1. SELECTING A TYPE OF OWNERSHIP
CHAPTER 2

2. AN EXISTING BUSINESS Why the business is for sale Insufficient sales
Competition
Economy
Retirement
Dispute between partners

3. ADVANTAGES OF BUYING AN EXISTING BUSINESS
The existing business all ready has customers, suppliers, and procedures.
The seller of a business may train a new owner.
Key employees to learn from

4. ADVANTAGES OF BUYING AN EXISTING BUSINESS
There are prior records of revenues, expenses, and profits.
Finances are more reliable
Financial arrangements can be easier.
Reduce/eliminate bank financing or easier to get (less amount to borrow)

5. DISADVANTAGES OF BUYING AN EXISTING BUSINESS
Many businesses are for sale because they are not making a profit.
Serious problems may be inherited.
Poor reputation
Suppliers and location
Capital is required.
Entrepreneurs do not have or access to $$$

6. 7 STEPS TO PURCHASING A BUSINESS
Write specific objectives about the kind of business you want to buy, and identify businesses for sale that meet your objectives.
Meet with business sellers or brokers to investigate specific opportunities.
History of business
Why its for sale

7. 7 STEPS TO PURCHASING A BUSINESS
Visit during business hours to observe the company in action.
Facility meets your needs
Ask the owner to provide you with a complete financial accounting of operations for at least the past three years.
Profit and expenses

8. 7 STEPS TO PURCHASING A BUSINESS
Ask for important information in written form.
All assets to be transferred
Past/present legal action
Suppliers
Suspicious if owner refuses
Determine how you would finance the business.
Get expert help to determine a price to offer for the business.

9. ENTERING A FAMILY BUSINESS
Advantages:
Some enjoy working with their family
Benefiting those they care about
Stays in the family
Pride

10. ENTERING A FAMILY BUSINESS
Disadvantages:
Management (regardless of ability)
Retain good employees (not family)
Family politics
Business vs. Private lives

11. FRANCHISE OWNERSHIP
A legal agreement that gives an individual the rights to market a company’s products or services in a particular are.

12. FRANCHISE OWNERSHIP Franchisee Franchisor Initial Franchise Fee
Royalty Fees
Advertising Fees

13. ADVANTAGES OF OWNING A FRANCHISE
An entrepreneur is provided with an established product or service.
Franchisors offer management, technical, and other assistance

14. ADVANTAGES OF OWNING A FRANCHISE
Equipment and supplies can be less expensive.
A guarantee of consistency attracts customers.

15. DISADVANTAGES OF OWNING A FRANCHISE
Franchises can cost a lot of money and cut down on profits.
Owners of franchisees have less freedom to make decisions than other entrepreneurs.

16. DISADVANTAGES OF OWNING A FRANCHISE
Franchisees are dependant on the performance of other franchises in the chain.
The franchisor can terminate the franchise agreement.

17. EVALUATE A FRANCHISE
What is the demand for this product or service in my area?
Other’s in the area now?
In the future?

18. EVALUATE A FRANCHISE
What are the costs and royalty fees associated with the franchise?

19. EVALUATE A FRANCHISE
How profitable have other franchises been in this area? What do they think of it?

20. EVALUATE A FRANCHISE
How long has the franchise been in business? How profitable is the franchisor?

21. EVALUATE A FRANCHISE
What services does the franchisor provide? Will the franchisor help me with marketing, merchandising, and site selection?

22. EVALUATE A FRANCHISE
Are the benefits provided by the franchisor worth the loss of independence and the cost of purchasing the franchise?

23. EVALUATE A FRANCHISE
What happens if I want to cancel the franchise agreement?