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Sit down with a good CPA to run through all of the numbers.
More importantly though, do you completely understand the business from top to bottom? I get the impression that you don't, based on your post. That's a massive risk to take on, in my opinion. If you decide that this biz makes sense for you, perhaps you could structure the purchase so that the retiring owner stays on for a defined amount of time to help with your transition into ownership?
You could not be further from the truth...there is a reason why I know the owner
Glad to hear that I was off base. This comment threw me for a loop:
Quote:
Originally Posted by Greybear
Who can I talk to who can look at the numbers and tell me what I'm getting into?
There should be accountants who specialize in small business operations. That's exactly who I would seek out to help me review the books, because they'll know what to look for. Best of luck with your venture!
I have an opportunity to buy a business that is about 30% cheaper than the advertised price, as I know the owner, and he is looking to retire.
<snip>
Also, do you feel buying a well established insurance agency is a bad idea in today's weak economy?
Thanks
This is a tough question. It would depend on what type of insurance agency. While a well established insurance agency should have stable cash flows, new sales may be more difficult. Insurance when someone is unemployed, or thinking that they may be, could easily become a discretionary expense. Certainly involve a CPA for financial fundamentals and probably a qualified investment advisor to help with the future "what ifs" scenerios. I.E. If home insurance, "what if" half the homes go into default. For auto, "what if" they drop everything but libility, or simply drop it. If life, "what if" half decide to cash out/cancel their policies. Bottomline, if you could handle a 50% cash flow for several years then maybe ok. Bottomline #2, since you know the owner well, he may be willing to defer the sell for 6 months to a year to give you time to more fully access the economy. Undersatnd your clientele and the factors that are affecting them. My 2cts worth.
Location: We_tside PNW (Columbia Gorge) / CO / SA TX / Thailand
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Quote:
Originally Posted by dsnellen
Understand your clientele and the factors that are affecting them.
realize the ins business is largely based on 'social networking and referrals', be sure you are into schmoozing and factor your potential success into the future cash flows.
In addition to a good CPA,
I would also go see a SCORE office and an SBDC. (They are usually free for initial visit) and of course YOUR friendly banker
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