| Now that you have decided on what sort of business | | | | history of making good money. |
| that you want, it is time for one of the most painful | | | | One of the best methods to prove your case is of |
| parts of buying into a business - yes, the financial side. | | | | course, producing a business plan. Providing that |
| Money is the root of all evil is a phrase that's been | | | | potential candidates come up with a good, well worked |
| bandied around quite a bit, and with the economic | | | | out plan, the chances are that they'll succeed in paying |
| climate still in a rather delicate position, buying a | | | | back the money. |
| business is not as simple as it sounds. | | | | The advantages of producing a good plan will allow |
| The ideal scenario is that you already have sufficient | | | | you to have a clearer understanding of what is |
| funds at your disposal. For instance, you may have | | | | required (a benefit in itself), and will prove to the bank |
| been made redundant from your old job and you may | | | | or the vendor that you have a clear vision in your head |
| have received a hefty redundancy package - or at | | | | of where the business will be heading. The plan needs |
| least one that's enough to help you buy a business. | | | | to demonstrate that you have a solid grasp of the |
| The other alternative is that you have enough funds in | | | | business opportunity and its projected financial |
| the bank anyway. Whether you were working in a | | | | forecasts. Of course, a bank or vendor is only going to |
| high-paid job and chose to form your own business; | | | | respond to the people that can actually pay the |
| whether you received inheritance money; or whether, | | | | money back. |
| in a vast miracle, you won the lottery, you may have | | | | Unfortunately, it's rare that banks lend you all of the |
| enough money to buy your chosen business outright. | | | | money, and with escalating costs, you are going to |
| The more likely scenario is that you will have to | | | | need to stump up some of that money yourself - call it |
| borrow money, and again, the economic climate | | | | the equivalent of a mortgage deposit. You will also |
| means that banks or businesses aren't quite as willing | | | | need to bear in mind that you need liquid capital to |
| to pay out as before. That means that you have to | | | | support yourself during the first few days of your |
| put your case to them, and also make that case as | | | | business. So work out the costs, calculate a |
| convincing as possible. | | | | worst-case scenario, and that way, you won't be |
| The two alternatives are both vendor financing and | | | | unpleasantly surprised. |
| bank loans. Vendor financing takes place when a | | | | When looking for potential businesses though, don't just |
| person or persons selling their business are wiling to | | | | settle on the cheapest option. While there are plenty of |
| lend the buyer part of the money needed. If you do | | | | affordable businesses out there at good value prices, |
| not have the right amount of money, it may be | | | | you still need to make sure that you are compatible |
| possible to ask the vendor if they are willing to take | | | | with the business and that the business is compatible |
| whatever money you can afford, and then pay the | | | | with you in terms of interests, knowledge and skill. |
| rest back in installments. | | | | Don't just settle on the first cheap business that |
| It's a good idea in principle, but be aware of a few | | | | comes along - make sure it's the one for you. |
| things. For one thing, the vendor may wish to charge | | | | If you want to choose a bank loan, a good idea is to |
| you interest, and may also want to use whatever | | | | shop around - talk to different banks to make sure |
| assets you have as security, for example your home | | | | that they know what they're talking about and that |
| or any other property that you may own. If for | | | | they have the right amount of knowledge to support |
| whatever reason you cannot pay back the | | | | your aims and ideas. The ones who understand your |
| outstanding sum or if the business goes bust, be | | | | own particular business needs will be worth |
| aware that you may have to pay the forfeit with your | | | | considering. It's also worth checking out which ones |
| property - so make sure that vendor financing is a | | | | offer the best deals and support. Either pay a visit to |
| suitable option and that you know the risks. | | | | your shortlist of banks in person (which will allow you |
| But then the same could be said of a bank loan, which | | | | to make that initial contact) or trawl the web for any |
| normally involves a bigger sum of money to be | | | | potential lenders. Understand the different incentives |
| borrowed. And the vendor will certainly be happy | | | | and offers, such as free transactional banking terms, |
| when the sale goes through, since it will take a shorter | | | | payment holidays as well as the charges that the |
| period of time. | | | | banks may put on you for security costs and valuation |
| If you do choose a loan, one element that may be on | | | | fees. It's also worth familiarising yourself with all the |
| your side is that your chosen business may be | | | | business jargon, legal terms and small print that may |
| well-known. It's also possible that you may have | | | | prove to be a problem. |
| decided to buy into a franchise. Banks regard | | | | In short, the key is research. Do research on the |
| franchising as a safer bet, since the majority of | | | | affordable businesses that hold potential for you. |
| franchises actually work out, and also most franchises | | | | Research the banks that offer the best deals. And |
| tend to be high profile names. But equally, buying your | | | | prove that you have the research skills by producing a |
| own business may impress the banks if there is proof | | | | sound business plan. That's the key - now unlock. |
| that that business has a solid track record and a | | | | |