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There are usually many questions that arise when a business owner considers selling their business. Venture Group Business Brokers can provide buyers and sellers with answers that will help make the transaction smooth and successful.

Here are some frequently asked questions:

What is a business broker?

Why should I use a business broker?

Are real estate agents also business brokers?

How do you advertise a business for sale?

How do you handle confidentiality?

Why buy a business instead of starting one?

What is the best business to own?

How is an offer structured?

What kind of financing is available?

How long does it take to sell a business?

What is a fair price for a business?

What is Cash Flow?



What is a business broker?

A professional who assists people in buying and selling businesses. This includes evaluating and pricing a business, working with prospective buyers, negotiating and structuring the transaction.

Why should I use a Business Broker?

A professional business broker has the training and experience to guide you through the process in a comfortable and efficient manner. He/she will coordinate the efforts of your professional advisors, such as attorneys and accountants. He/she has handled many transactions and understands the complexities of selling and buying businesses. A professional business broker can save an owner time in searching for and qualifying buyers as well as maximize exposure to numerous qualified buyers.

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Are real estate agents also business brokers?

No. Although they do share some similarities in how they operate. Business brokers sell only privately-held companies while real estate agents sell real estate. There are many differences between putting together a business transaction and selling a piece a property.

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How do you advertise a business for sale?

We advertise on the Internet through our website and through the prominent national website database, BizBuySell.com. We also advertise in the local newspapers and use direct mail marketing. We network with local businesses and receive referrals from attorneys, accountants and other professionals.

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How do you handle confidentiality?

Venture Group Business Brokers handles all transactions in strict confidence to protect the interests of all parties. Before any detailed information concerning a specific opportunity is released ,we require that a prospective Buyer review and sign a nondisclosure agreement outlining his/her responsibility in having access to a Seller's confidential information. VGBB is committed to protecting the confidentiality of the business sale. We understand that public knowledge of a potential sale can affect the attitudes and actions of customers, employees, competitors, lenders, suppliers or investors, and thus the value of the company.

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Why buy a business instead of starting one?

Buying a business will usually require more money than time while starting one requires more time than money. The break-even point for buying versus starting a business is the cost to buy equipment, rent a space, pay a staff, pay for advertising, establish contractual relationships and support yourself while you are building up a customer base. If you buy a business that has already been established, you have income from the very first day and you already know what can be accomplished by the business. If you start a business, you face some uncertainty over the success and desirability of your product or service. Buying a business takes a lot of the risk out of your decision.

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What is the best business to own?

In general, there is no industry that is particularly better than another. Most Buyers want to own a profitable, well-managed business in an industry that holds a personal interest for them. On the other hand, some Buyers may look for opportunities that offer turnaround potential, where they can apply their special skills.

Example: two restaurants are located in the same shopping center, one is successful and the other is not. The successful one may have a hands-on owner versus an absentee owner. It may have more effective advertising, friendlier employees, better customer service or more competitive prices. It may pay less rent, have more efficient equipment, pay less for supplies and have higher profits. The only way to find out which one is better is to compare the two and select the more desirable one.

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Most businesses sell for one-third to one-half cash down. The remainder is financed by the Seller, by a bank, through family or friends. Sellers generally prefer to receive all cash at closing and some Buyers are able and willing to accommodate them. However, Buyers are usually trying to get the most bang for their buck and will want to leverage their down payment into the largest business they can buy. Although Buyers may want to make a no-money or low-money down offer, it is very rare that they will succeed. Usually a business cannot earn enough to both pay a salary to the owner and service such a high level of debt. In addition, the lender, whether it is the Seller or a bank, wants the Buyer to show his commitment to the business by having a vested financial interest in its success.

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What kind of financing is available?

Seller financing is usually the least expensive and easiest to obtain. It also tells the Buyer that the Seller has confidence in the business. There are no loan fees and the interest rate is usually lower than the bank rates, but often the term of the loan is shorter. Seller notes make up the majority of Buyer financing. Banks will loan money on businesses that show a strong earnings history on the tax returns. They require a lot of documentation and the payment of upfront fees. If all else fails, family or friends will sometimes offer to help out by either providing funds or signing a guarantee for a bank loan.

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How long does it take to sell a business?

The average time to sell a business is usually between six to eighteen months but there are exceptions. Some businesses may sell within a month of being put on the market. Others may take several years to attract the right Buyer. Selling a business takes longer than selling a house or a commercial building because of the confidential nature of a business sale.

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What is a fair price for a business?

As with any other product, supply and demand determines the value of a business. If a business is especially desirable and there are few on the market, the price will be much higher. A general rule of thumb is 2 to 3 times the owner's benefit, with a 30% to 40% down payment and a note to the seller using the assets of the business as collateral. If the business can pay you the income you need and make the payments to the seller, then it's worth the price. If the cash flow won't do this, then the deal needs to be restructured so that it will.

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What is Cash Flow?

Cash Flow or owners benefit is calculated as profit before income tax, one time expenses, depreciation, interest and owner's compensation & benefits. This is the amount of money the owner has available to pay himself, buy additional equipment, make note payments on the business and pay taxes.

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