppliers and customers. Below are some pointers in avoiding this mistake:

• Select the type of business or industry that plays to your interests, strengths and knowledge. You, the soon-to-be entrepreneur should choose a business that suits your skills and personality, one where you have some experience in – be it in the work you have done in the past, classes you have taken, or special skills you have developed through a hobby. You will struggle more to learn the ropes after you buy a business if you have no knowledge of the industry.  Your employees might not take orders from you if they know or sense this. It may be a mistake to buy a business you know little about – no matter how profitable it is, you may run it to the ground in a few months.

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Jay Goltz, in an article in The New York Times, lists down the major reasons for business failure.  He says that entrepreneurship is not for everyone.  One has to have the drive, tenacity, perseverance and personality to be a successful entrepreneur.  He also lists down tips in starting a business.  If you are thinking of starting a small business, read on.

People start businesses for all kinds of reasons. Some expect to get rich, some want to be their own boss, some want to follow their passion and some want to control their own destiny (or at least try). Many have one thing in common; they fail. More than half, depending on whose number you use and how much time you give it.

When I started my business in 1978, there was very little information out there on how to start, expand and operate a small business.

The world has changed. Today, there are countless magazines, Web sites, classes, organizations and consultants available to help the aspiring entrepreneur. Given all of these resources, the question arises: Why is the failure rate still so high? I believe there are three reasons.

First, many entrepreneurs learn to build a business the way some people learn to swim; they just jump in. They might have the basic skill, or even be very talented at the task at hand, whether it is baking or programming or candlestick making. What they lack is basic knowledge of marketing, management and accounting. Even though there are many resources available, they are too busy doing the task to learn how to do the basics. In this case, ignorance is not bliss; it is a ticking time bomb.

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Start-up companies are finding it difficult to find money for the next level of their business.  Every year, many start-ups do not make it to the next round. But this year, the situation is particularly bad … and next year they expect it to get worse.  There is less cash to go around.  Many start-ups will have to look for alternatives to raising new funds, writes Sarah McBride at Reuters.com.

Venture capitalist Bill Gurley has noticed something new this autumn: a big jump in the number of what he calls “legitimate introductions” that he receives each day to entrepreneurs who hope he might invest in their start-up companies.

The money-seekers are companies that have benefited from a tidal wave of early-stage investing in start-ups and who now need funding from mainline VC firm’s such as Gurley’s Benchmark Capital to take them to the next level. But many companies, even some that have done fairly well in their initial phase, are finding it increasingly difficult to raise the next round of cash.

So far this year, some 859 companies have raised an initial round totaling $3.9 billion, according to data from the National Venture Capital Association and ThomsonReuters. That compares with 777 companies raising $3.5 billion this time last year and 523 companies raising $2.3 billion in the first nine months of 2009.

The plethora of early stage companies is a result of the comparatively low cost of bringing new technology products in the age of dirt-cheap software and data storage and massive social-marketing engines such as Facebook. A growing legion of wealthy “angel investors,” many of whom made their money in the last boom, has contributed to the start-up boom too.

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Individuals who want to buy a business contact business brokers and sellers.  How will the latter know who among these are serious buyers?  Who are the “time wasters”?  If you meet the following list of criteria, you are a serious business buyer.

· You know what you want.  As a serious buyer, you know the type of business you want to get into.  You want one that matches your skills and experience.  You also know where this business should be located.  You are not a “tire kicker” who inquires about businesses for sale and cannot make up your mind on whether to get into sales, retail, service, manufacturing, etc.

· You do not waste time.  You identify target businesses or acquisition prospects, do your research, and you are ready to make contact, set up appointments and visit these companies.  You meet with potential financial partners.  You discuss with the seller or broker important considerations.  You focus on businesses that are suitable for your background.

· You have realistic expectations.  You understand that there is no perfect business for sale and that you have to take on some risk. 

· You are “transparent” to the seller.  You disclose your identity as the buyer.  You are forthcoming about your reasons for wanting to get into the business and your financial situation or capability.  This will lay the foundation for building trust as the transaction proceeds.

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Those looking for a business to get into should try franchising.  Franchises are doing better than most industries, and it has grown 40% over the past ten years.  Steve Caldeira, CEO of the International Franchising Association, is optimistic that franchising will steadily grow in 2012 and beyond.  Consider these favorable factors mentioned at TheStreet.om – available commercial spaces and talented job applicants, support from franchisors and loosening of credit.

One of the easiest and more predictable ways to do that is to look for those companies aiming to grow and buy a franchise.

Franchising means you run a business of your own, but with a proven method of success as well as support and marketing assistance from the franchisor.

Joel Libava, a franchise-acquisition consultant and author of Become a Franchise Owner! says franchising means building equity in a business, controlling the circumstances to reach your career goals and dreams and creating an opportunity for your children to join you.

Here are some reasons 2012 is a particularly good time to own a franchise:

1. Credit is loosening.

“The big issue has been a lack of credit to meet the demand for [franchisors' and franchisees'] growth.” Caldeira says.

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Jeff Haden lists down the legal requirements or basic infrastructure an entrepreneur must accomplish before starting a small business.  He says there are people at the courthouse or local treasurer’s office willing to assist you.  It will only take two days tops in most areas to finish the list.  Below is the list published at CBSNews.com.

Here’s a quick-start guide to starting your own business:

Determine your business name. While branding, unique selling propositions and business-identity considerations are important, keep in mind there is no perfect company name. So don’t worry about selecting the ideal URL, dreaming up the perfect website design or roughing out your promotional literature. Pick a name. You can always operate your business under a name that’s different from your company name. (That’s what a DBA, or “doing business as,” is for.) And you can always change your company’s name later, especially if you end up doing something different than you originally thought.

Apply for an Employee Identification Number (EIN). An EIN is a federal tax number that is used to formally identify your business. Although you don’t need an EIN unless you plan to have employees or form a partnership, LLC or corporation, it makes sense to apply for one. The process only takes a few minutes and is free. If you don’t have an EIN your Social Security number is used to identify your business for tax purposes. An EIN allows you to keep your Social Security number confidential. All you have to do is go to the IRS website and apply.

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Are you looking to start a business today? Bob Voss at AllBusiness.com advises that you study the current social trends.  What target markets are rapidly and steadily growing?  You should also have a competitive edge over other similar businesses.  Previous experience and know-how in that industry are also advantages if you don’t want shaky surprises.

“What is the best business to start right now?”

The meaning behind this question is clear. The person asking the question is looking for the perfect business based on current growth trends and economic issues.

I answer this question two ways. I usually start by explaining that various social or cultural trends can provide opportunities for business startups and even “recession-proof” businesses. For example, businesses that provide services to help aging seniors live more independent lives are a smart bet because the target market is growing rapidly.

Similarly, “green” businesses are being positively received right now. (The problem with “green” businesses is that many don’t have a sustainable business model and can require a lot of start-up capital: just look at Solyndra!) Pet-related businesses also seem recession-resistant. For some reason, people will continue to spend money on their pets even when they are in financial trouble.

But be warned: Trends are important, but they can change rapidly.

The second way I answer the question is to explain that any business can be a good business to start if it has three particular traits:

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J.J. O’connor first experienced the franchising business at age 15 when he witnessed the life style of his friend’s father, who owned a convenience store franchise.  He liked what he saw.  A year later, he had a hockey accident and ended up as a quadriplegic.  This disability did not prevent the former hockey player from pursuing his dream of owning a business.  Together with a marine veteran and his best friend’s nephew, he will soon operate four Sport Clips hair-cutting businesses, as reported at Entrepreneur.com.

While he requires 24-hour care and can’t stand on his own, he can use a computer mouse and voice-recognition software to run the back-end operations of his Sport Clips hair-cutting business, which he operates with partner Dick Marak, his best friend’s nephew.

O’Connor, who graduated with a business degree from Lake Forest College outside Chicago, opened two Illinois stores with Marak within a two-week period in 2008, purchased another in Wisconsin in 2010, and are in the process of opening a fourth location. And they hope to open a fifth, O’Connor says.

Running the business allows O’Connor to work from home, where he lives with his parents, grandmother, three of his five sisters and his dog. He also works as web manager for the Amateur Hockey Association of Illinois, chairs USA Hockey’s Disabled Hockey Section and does motivational speaking.

Because of his disability, it’s hard for O’Connor to sit and work for the 10- and 15-hour days entrepreneurs often have to log.

“Sport Clips was fitting for me because I didn’t have to necessarily be there all the time, all day long,” he explains.

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Not everyone is fit to be an entrepreneur.  It takes a certain mix of character to be a success in business.  You must have some know-how and skills in the business you are getting into.  You must be willing and comfortable in taking educated risks.  You should have people skills.  Entrepreneur.com came up with a guide to assess if you have what it takes to be an entrepreneur.

There is an enormous difference between wanting to do something and being able to make a living at doing that something.

Being a successful business owner requires investing your own money in addition to a ton of time and effort. Despite the appeal of being your own boss, the reality is that not everyone is cut out to be a successful business owner.

Here are five quick personality assessments to evaluate before taking the entrepreneurial plunge:

Are you Santa or an elf?
Entrepreneurship requires managing a wide variety of tasks as part of the business, from marketing and accounting to training, customer service and more. Can you wear multiple hats, as Santa does with Christmas, or do you prefer to be the elf that loves to execute specific tasks? Do you take initiative or do you want clear instructions? Santas make better entrepreneurs than elves do.

What’s your relationship with money?
Starting a business requires money to start, to operate and for you to live on while it scales. If you are a big spender and aren’t great at managing money, those bad habits are likely to follow you into a business. And if you are usually unable to make worthwhile investments in the future of your business for fear of ending up living in a cardboard box if things go wrong then you may end up penny wise and pound foolish, as they say.

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Thousands of soldiers returning home from overseas deployment at the end of the year are most likely to try entrepreneurship rather than seek employment in companies as reported at BusinessNewsDaily.com.  With their training and discipline, they have high chances of success in running their own businesses.  Civic and business organizations are offering them assistance to guide them in this new chapter in their lives.

With thousands of troops scheduled to return home this winter from the war in Iraq, a shaky economy and a declining job market could send many on the path to becoming entrepreneurs on the home front.

Veterans increasingly are forgoing the more traditional route of finding a job working for someone else in exchange for the opportunity to own their own business. There are already more than 3 million veteran-owned businesses operating nationwide. And there are a number of organizations, businesses and associations looking to help them get started, offering everything from marketing help to the basics for a launch.

Terry Powell is the founder and chief executive officer of the Entrepreneur’s Source, which has helped thousands of veterans become business owners.

“In the last year or two, we have seen a lot more,” Powell told BusinessNewsDaily of veterans’ interest in becoming entrepreneurs.

Newly released U.S. Census Bureau statistics show that nearly 12 percent of the veterans who have left the service in the last decade are unemployed, and the grim economic climate is forcing more of them to become self-sufficient, Powell said.

Prepared for entrepreneurship

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There should be no surprises after you buy a business if you thoroughly studied and investigated the business.  What you should do now is to smoothly go through the transition phase as the new owner, and with the right decisions and actions, the business will thrive.

After You Buy a Business …

1.  Maintain the status quo for now.  Avoid disruptive changes that may confuse the staff or customers alike.  Gradually introduce changes and see how the employees and customers react. 

2.  Hire the former owner to stay for a pre-determined period during the transition phase as your adviser or consultant.  He or she can guide you through the daily operations of the business.  Observe, listen and ask questions.  The seller can introduce you to the employees, customers, suppliers and the landlord.  The presence of the former owner adds the much-needed stability, especially as far as the employees and suppliers are concerned.

3.  Learn the ins and outs of the business.  Talk to the employees, customers, suppliers and business executives in the same industry.  Know how the company is currently run.  Review the policies and systems in place so you can make amendments or revisions if needed.

4.  Meet with the employees about the future of the business.  Seek their support and assure them of their job security.  Get their feedback and suggestions on how to improve the products or services that the company offers and how to build the business.  They will be more effective workers if you involve them in drafting policies or improvements.  They will feel they have something at stake in the company. Let them get to know you and vice versa.  Be available to answer their concerns.

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What is in store for soldiers coming home from Iraq and other foreign deployments?  Will they join the long list of unemployed? Huffington Post says the International Franchise Association is encouraging veterans to try franchising.  Franchisors believe that the discipline imposed in the military training of soldiers make the latter ideal for the franchise system.

Rick Bisio, a Bradenton, Florida-based author, franchise consultant and broker with FranChoice Consulting says that you see unemployed people everywhere. “Another person you know has lost their job.” He continues, “Friends, relatives, neighbors and business acquaintances (are unemployed) – it’s epidemic.”

Consequently Bisio is focusing on “franchises that thrive in recessionary economies,” because many unemployed workers are opting for self-employment.

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Before deciding to buy a business, do your homework.  Your investigation must begin after drawing up a shortlist of potential businesses to buy.  Use the Internet and social media to learn about each business prospect.  Pose the following questions to people involved in the same business:  

• Why is the owner selling the business? 
• What is the reputation of the business? 
• What is the future outlook? 
• Does the company have a sizable market share to remain profitable? 

With some perseverance, follow each information trail, taking notes as you go.  After a preliminary exploration, some businesses may reveal negative reviews.  This narrows down your choice to one.  It is only then, when you think the company will stand up to a deeper investigation, that you meet the owner of the business.  Start the due diligence process with the goal of making sure the company is worth buying.

Here is a checklist for investigating a business for sale:

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With today’s rising unemployment, there is a corresponding rise in the number of prospective buyers looking for businesses for sale.  Most people dream of owning their own business, being the boss, setting the rules, controlling their lives, and earning for themselves.  Starting a business can be difficult.  You have to spend a lot of time and money coming up with an idea or service; testing it; developing its production or operation, marketing and selling it; hiring people; finding a location; sourcing equipment and vendors, and attracting customers.  Many of these start-up frustrations are bypassed when you buy an existing business.  There is no better time than today to pursue your dream of owning your own business.

Why should you buy a business?

1.  The business has immediate cash flow from day one.
You start earning as soon as you sign the purchase contract.

2.  Existing customers are already in place.
Start-up ventures sometimes fail because customers do not come for some time despite the initial investment and the work you put in.  Contrast this with an established business that has a loyal customer base.  You should keep your customers by maintaining the status quo for some time before introducing any changes.

3.  The risk of business failure is lower.
Buying an established business with ongoing cash flow, proven systems, a known brand, existing customers, and a good reputation is less risky than starting a new business.

4.  People know the business brand and logo.
You do not need to introduce the product or service because the public is already familiar with the brand or image of the company. The company name and logo are integral to the value of the business. 

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You had decided to buy a business instead of starting a new one.  You chose the industry after studying the market trends and emerging opportunities for its growth.  Fortunately, it is an industry that matches your skills and one that you are familiar with.  You have looked at businesses for sale and narrowed your choice to the right company. You want to make an offer but you are not sure.  There are so many unknowns.  You read the seller’s preliminary information and you want more in-depth scrutiny of the business.  How will you proceed?

Access to the “real” numbers is crucial when you buy a business.  A business owner is reluctant to share his company records even if he or she has put up the business for sale.  If you put yourself in the seller’s shoes, you will understand.  The seller is contacted by all sorts of strangers who ask for the company’s books and records.  Some just look; others are interested but lack the financial capability. Some may have the money but are unwilling to pay the price the seller is asking. Or worse, a competitor may send someone to check up the business. How will the seller know who the serious buyers are?

You, the prospective buyer, who finds the business promising, should present a written offer to buy the business.  This shows the seller that you are serious about making a deal.  The seller will now see you in a different light and open his books and records for you to study (usually after you sign a confidentiality agreement).  This offer to buy sets the wheels in motion.

Written offers convey you are different from the “lookers” who just inquire about the business.

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Bringing a business for sale transaction to fruition is a trying, lengthy learning venture.  You, the buyer, have to try your best to negotiate with the seller in a civil and honest atmosphere.  Pleasantness, reasonableness and fairness are needed for the process to proceed smoothly.  Once you decide to buy a business, you have to move fast or it might slip through your fingers.  You have to signify your serious intention to the owner by formalizing your bid. 

Before making a formal offer, you have to determine how much the business for sale is worth.  You do not want to pay more than its real value.  For this, you have to engage a business appraiser knowledgeable of the market trends for this particular business or industry.  A CPA or accountant should also be consulted to examine the proposed transaction from a tax perspective.  Going in on your own is not recommended.  A lawyer can draft your offer proposal in its entirety or at least review one that you have prepared.  Although the former is the better way to go, it is also the more expensive route.  However, if you have a verbal agreement with the seller on key issues and you have prepared a draft following available purchase agreement forms or templates, bringing in a lawyer later will cost you less.  Remember though to never sign a contract associated with the purchase of a business without first having this reviewed by a lawyer. 

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When buying a business, one would think that the pressure is on the seller to complete the sale. This is not the case. A seller is very selective about whom he or she will sell to. After investing many years in the business, struggling to build it up and making it profitable; the seller would want to make sure his or her “baby” will fall into good hands. As such, the pressure is on you, the buyer, to impress the seller that “You’re the one!” You have to let the seller think that you have the ability, the desire, and the commitment to buy the business and build on its success.

First impression is critical
You have to let the seller feel that you can get the deal done. During the initial stage of the business for sale process, you should factor in not just the financial aspect of the process but also the human element in the discussions.

• You must be sensitive to the concerns of the seller. Study the seller. Observe where his or her emotions lie. 
• Be careful how you probe questions and extract the information you need.  Do not be demanding.
• Let negotiations unfold naturally.
• Like in any relationship, establish trust gradually. Build a solid relationship not only with the seller but also with his or her advisers or representatives.

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Three years ago marked the beginning of the recession. And, although the country is not entirely healed, signs of progress are visible. Americans have begun to trust in the economy again and spend. An industry that is experiencing financial growth and promise is used car dealerships.

Sales within the car industry grew over 10% from 2010 to 2011. If this increase continues, by the end of 2011 almost 40 million used cars will be sold. If you’ve always wanted to start your own business and have a passion for the automotive industry, a used car dealership is full an opportunity showing prosperity for the future years.

What are the steps to start your own car dealership?

1. Find locations in your area to start your shop. The area should be a commercially zoned, flat lot.
2. Should you not already have one, secure a dealer’s license from your state Department of Motor Vehicles. Typically this consists of passing a written test, completing an application, and paying a fee before receiving a license.
3. Obtain a used car dealer bond to meet state surety requirements. This will ensure your customers are protected from cars with hidden problems.
4. Supply your inventory. Determine whether you will buy and trade used cars from community members.
5. Find a bank to become the lender for your dealership.
6. Hire staffers. You’ll need mechanics and salesmen to help you take the load of your shoulders.

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When I first started my business, I had a business mentor who told me the following quote. I’ve never forgotten it because it’s so true for many, many business owners. He said:

“Show me an entrepreneur and I’ll show you a manic-depressant.”

How true is that? One moment as a business owner, you can be on top of the world and nothing can go wrong. The next, you’re down in the doldrums thinking that a job could really be great right about now. And all it can take to change your mood is literally a phone call or an email.

The problem is that as a small business owner it’s far too easy to find yourself slipping into the hole of depression and once you’re there, it’s very hard to dig yourself out again. I know – I’ve been there.

The trick is to catch yourself when you start feeling down and put things in place again to lift your mood. Let’s face it, opportunities happen when you’re feeling great and clients start to come through the door. When you’re feeling down, nothing works and no new clients materialise. The hole is not a good place for you.

But, it’s all well and good me sat here saying to you that when you start feeling down you need to put things in place to stop you dropping into that hole. What if you’re already there though?

Well, if you’re already there, you need to try every trick in the book to pull yourself out. Here are my top ten tricks and tips that have worked for me in the past:

1. At the end of every day, force yourself to think of three good things that have happened. You’re not allowed to concentrate on any bad things. The good things can be as minor as you like – i.e. had a good meal with my partner, but they must be good.

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Getting a merchant account is very easy – understanding it is a different story. There can be a lot of different fees associated with a merchant account:

• Discount rate (Visa / MasterCard / Discover Card): 2:15% – 2.39%
• Transaction Fee – 20¢ – 50¢ per transaction)
• Batch Fee – Free to 30¢ per batch
• ACH Fee – Free to 25¢ per deposit
• Address Verification Service (AVS)- Free to 15¢ per transaction
• Electronic Gateway Fee – $10.00 – $100.00 a month
• Statement Fee – $0.00 – $20.00 a month
• Customer Service Fee – $0.00 – $20.00 a month
• Monthly Minimum – $0.00- $50.00 – for example, if your discount rate is 2.5% and you sell $1,000 that month, your charge is $25.00. If you monthly minimum is $25.00, you have met that requirement, and should not be responsible for that amount)
• Application Fee – $0.00 – $1,000.00
• Merchant Account Set-Up Fee – $0.00 – $1,000.00
• Electronic Payment Gateway Set-Up Fee – $0.00 – $1,000.00
• Membership or Annual Fee – $0.00 – $1,000.00
• Virtual Terminal – $0.00 – $25.00 monthly

As you can see, there can be a lot of charges. The two basic components of an Internet merchant account are a merchant account provider and an electronic payment gateway.  The electronic payment gateway is similar to the point-of-sale (POS) terminal in the grocery store.  The main U.S. gateways are Quantum Payment Gateway, Authorize.net, Payflow (owned by Paypal) and LinkPoint (aka YourPay or First Data Global Gateway).  All three of these companies cannot process credit cards without the aid of a merchant account provider.

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