Here at Real Estate Right, we are giving a general overview of all things real estate, and one part of it we haven't done yet, but is still under the real estate banner is buying a business. Many people start a business, but many also buy an existing business, so today we are going to help those who want to get out of the 9-5 grind and help them be their own boss with some helpful tips on buying a business.
A business owner in a previous life, owning businesses in hotels, accommodation, restaurants and service stations, Phil Mammolito, from CRE Brokers, is an experienced business owner turned business broker, helping people understand the benefits of owning established businesses throughout Victoria and Tasmania.
1. If you are buying a business, what are you actually buying?
2. There is usually a lot of business word jargon in the business ads, so let's explain a few of them?
a). What's the difference between a leasehold and a freehold?
b). What's the difference between buying a franchise over a stand alone business?
c). What is good will?
d). What is stock at valuation or equipment at valuation, and why is it added to the price (or is it)?
3. What numbers should we be looking at to determine the worth of a business?
4. Is there a golden rule about how much we should pay for a business?
a). Does this differ between a bricks and mortar type of business?
5. How do businesses transition between the old owner and the new owner?
a). How long is the transition?
b). Is it assumed that staff come with the business?
6. What happens if the business has loans against them? Does the original owner have to pay out the loans or does the new owner acquire the loans as they are the new company director?
7. When buying property you can use a buyer's advocate. Are there business broker advocates as well or should we be reliant on our accountant to be guiding us on our business purchase?
8. Is there anything else we should know about buying a business?
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Phil Mammolito can be contacted via the website:
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