Startup Junction

Purchase & Sales Agreement

The pruchase and sales agreement is a binding agreement between a buyer and a seller, which is executed once all the terms and conditions have been agreed upon and met. It is very important to have an attoreny and a CPA review this document before signing on the dotted line. Your Purchase & Sales agreement should have the following items listed on them:

While buying or selling a business the biggest challenge is to determine the fair value of the business.

Poor Business Valuation Methods

Once an entreprenuer decides to start a business the next question which comes to their mind is if they should build something from scratch or should they buy an existing business. There are several advantages and disadvantages of buying an existing business.

Advantages of Buying a Business

How to buy a Profitable Business

Investigate The Business

Planning personal finances is an essential task while starting a new business. It can take up to six months or more before your business is profitable. During this time you will need additional finances to support yourself and your family. Below are some tips to manage your personal finances:

1. Prepare a monthly budget for household expenses.

Breakeven point is a time at which a business becomes profitable. Breakeven analysis can help business owners determine when a business will start making a profit.

How to calculate a breakeven point

To calculate your breakeven point, you should add your fixed and variable costs and subtract them from an assumed revenue so that it is equal to zero.

Every business has its own startup costs. For example, to start a fast food franchise you may need anywhere from $50,000 to $1,000,000. On the other hand you might be able start an internet based home business for less than $10,000. Therefore, there is simple method for estimating your startup costs. However you should should know what it will cost and if you have enough money.

Appendix in a business plan is used to enclose any supporting documents which investors might be interested in. THe informaton in an appendix should be added only on as needed basis so that your business plan doesn't become bulky with a lot of irrelevant information. Below are some of the common items:

1. Resumes of key managers
2. Product pictures
3. Details of market studies

Financials is the crtical component of a business plan. It tells all the stake holders about exactly when you will be making money. The financials should be developed in end when you have a complete picture of your business. Your financials section should have the following:

Historical Financial Data

If you are trying to raise money or get a loan to start or expand your business then you should do it in this section. In this section you should discuss the following:

1. How much money do you need now?
2. How much money will you need in the long term and when you will need it?
3. How will you use these funds?
4. How and when the lenders and investors will be repaid?