Wanting to buy a business!!!

Hey everyone out there, how's it going on this fine night? Well basically as the title of the thread states I have a very good opportunity to buy a business from a close friend nearing retirement in the next year....year and a half. He is asking me for about ~600k to ~800k. The big jump from 6 to 8 hundo is due to him recently picking up a lot of business that is going to be steady. Say I was to end up paying about 700k; how hard would it be for me to get about a 200k dollar loan? I have records from the last 5 years of how the business has only grown and really is still growing. Anyways my long term plan is to hopefully get around a 200k dollar loan and pay about 5 to 10k dollars after that every month for about 5 years (all depending on how much he actually sells it for). Anyways anyone that has any input on this please feel free. Peace out.

Im sure if your credit is fine and you can explain this all to the bank they would give you a loan no problem. Just call your bank and set up an appointment and see what they say.

Before you EVER step foot into a bank to request money, you need to have a good business plan. Since you have a year or two to decide if this is what you really want to do you have plenty of time to prepare. http://www.amazon.com/Write-Business-Plan-Mike-McKeever/dp/1413300928 This is a link to a book that was like my bible when I first started my business. If you have decent credit and a sharp business plan/proposal ready for the bank you will be fine. You need experience in the field in which your business will target as well. If you have no experience I would ask your friend if he would let you work for him a couple days a week to kind of get a feel for everything, even if he cant pay you. Hope this was helpful.

i love how this is just a big blabber about money/loans

you've managed to impress everybody who's read this thread


now how about actually discussing what the business IS/does

Are you just guessing what the business is worth or do you have some sort of independant verification?

Do you know what ROI is?

Have you worked in the business and are you familiar with it?

Sounds like something that would take alot of research since you will be paying close to a million dollars.

I bet you could find a consultant to help you with the valuation. Close friend or not, I would not take his word for anything I would want to see the IRS tax returns for the last 5-10 years, bank records, etc...

And I would do that if I bought a business from a family member much less a friend.

If this is your first business then I'd strongly suggest you hook up with S.C.O.R.E. (http://www.score.org/explore_score.html).

There is tons of shit you'll have to learn, in addition to running the business. The score service is free and, if you really do have something viable these are the people who can probably hook you up with the money people.

Generally speaking a business sells for 5~7 times the earnings. So, if the business is making $100k per year, that would equate to approx $500k ~$700k for the business (about what you are talking about). It is going to be hard to retire a debt this large in the time you would like if you only have $100k per year (that is like less than $10k per month to work with).

Go slow, talk to people who have the proven experience, ask lots of questions. Good Luck

budsmoker87 said:

i love how this is just a big blabber about money/loans

you've managed to impress everybody who's read this thread


now how about actually discussing what the business IS/does

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Well I'm not blabbering about it I wasn't a business major in college......and why would I go around on this site giving exact details of what it is/does (if I was on a forum that talked strictly business and not drugs I would tell everyone what I was doing). Lets just say it deals with international services of certain cargos (everything legit lol). I work for the person who owns it. That's also why I started this thread;it is because I want all of these people who I hang out with all the time in person on this site to see how much money I wanna be making......yeah that's the main thing I'm doing is impressing my weed forum friend.

Sarcasm aside......

^^Timmy22---- Thanks for the website, I'm going to look into that. I don't know a whole lot about loans or business plans but I'll work on it until the time comes. As for my credit, it's pretty good, I do not know the exact score though. Thanks for the help.

NLXSK1 said:

Are you just guessing what the business is worth or do you have some sort of independant verification?

Do you know what ROI is?

Have you worked in the business and are you familiar with it?

Sounds like something that would take alot of research since you will be paying close to a million dollars.

I bet you could find a consultant to help you with the valuation. Close friend or not, I would not take his word for anything I would want to see the IRS tax returns for the last 5-10 years, bank records, etc...

And I would do that if I bought a business from a family member much less a friend.

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Ive worked for the business about 2 years now, basically its just him, a truck driver, and myself. I know it inside and out. I can get the IRS tax returns and bank records. That would prob be a good thing to show in my business plan huh? Like I said, I don't know much about business planning or things of that nature. I went to school for architecture and since know one is building shit right now......... Thanks for the help

Your Grandfather said:

If this is your first business then I'd strongly suggest you hook up with S.C.O.R.E. (http://www.score.org/explore_score.html).

There is tons of shit you'll have to learn, in addition to running the business. The score service is free and, if you really do have something viable these are the people who can probably hook you up with the money people.

Generally speaking a business sells for 5~7 times the earnings. So, if the business is making $100k per year, that would equate to approx $500k ~$700k for the business (about what you are talking about). It is going to be hard to retire a debt this large in the time you would like if you only have $100k per year (that is like less than $10k per month to work with).

Go slow, talk to people who have the proven experience, ask lots of questions. Good Luck

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Thanks for the info Grandpa....I had no idea a business could sell for that much more than it is making. Hopefully bossman doesn't figure this out lol. I'm gonna do some research on these websites today and see what I can come up with. Thanks again for the help fellas!

KindGrower said:

Ive worked for the business about 2 years now, basically its just him, a truck driver, and myself. I know it inside and out. I can get the IRS tax returns and bank records. That would prob be a good thing to show in my business plan huh? Like I said, I don't know much about business planning or things of that nature. I went to school for architecture and since know one is building shit right now......... Thanks for the help

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You're paying 700k for a business with two employees?

thedoc08 said:

You're paying 700k for a business with two employees?

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Yeah sir sure haha, I mean I would/hopefully will if everything goes all right. Bossman's main employee is a forklift and believe it or not that and a 18 wheeler truck are the two things that make the money. Boss is actually gonna higher another person because we have 2 forklifts then things will really start flying.

Collateral... plain and simple. my credit score was 700 when I was trying to buy 49% of a company. with no collateral, they didnt care. And this was 8years ago... It will be much harder, and alot alot alot of hoops to jump through, seeing how the banks have tightened up. As far and selling the company, they couldnt care less about what "Potentially" the buisness can make. The company value is based on assets, and what you own. our company makes over 100,000 in snow plowing alone, not including what the business is based on. Lawncare and landscaping. that aside, when we were audited two years ago, the company was valued at just below 300,000... that was only for the 6 trucks, 8 exmark zero turns, toolcat, botcat, trailers, tree spades, pulverizer, brush hog, graders etc... not including the 80x100 100,000 shop, or the thousands of trees we have. basically the work that a company is never set in stone. I lost a 30,000 dollar account that we had just because of an under bid, by less than a grand. an account ive had for 5 years. the income is about 20% of the consideration when approving a loan. IF you fail, they want your shit... Of course this was my experience, and everyones can differ. If it werent for my mother putting her house on the line, and me being extremely tight with money, i would have never got a loan. its about collateral. although a college degree in business management would help....

dangledo said:

Collateral... plain and simple. my credit score was 700 when I was trying to buy 49% of a company. with no collateral, they didnt care. And this was 8years ago... It will be much harder, and alot alot alot of hoops to jump through, seeing how the banks have tightened up. As far and selling the company, they couldnt care less about what "Potentially" the buisness can make. The company value is based on assets, and what you own. our company makes over 100,000 in snow plowing alone, that is least amount we make in a year. that aside, when we wereaudited two years ago, the company was valued at just below 300,000... that was only for the 6 trucks, 8 exmark zero turns, toolcat, botcat, trailers, tree spades, pulverizer, brush hog, graders etc... not including the 80x100 100,000 shop, or the thousands of trees we have. basically the work that a company is never set in stone. I lost a 30,000 dollar account that we had just because of an under bid, by less than a grand. an account ive had for 5 years. the income is about 20% of the consideration when approving a loan. IF you fail, they want your shit... Of course this was my experience, and everyones can differ. If it werent for my mother putting her house on the line, and me being extremely tight with money. its about collateral. although a college degree in business management would help....

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Interesting....what about collateral that is not tied in with the business such as car, house, land.....? We got 2 forklifts and a truck lol. Basically that all it takes to run this business so not a whole lot of collateral in the actual business itself. Thank you for the help. Hope everything goes well for your business. Especially with all this crazy winter weather everyone is getting!

So you're trying to say that with two employees, you take cargo which was shipped internationally (assuming to a port), utilize a forklift to take the containers off the stackaments, load them into the back of an 18 wheeler, and deliver them for less than an established international shipping company can, while showing earnings in excess of 100k annually?

I would personally avoid this one. Buy a tanning salon.

KindGrower said:

Interesting....what about collateral that is not tied in with the business such as car, house, land.....? We got 2 forklifts and a truck lol. Basically that all it takes to run this business so not a whole lot of collateral in the actual business itself. Thank you for the help. Hope everything goes well for your business. Especially with all this crazy winter weather everyone is getting!

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As far as I know you can't put any assets for the business which you are applying for a loan for up as collateral, as that is a given. Similarly to how you can't use a house you are applying for a mortgage for as collateral. The reason for this is if you default on the loan, the bank forecloses on the business or house automatically, then reverts to the collateral in order to recoup any losses sustained from doing business with you.

If you own a house the bank would likely consider 60-80% of the equity you have in the house as collateral. That means if your house is worth 200K and you still have 110K to pay off they will consider 60-80% of the 90K as collateral.

thedoc08 said:

So you're trying to say that with two employees, you take cargo which was shipped internationally (assuming to a port), utilize a forklift to take the containers off the stackaments, load them into the back of an 18 wheeler, and deliver them for less than an established international shipping company can, while showing earnings in excess of 100k annually?

I would personally avoid this one. Buy a tanning salon.

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Basically that is correct. Except there are a few other trucking companies that pick up the actual cargo and then dispatched to go to certain areas around the U.S. Business has steadily been growing for us as well; we were doing about 30 trucks a week then bumped up to 40 then 50 now were at about 60 loads a week and just got offered to take another 12 to 15. Boss man and I are connected pretty well to the people we get business from so it has been steady and growing which certainly isn't bad.

My mothers house was used as collateral. the cost of buying in, was greater than the house. As a matter of fact, 80% of the homes equity was the collateral, along with 20,000 in my savings. If it werent for my savings, 100% of the house would have been required, and still wouldnt cover the buy in expense. You dont have to have 100% of the buy in, in collateral. they just want a large % covered. Like thedoc said, you cant use the business' equipment as collateral. when it snows, it snows money, lol. thanks for best of wishes... hope this all helps.

KindGrower said:

Hey everyone out there, how's it going on this fine night? Well basically as the title of the thread states I have a very good opportunity to buy a business from a close friend nearing retirement in the next year....year and a half. He is asking me for about ~600k to ~800k. The big jump from 6 to 8 hundo is due to him recently picking up a lot of business that is going to be steady. Say I was to end up paying about 700k; how hard would it be for me to get about a 200k dollar loan? I have records from the last 5 years of how the business has only grown and really is still growing. Anyways my long term plan is to hopefully get around a 200k dollar loan and pay about 5 to 10k dollars after that every month for about 5 years (all depending on how much he actually sells it for). Anyways anyone that has any input on this please feel free. Peace out.

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is this for real why the fuck u come on a drug growing website to ask about A 200k loan goto the bank m8 dont ask a load ov stoners that aint got a clue wtf??

ckckck said:

is this for real why the fuck u come on a drug growing website to ask about A 200k loan goto the bank m8 dont ask a load ov stoners that aint got a clue wtf??

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haha good stuff. I thought about that, I got plenty of time to go by the bank. I just wanted to know what some people thought on this site as I come to this site often. Plus can't feel that bad about it, it is the "Black Briefcase" section. lol