What are you paying for when you buy a business

What are you paying for when you buy a business?

When you buy a business, you are buying assets of a company but in reality, you are buying a stream of earnings to be earned by those assets. The business assets are a means to make money but if they did not produce a cash flow, you would not be buying those assets.

The assets may have a liquidation value but price that you pay over and above that, the earning power of those assets is the goodwill
of the business.

In order to increase the value of the business, owners will have to have higher income. As a result, there is a possibility that the owner will claim many of the business expenses are personal and do not need to be continued on after he/she left the business and all the family members who are on the payroll are not really needed therefore should be added back in the normalized earnings. Often, owners will state that there is cash sales in the business and that is where the profits can be found.

In my opinion, if you cannot prove the cash sales then they do not exist. If the owner knows that there are cash sales and he knows that he is selling the business, why does he/she not come clean and deposit the cash in the business to prove what the actual sales are?

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How do you find the right business?

If you do not know what you want to do, the easiest way to narrow the choices is to determine what you do not want to do. Do you want to go into business for yourself, buy a business, or work from home?

Once you determine what you do not want to do, choose what interests you and what you are good at.  From there, decide if you have any contacts in that field. Would they be willing to buy your products or your service?
It is easier to sell to someone you know than to a stranger.

Many people do not know what to do when they want a career change; sometimes, you can look for years before you develop something that interests you. Taking a professional career counsellor’s advice from pillentum.com.au can help you through the process of finding a new career path.

My wife was bored of her job and wanted a change but did not know what she wanted. Her father sold his house, and the real estate agent brought in a home stager to prepare the house. My wife had never heard of this profession before, and she talked to the person staging the house and then decided that was the business for her. That was three years ago, but she took three years to find something interesting. She looked at many different opportunities; many were exciting
but not attractive enough to be in that field daily. She was lucky; a new idea stumbled into her lap when she was not looking.

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