Home – New Forums Starting your journey Buying a business – advice please!

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  • #988104
    Anonymous
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    An opportunity has come up to buy the travel agency where I have worked for the last 9 years. I am looking at going into a partnership with my work colleague. We have always worked well together and she has been in the industry for at least 14 years. The current owner is about to retire, and as my colleague & I do all the bookwork, we know that the business is doing extremely well and has continued to increase profits each year. We are also the only travel agency in town.
    My question is, is it better for us to go in as a partnership or as a company? Also, we may be able to finance part of the loan by vendor finance….is this a good idea? The purchase price would be around $400K!
    Any advice would be appreciated!!

    #1165616
    Tony Manto
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    My advise is to pay for professional advice! This is a large purchase and although you may work well with your friend, going into business is a whole other story. I seen many of friendships and even family partnerships disagree and get ugly. Talk to and accountant.

    #1165617
    Dave Gillen – Former FS Concierge
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    Hi there Travelbug,

    Welcome aboard the forums!

    It’s a big purchase for you so I would indeed seek professional advice from an accountant. Someone you can sit down face to face with and discuss the pros and cons for your circumstances. As for the vendor finance, I have no expertise here but it obviously depends on the terms and your alternative options.

    Great to have you here and good luck! We’d love to hear back from you when the deal goes through to see how you went. :)

    Dave

    #1165618
    MissSassy
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    Vendor finance is a great option as it allows you to see that there is confidence from the owner that you will succeed.

    Yes you need an accountant to advise you but as you are looking at a partnership I also suggest you set up a legal contract too.

    http://www.legalvision.com.au is a Flying Solo member and they are great, get in touch with them too.

    If you haven’t run a business before it is very different to being an employee, so grab some business advice to help you through the purchase and through being business owners.

    #1165619
    Anonymous
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    Thanks for the advice guys! Yes we will definitely get an accountant to have a look. Neither of us have run a business before, but we both love our jobs and can’t imagine working anywhere else. We would have been quite happy to continue working for the current owner as he’s been a fantastic boss, but know that if anyone else was to buy the business, we’re likely to have no job at all. He’s built the business up over the last 40 years, so it’s definitely an icon in our city.
    But it’s an extremely large amount to pay for a business when we have no business experience…..

    #1165620
    Tony Manto
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    The fact that you have already worked there will be a great start. All you need to do is keep doing what’s working. Your accountant will work out the other stuff.

    If you feel you need to, get a business coach or mentor to help you with decision making and a sounding board.

    #1165621
    bb1
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    Just be careful with the purchase price and the vendor finance, Sounds great for the current owner to be offering vendor finance, but it also means no outside scrutiny of the purchase price, Yes you know its a good business, but he could still be inflating the price. At the end of the day he doesnt care if you pay to much, as you will still owe him the money if the figures dont stack up

    have someone independant value the business (this wont be an accountant),

    #1165622
    Anonymous
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    So could a business coach value a business? Also…can a family trust be set up within a partnership? That is, two families within one business?

    #1165623
    MissSassy
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    It depends on the coach and the business – unless it is part of their business, stick to someone who specialises in business valuations.

    Speak to your accountant about the structure so they can take into account all the circumstances.

    #1165624
    Anonymous
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    Thanks for the advice, yes will be making an appointment soon with our accountant. As I have never had any business experience before, it’s nice to go in with a bit of an idea. Anyway, as soon as I have any news, I’ll post it here…I’m sure there will be many more questions I’ll need help with!

    Thanks again!

    #1165625
    The Hobbit
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    Tony Manto, post: 191812 wrote:
    My advise is to pay for professional advice! This is a large purchase and although you may work well with your friend, going into business is a whole other story. I seen many of friendships and even family partnerships disagree and get ugly. Talk to an accountant.
    Oh so True, once money is involved things can get very ugly, even amongst best friends. Seek the advice of a solicitor and tie things up so you can exit without too many dramas if things go bad.
    Have an exit strategy.
    #1165626
    Anonymous
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    Hi Travelbug,

    If you’re looking for help valuing a business, some of the business brokers in the Flying Solo directory offer this service, I think.

    Good luck,
    Jayne

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