BizBen.com recently reported the California business sales market grew steadily in February, following an overall decline in 2010. As the market continues to improve this year, many seasoned professionals are wondering if their next venture should be to launch a new company and incorporate in California or to buy a small business and skip the building process altogether.
While valuations have remained somewhat low in response to the recession, the volume of qualified businesses remains relatively high. Accordingly, now may be the best time to buy a business.
Ted Leverette, president of a Florida acquisition networking company, tells Entrepreneur magazine that prospective buyers should not approach any business that has not been profitable over the last five years.
"Absolutely don't buy anything that has an annual pretax net cash flow under $100,000," he told the magazine. "That's the smallest you want to go."
He also suggests buyers hold on to the owner as a consultant when growing the company. No matter how much managerial or entrepreneurial experience the buyer has, he or she has not managed the business in question.
"You need someone really good in the product area, and someone who really understands the marketing," Leverette says, "and then you want to compensate them well."
Tags : ca, operations, small business management
Posted: Mar 3rd, 2011