I’m Looking to Buy a Business

“I’m Looking to Buy a Business“.  As a business broker based here in Florida  this is a statement that I hear often.  Within  the industry various statistics are stated regarding business buyers.  I have heard that 9 out of 10 of those that say they want to buy a business actually don’t buy a business.  Based on my experiences that statistic may hold true.  There are so many currently employed that during their 40- hour work week aspire to “be their own boss” by starting their own business or buying their own business.

Live Your Dream – Buy A Business

There are many unemployed out there that also think they may want to buy or start a business.  So while there are probably as many as millions of those both currently employed or unemployed that aspire to buy a business or start  a business, there is a much much smaller subset of those that even attempt to act on those aspirations.  Of that small percent that actually act on their dreams and or  goals a small percent may contact a business broker such as myself, and a small percentage of that group may find themselves at a closing table signing documents and actually buying a business.

Many business acquisitions are done with out the assistance of a business broker.  The numbers of how many entrepreneur types set off to buy a business and successful find a business without the professional assistance of a business broker are unknown to me.  I personally  had bought several businesses on my own without the assistance of a business broker.

These were strategic acquisitions within a certain industry.  I personally feel these types of acquisitions have a higher success rate.  Existing relationships, industry knowledge, focus,  and synergies provide for a higher success rate.   My views on this are based upon a fair amount of first hand experiences of myself and peers. This discussion is based primarily on non- strategic type acquisitions as referred to above.

Buy A Business

Photo (c) richardparker.com

Just one of the many steps in the process of buying a business that I assist in is how to apply some focus and some parameters to the basic statement of “I want to buy a Business”.  Being my company website is Sell a Business Florida I assume the person contacting me thru my website is looking to buy a business in Florida, but very often many of the other parameters have not been carefully considered.

When one is looking to buy a business criteria can range from looking at a certain specific company, to a certain “type” of business, to “I want to buy A business in the state of Florida”.  If you (or someone that you know) are currently employed and want to act on aspirations to buy their own business and gain the feeling of control of ones destiny, or are currently unemployed and view buying a business  to be the best means to a gainful career please consider the following.

Things To Consider Before Buying A Business

Below are a few parameters to consider when searching to buy a business.  The list can be long and extensive but the below is a starting point that allows the search to buy a business to maintain some focus.

  • Location-  For business purposes and family purposes does the business need to be in a certain State, County, City, or a certain side of town?  Or are you looking to buy a home based business that you can operate from most anywhere in the world?
  • Type of Business-  Are you looking to buy a certain type of business  like a Landscape Company For Sale or Towing Business For Sale , or are you looking to buy a business that has maintained certain performance levels such as “I want to buy a business that has at least 3 consecutive  years of  Net Income of $100,000+”.
  • Are you looking to buy a Hands on or Hands off business.
  • How much Available Capital to do you have? – This will set a range of businesses that you may consider.  Keep in mind that both Available capital for buying a business and Working Capital for running the business should both be considered.
  • Are you looking for a business that includes real estate
  • Are you looking for a business that provides Seller Financing?

Prospective Business Buyer ” Hi Scott I am looking to Buy a Business in Florida” Scott” Great,  What type of business are you looking to buy” Prospective Business Buyer“I really don’t know”

Why Buy A Towing Company

When Buying a business –  It has been said by others Pay for the Past, Consider the Present, Buy for the future.  So what is most important when looking to buy an existing business.  How much weight do you put on last years numbers?   How important are the current numbers?  How much are you buying the business for the future numbers?  Past, present,  and future all matter.

But buying a business is buying the future. I am currently working with a Florida based Towing company that is interested in selling his business.  We are selling his Towing company for $1,400,000.              Towing Business For Sale It is easy to imagine a towing company to be no more than the guy that hooks up your car at the side of the road and tows it in for repairs and that is the extent of the business.  This Towing business for sale is much more  that.  I attempt to view businesses for sale from the perspective- “would I buy this business, and why or why not?”.

Why Should Your Buy Towing Company Business:

This Towing business for sale will be a solid business investment for someone and I’d like to highlight reasons why someone will buy this business:

1.   Multiple Income Streams- Yes they do tow cars, but the business model is so much more than that.  They derive revenue from towing, also, vehicles towed in very often pay a daily storage fee, sometimes for vehicles in accidents vehicle require “sealing the car with stretch wrap” to eliminate additional damage from weather, some vehicle owners elect to get vehicle serviced at the towing companies service shop, so there are service fees, some vehicles get towed in and never get claimed.(more than you would think).  These vehicles get fixed and resold, sold for parts, or sold for scrap.   So Income comes from:  a.  Towing,  b. Storage,  c. Securing  d. Storage              e. Service work  f.resale  g. Disposal

2.   Significant Assets are included in purchase Price- Land, multiple buildings, multiple trucks, equipment collectively total over $1,000,000.   I have never been a fan of buying a business because of the assets- Usually cash flow is main area of interest.  But owning the property that your business operates on and paying “yourself the rent”, allows you both control and the ability to enjoy appreciation of this asset as you grow your business.  Also, securing money for your business is easier with assets on your balance sheet.

3.   Good Cash Flow–  This Towing  business generate about $160,000 a year in cash flow.  With Revenues of about $600,000 this is a respectable cash flow. Cash flow has been fairly steady and consistent over a several year period.

4.   A Towing Business is a Recession Resistant Business- There may be a business that is “Recession Proof”, but I am not so sure what that business may be. The economic downturn that began in 2008 has been both extended and far reaching.  Outside of insurance companies, most businessesIi know of have felt the effects of this downturn by significant reduction in revenues.  The towing business is a service that is neither a “luxury item” nor discretionary expense.   A towing company provides a service that is needed regardless of the economy.  This business did realize a 12% reduction in revenues, but compared to the 20%, 30%, and 40%+ reductions in revenues by many of the businesses that i have been working with, this dip in revenue is minimal.

5.   Future Prospects– Business has opportunity to add an onsite used car auto division.(both the land and building exist and the towing nature of the business results in vehicles potential for resale).  Service department has considerable room for growth, and unlike many auto service companies that may wonder where their next customer may come from, the towing operations bring customers in!  As with the auto resale operation, most of the infra structure is in place,  incremental revenue  could result in substantial incremental cash flow.

Towing Company

Photo (c) grandrapidsmilocksmith.com

Yes , I have a vested interest in the sale of this towing company.  I stand to gain financially as this business sells.  I also  attain personal satisfaction helping a long term business owner work thru this process of transition.  Finding the right buyer and getting the right price and terms for this business are the goals we set.

I believe this Towing business for sale will be of benefit to the right buyer.