The reasons why people leave their traditional jobs, muster the courage to follow their passions and buy and launch their own businesses are varied. The ability to control their own schedule, use their skills to grow revenues and leave a significant amount of money to their loved ones are some of the reasons why people buy and launch businesses. Yet, buying a business comes with challenges.
Buying a business generally isn't a good idea unless an entrepreneur has enough disposable income to put up sufficient capital to cover the costs of the sell. Challenges related to buying a business could also prove to be too much if entrepreneurs don't understand their target audience, don't know how to market to those prospects and have minimal or no experience managing cash flows.
Then there's the challenge of recruiting and hiring the right employees. It's these challenges that may keep more people from buying a business. Yet, selling a business is no easier than buying a business. However, to stop losing capital and investing more money into failing businesses, thousands of entrepreneurs opt to start selling their businesses.
In fact, Nolo chronicles that, "Each year, some 300,000 U.S. businesses change ownership. Most are small and mid-sized businesses, like retail stores, beauty salons, quick-print shops, restaurants, tax preparation services, landscapers, electrical contracting firms, and modest manufacturing operations." Before selling a business, entrepreneurs need to compile a considerable amount of paperwork.
These documents include lease papers, licenses and permits, marketing expenses, payroll expenses, several years of filed tax papers, outstanding loans and the business' managerial and organizational structure. After compiling required documents, when selling a business entrepreneurs have to find out how much their businesses are worth.
The process of valuing a business includes placing a price on assets like office equipment, property the business owns (not pays rent on), facilities, inventory and the numbers and types of customers the business has. Three approaches that are taken to value a business are the Asset Based Approach, the Income Approach and the Market Approach.
With the Asset Based Approach the value of a business is "based on the costs to replace the tangible assets in like-kind condition." Score also reports that, "The Market Approach derives indications of value using ratios or factors derived from the earnings, sales and/or assets of past transactions of similar businesses." Furthermore, "The Income Approach derives indications of value by converting some level of earnings into a value using a capitalization rate, discount rate or multiple."
It's not uncommon for entrepreneurs to have little to no knowledge or understanding about these three valuation processes, let alone about the process of marketing a business as being for sale. Concerning the latter, the challenge of marketing a business as being for sale can become tougher if business owners want to keep information about the sell confidential.
To navigate through the detailed process of selling a business, some entrepreneurs are seeking guidance from specialists at companies like TransworldBusinessAdvisors. Specialists at these companies have years of experience helping to value businesses, assisting entrepreneurs with the financial and psychological challenges of the change and developing rewarding sell contracts with buyers.
Buying a business generally isn't a good idea unless an entrepreneur has enough disposable income to put up sufficient capital to cover the costs of the sell. Challenges related to buying a business could also prove to be too much if entrepreneurs don't understand their target audience, don't know how to market to those prospects and have minimal or no experience managing cash flows.
Then there's the challenge of recruiting and hiring the right employees. It's these challenges that may keep more people from buying a business. Yet, selling a business is no easier than buying a business. However, to stop losing capital and investing more money into failing businesses, thousands of entrepreneurs opt to start selling their businesses.
In fact, Nolo chronicles that, "Each year, some 300,000 U.S. businesses change ownership. Most are small and mid-sized businesses, like retail stores, beauty salons, quick-print shops, restaurants, tax preparation services, landscapers, electrical contracting firms, and modest manufacturing operations." Before selling a business, entrepreneurs need to compile a considerable amount of paperwork.
These documents include lease papers, licenses and permits, marketing expenses, payroll expenses, several years of filed tax papers, outstanding loans and the business' managerial and organizational structure. After compiling required documents, when selling a business entrepreneurs have to find out how much their businesses are worth.
The process of valuing a business includes placing a price on assets like office equipment, property the business owns (not pays rent on), facilities, inventory and the numbers and types of customers the business has. Three approaches that are taken to value a business are the Asset Based Approach, the Income Approach and the Market Approach.
With the Asset Based Approach the value of a business is "based on the costs to replace the tangible assets in like-kind condition." Score also reports that, "The Market Approach derives indications of value using ratios or factors derived from the earnings, sales and/or assets of past transactions of similar businesses." Furthermore, "The Income Approach derives indications of value by converting some level of earnings into a value using a capitalization rate, discount rate or multiple."
It's not uncommon for entrepreneurs to have little to no knowledge or understanding about these three valuation processes, let alone about the process of marketing a business as being for sale. Concerning the latter, the challenge of marketing a business as being for sale can become tougher if business owners want to keep information about the sell confidential.
To navigate through the detailed process of selling a business, some entrepreneurs are seeking guidance from specialists at companies like TransworldBusinessAdvisors. Specialists at these companies have years of experience helping to value businesses, assisting entrepreneurs with the financial and psychological challenges of the change and developing rewarding sell contracts with buyers.