Business Investor Parity (BIP) allows you to get back at least as much money and you invest. It is rare, but some of the best businesses offer precisely that.
Remember that less than 10% of the businesses on the market generated $100,000 discretionary earnings AND are SBA financeable.
Legacy Business Brokers Tampa Bay conducted a recent market research study of 2,930 businesses. We looked for ones that met three criteria:
1) Net to Owner (SDE) of $100K or more
2) Reported Earnings Supported with Tax Returns
3) SBA loans (SBA pre-qualified)
Out of the 2,930 businesses in the study, only 113 met the criteria, and 19 of those were Under Contract.
Many businesses advertised on the market have records that just do not line up with the seller’s advertised claims.
Look for businesses advertising outstanding financial records. Look for businesses where the Profit and Loss Statements line up with the Tax Returns. Note that you can always verify a Seller’s Tax Returns by submitting a signed IRS Form 4506T to the government. Trust but verify.
Also, look for ads mentioning SBA pre-qualified. No business is SBA pre-approved, but great businesses can qualify for SBA financing. That generally means you can acquire such a business with 20%, 15%, or sometimes only 10% down. Most loans used for the business only run for ten years. If commercial real estate is valued more than the business itself, the loan for the business and the land combined can run for as many as 25 years.
Find more great ones here: http://bizmls.com/listings/bbf-883/bus-obo100k.asp