This book is a must have if you're planning to buy or sell a business. One of the few books written that includes the methods used to determine the value of a business, this valuable text could save you hundreds or thousands of dollars on any transaction! And long after the transaction, you'll keep this book in your library as a reference.

Excerpt from Chapter 1

TRAINING: When you train new employees, your competitor may send you a "Thank You" note! What often happens after you upgrade a responsible employee is that he goes "across the street" to your competitor. That's because you didn't explain that the compensation would grow along with the new responsibilities. Now you have to compete against someone YOU trained! And for the other guy's profit!

 

Excerpt from Chapter 2

SURVEY THE MARKET FOR GAPS: When you decide on the general type of business you might want to buy, you can get a little closer by studying the need for the specific type of business in your area. Major market firms use some fairly simple methods to determine the need for products and services in any given area. They first look for "market gaps"

Don't let the term throw you. "Market Gaps" is just what it sounds like. In the market you are researching you are looking to see if there is some "gap", or demand need, for you to fill. If you have a general direction, take "retailing" for example, you can use the old "Yellow Pages" trick. Take a phone book from another large city or a suburb of a city far away from you and compare the Yellow Pages with your own telephone book. Find out what's missing. Compare the number of firms for different services or products for each geographical area. You'll be amazed at how much you can learn from this simple trick.

You can calculate "slippage". This is a term for expenditures that should be spent in your area but for one reason or another the money is being spent in some other geographical area. This doesn't have to be a difficult calculation. You might simply survey cities or towns close to you and count the number of firms in each locality. Relate the number of firms to the population of the localities. If you have two pizza shops per 100,000 people and the other locality has four pizza shops per 100,000 population...you have probably found a gap. (Caution: make sure the firms you are counting are making a profit!) Another simple method is to compare the number of square feet of specific business space in two areas. For example, you may find six thousand square feet of women's retail clothing in one area, compared to two thousand square feet of women's retail clothing in another. Again, compare the square footage per population for each area.

Or you can get very specific with the study of market gaps. Most states have a planning office which compiles many, many statistics. If you live in a state which has a sales tax, the sales tax department also compiles many statistics on expenditures by product/by area. Armed with these statistics you may calculate with very close precision where the gaps exist. Be sure to use common sense. I remember one college professor who spent the first thirty minutes of our initial Statistics class writing names, dates, numbers and formulas on every blackboard in the room. Then he went to his desk at the front of the room, sat down and said, "These are the statistics...what do you want me to prove?"

Be on the watch for business closings in your area. Try your best to determine why the business closed. There are sometimes reasons other than lack of demand. Death of a business owner might cause a business to be closed while the demand for products and/or services might actually be on the rise. Businesses can be "zoned out". Owners can be retiring and feel the business is not worth enough to seek a purchaser. By the way, you don't have to wait until the business closes to know about it. If you're looking for a food business, ask the bread man to keep an eye out for you. He often knows months in advance of a business that needs a new owner.

 

Excerpt from Chapter 3
There may be some way for you to achieve your stated goals without buying or selling a business on the open market. "Goals" is the main theme. Your main goal may be to invest your money. It may be to get out of a given situation such as needing a job. You may have as your goal to get into a desired situation. Consider some of the following areas to see if there isn't some more preferable way to accomplish your goals without actually buying or selling a business.


JOINT VENTURE: Divide talents, capital and time between yourself and others and define a way to achieve your goals. You may put up the needed capital for someone better equipped to run a business. You might receive an investment return similar to leaving the money in a bank and participate in the profits of the business. If it's your business now, you might seek to create a joint venture with someone with capital instead of selling. If capital is the only problem, you have a good chance of finding someone to discuss this with. Be sure to be honest in sharing your expectations and formulate the same kind of "rules" you would if you were operating the business with you in control. The key to a successful joint venture is value; each party to the venture must offer a unique value. Because of the value of each partner, the others will want him/her to remain as part of the venture. Remember that value is a perception and each party's perception is bound to be different.

I call it the "Platform Concept" and it's one of the main reasons that franchising is so sought after. The number of real "entrepreneurs" among America's businesses is really quite small. If individuals each had to start up their own business, even more would fail! As you read the following paragraphs, ask yourself if you have the ability (or desire) to generate each of the steps from "zero". Many of these areas are in place when you buy a business, even if they are not running properly. And you probably have no idea how long it would take to learn zoning laws, licensing, permits, utilities, floor layouts, inventory establishment and controls, etc.. When you buy someone else's business you are really buying a "platform" and building your own business from that foundation up.

 

Excerpt from Chapter 4
ORIGINAL SET-UP: You've decided to sell a product. What do you do now? Where do you buy the product? How much should you pay? How should it be priced? Do you need a license or permit to engage in sales? What about sales taxes? Do you collect them? What form of business should you use? Sole proprietor, S-Corporation, partnership, or LLC?


How large a facility do you need? What about racks, shelves and the like? What sort of communications will you need? What kind of advertising works? How often? How much? How many employees should you hire? How do you train them? How much should you pay them? This list could go on forever and it seems to do so. Most people buy an existing business because they recognize that they do not wish to spend the energy, time or money to "reinvent the wheel". The person who can go in from "zero" and do all of this is the one I call the "entrepreneur". Be sure you are ready for it before you begin! At least part of the purchase price can be allocated to NOT having to spend the time, energy and money to get the business up and running.

 

Foreword & Introduction
Chapter 1 Small Business in America
Chapter 2 How to Choose the type of business to buy
Chapter 3 Ways to achieve goals without buying or selling
Chapter 4 Why buy an on-going business
Chapter 5 Why sell an on-going business
Chapter 6 Buying a Business
Chapter 7 Selling your Business
Chapter 8 The documents to use for buying or selling
Chapter 9 The business form to use
Chapter 10 Dangers in buying or selling
Chapter 11 The real property - Lease or Buy?
Chapter 12 Valuation of a small Business
Chapter 13 Financing - where to get it
Chapter 14 The need for Professionals
Chapter 15 More "Street Smarts"
Chapter 16 Sources of help
Appendix
Glossary
Index

Small Business Primer: How To Buy, Sell & Evaluate A Business is a seminar by Samuel S. Tuttle, CCIM offered in an easily accessible book form for the non-specialist, general reader. This superbly presented "how to" manual is filled with cogently presented, step-by-step instructions to improve one's negotiating and decision-making skills, including how to evaluate and size up a business to buy or sell, and the risks and rewards that come with such transactions. A practical, go-get-em book with a useful message easily absorbed by readers of all experience levels, Small Business Primer is a thorough, comprehensive, highly recommended selection of first-class financial wisdom specific to the assessment, acquisition, and profitable disposal of any business regardless of its nature, size, or complexity.

 

Plain talk from the heavily-credentialed Tuttle hits the mark for its effectiveness, breezily imparting tips and techniques galore, applicable to both business beginners and pros.
Subject areas covered include: buying and selling a business, how to choose the right one, primary documents needed for sales and purchase, and the big one - where to get financing.

An excellent appendix and resource section complete the package, leaving nothing else to conclude than this one is exactly what it claims to be: a full-fledged seminar in a book (and a good one at that).

 

"…insightful look at our profession. I have read most of the 'how-to' books on Business Brokerage but yours is one of the best primers…that I have seen. I will be pleased to use it as a reference book for my classes on Business Brokerage."

 

The author completed courses at Yale University, and graduated magna cum laude from Fairleigh Dickenson University with a BS in Business Management. He has owned, operated, bought and sold businesses, and has been a professional business broker and counselor for the past twenty years. He holds the Certified Commercial Investment Member (CCIM) designation (the "Ph.D of Commercial Real Estate") and is uniquely qualified to immerse the reader in the real world of business. He is a member of the Mid-Atlantic Business Brokers Association as well as an officer of the Mid-Atlantic Real Estate Marketing Association. He is a Certified Business broker (CBB) and is a charter member of the Real Estate Cyberspace Society(RECS). Mr. Tuttle has given seminars on this subject over several decades, and has followed the outline of his seminar to create this book. You could call it a "seminar in a book".

Mr. Tuttle's experience in the world of Commercial real estate lends another dimension to his writings and advice. A creative marketer and problem-solver by reputation, he has learned to anticipate problems and obstacles in advance - making the planning process more bullet-proof. He believes in good judgment, common sense, and taking responsibility for one's own decisions. His teachings are extremely positive, and his methods encouraging. He is known as a mentor, a confidant, a counselor, and is considered a credible resource.

 

Small Business Primer: How to Buy, Sell & Evaluate a Business by Samuel S. Tuttle
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