BUYER'S GUIDE TABLE OF CONTENTS

Congratulations on taking your first step toward business ownership! While the benefits of being self-employed are widely recognized, relatively few people muster the courage or ambition to pursue this course for themselves. Your interest and initiative in contacting Saint Louis Group Business Brokers/Sunbelt has set you apart from the average person. We appreciate the opportunity to work with you! The purpose of this buyer's guide is to acquaint you with our company, and with the process of buying an established business or franchise.

Buying a business is a unique endeavor in that both the buyer and the seller have a lot on the line, neither is likely to have much if any experience with such a transaction, and there are very few professionals who are skilled in guiding the process through from start to finish. A typical business purchase will have legal, financial, real estate, and business issues to be addressed, as well as practical considerations, like whether or not the business is a good fit for the buyer. Many people turn to their attorney, accountant or real estate agent for assistance. Within their realm of expertise, these professionals can be helpful, but very few have the experience or the systems developed to accommodate all the aspects of this type of transaction.

The benefit of working with Saint Louis Group Business Brokers/Sunbelt is that we specialize in selling businesses. We offer a comprehensive system designed specifically for purchasing a small business, the experience to get the job done, and every advantage you will need to move from dreaming about a business, to owning one.

Experience. David J. Marlo, president of Saint Louis Group Business Brokers/Sunbelt, has been a respected Saint Louis business leader for over thirty years, achieving his Certified Business Counselor designation in 1976. Since then he has owned a Mail Box Etc. store, ERA Village Real Estate Co., Kohrs Lane Development (a commercial building company) and Olram Business Brokerage (large business sales). Marlo founded Saint Louis Group Business Brokers/Sunbelt, the area's first major broker specializing in selling small businesses, providing a vital service to the area’s small business community.

Professional Brokers. Saint Louis Group Business Brokers/Sunbelt brokers are hand picked men and women who have deep ownership experience and are passionate about small business in our area. Our team of brokers brings a level of personal experience and business savvy to the table that is beneficial to all parties.

Proven System. At Saint Louis Group Business Brokers/Sunbelt we incorporate a door-to-door system, which means that from the point of walking through our front door, to the point of walking through the door of a local business as it’s new owner, there is a system in place to facilitate every step of the process. From the extensive training of our brokers to our comprehensive Asset Purchase Agreement our system is designed to guide you step by step through the entire process of buying a business.

Results. Our job is to facilitate a smooth and successful transition, from start to finish. We possess all the necessary strategies and tools to get the job done. We understand that the sale of a business is a major event in the lives of the seller, the buyer, and the business itself. It’s more than just a matter of money and legalities; there are also emotions, logistics, and personalities to consider. While every situation is unique, we are adept at dealing with the intricacies of these transactions. Our brokers maintain an active role in the process, every step of the way, until the transaction closes.

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Who are the sellers? Businesses are sold every day for a variety of reasons, every business has it's own story. Some of the most common reasons include retirement, illness, relocation of family, and faltering profits. The reason the business is for sale is definitely something you will want to know if you are considering purchasing it, but in the final analysis it usually doesn't effect whether or not that business is a good purchase for you. It is far more critical to know whether the business is a good fit for you, than to try to understand why it is no longer a good fit for the seller.

Who are the buyers? While there is no hard and fast rule, these are typically either business owners in the market for expansion, or first-time buyers with at least one career behind them. Every prospective business owner should:

• Be ready for the responsibility of business ownership

• Have the full support of key people, such as a spouse

• Be in a financial position that allows for such an investment

• Be passionate about the business he or she is buying

(QUESTIONS BUYERS SHOULD BE PREPARED TO ANSWER)

Which businesses are for sale? Most business owners do not want the fact their business is for sale to be widely known. Not only can this information be damaging to the ongoing operation of the business, it also produces many unwanted distractions for the owner. Business owners often hire a business broker to promote the sale discreetly, screen prospective buyers, and guide the process along until the transaction is complete. Saint Louis Group Business Brokers/Sunbelt represents a wide range of businesses for sale in the St. Louis metro market. (LOCATING THE RIGHT BUSINESS)

Confidentiality rules & financial disclosure. As a prospective buyer working through Saint Louis Group Business Brokers/Sunbelt you will be required to sign a confidentiality statement and to provide a summary of funds you have available for purchasing a business. Prospective buyers must agree to the rules of confidentiality and meet the minimum financial requirements to purchase a particular business before being given any proprietary information regarding that business. (CONFIDENTIALITY / AGREEMENT)

How long will the process take? Some transactions can occur within weeks

after the buyer begins a search, while other times a buyer can spend months, years, or may never achieve the goal of purchasing a business. While some variables are out of your control, there are measures you can take to speed up the process.

• Have funds designated and available to make the transaction.

• The less bank financing is necessary, the quicker the process goes, so having more funds up front can speed things up considerably.

• Be open-minded about a business that meets your needs, even if it’s not exactly what you pictured.

• Be clear about non-negotiables. For example, if moving is not an option, set a maximum distance the business can be from your home.

• Be realistic about the income you can expect from the business, and know the minimum you require.

• Don't complicate the process by involving too many people; keep it limited to as few key people as possible.

• If there are other people involved, such as a spouse, keep your communication open to avoid surprises.

When can I quit my job? If your current income from your job is necessary to sustain you, or if not having that income would cause you to use funds designated for buying a business, then don't quit your job! There is no guarantee you will replace that income as soon as you may need to. (FINANCING THE PURCHASE OF A SMALL BUSINESS)

How much will it cost? Each business is priced at "fair market value" which is determined by considering the value of all fixtures, furniture and equipment, and the average owner benefit in recent years. Other factors, if they are significant, such as leasehold improvements may be figured into the calculation as well. The pricing method for every business is open for review. If the business carries inventory, the cost of the inventory on hand at Closing is paid by the buyer, in addition to the purchase price of the business. (SAINT LOUIS GROUP BUSINESS BROKER / SUNBELTPRICING METHOD)

How much money can I expect to make once I own a business? One of the benefits of owning a business is that your income is potentially unlimited. What you do with the business once you own it is up to you! As a starting point though, in most cases we have an indication of revenue and owner benefit in previous years from tax returns or other financial statements. While the completeness or accuracy of these records will vary among businesses, and there is no guarantee that future revenue will be in line with the past, this information serves a useful gauge.

What can I do to make my dream of owning a business a reality? The most helpful advice to a prospective buyer might simply be to keep moving forward. There will undoubtedly be bumps in the road that will test your commitment and resolve, but if you keep the goal in focus and have fun during the process, you will achieve what you're after. (STEPS TOWARD OWNING A BUSINESS)

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For some people there comes a time when the pros and cons of being employed by corporate are weighed, and the option of being self-employed emerges as the clearly more desirable lifestyle. The following are typical considerations:

1. The employer mandates hours.

2. Employer regulates pay.

3. Insurance choices are limited.

4. Retirement savings options are limited.

5. Time off / vacation time is limited.

6. Employer mandates Job responsibilities.

7. The corporate ladder, seniority system, or office politics can hold you back.

8. Job security is uncertain.

9. Your personal fulfillment is secondary to performance.

10. Your future is secondary to that of the employer. Regardless of the time you invest in a company.

11. No equity growth for you and your future.

1. You regulate your own hours.

2. Your earning potential is virtually unlimited, and you build equity in the business.

3. You can select the best insurance plan for your business and family.

4. You can invest your savings however you see fit, possibly back into the business!

5. Your schedule is up to you. Employees can be trained to manage the business short term to afford you time off.

6. You delegate responsibilities appropriately.

7. You are at the top of the chain of command.

8. Your job is secure - you are not likely to lay yourself off.

9. Your business is an avenue for you to challenge yourself, learn, grow, and impact those around you.

10. The development of your business and your personal aspirations for the future go hand in hand. The longer you operate the business the greater equity you gain.

Business ownership can support a long-lived and healthy career, as well as a fulfilling lifestyle, by affording greater flexibility, broader resources, greater earning potential, more involvement by family and friends, and tighter control of one’s security and future. The independence of being self-employed, plus the thrill of learning and growing with one’s business, can be an exhilarating experience unmatched by any other. And at the end of the ride, whether that comes early or late, there is something to show for the time and energy invested: a business to sell or to pass on to a son, daughter, friend or loyal employee.

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Business ownership doesn’t suit everyone. The dream of owning a business can become a real trial for the person who was anxious about the "good stuff" and not prepared for the challenges. Take this personal assessment before assuming you are cut out for the role of business owner.

• What is your risk tolerance?

• What is your work ethic?

• How well do you cope with challenges?

• Do you enjoy working with people?

• Are you in a financial position to purchase a business?

• Are you equipped to handle the responsibilities associated with the business?

• What are your skills?

• Why do you want to own a business?

• What are your goals?

• What concerns do you have about owning your own business?

It would be wise to discuss these questions with someone who knows you well, as well as with a Saint Louis Group Business Brokers/Sunbelt, Broker, who is familiar with these issues and can help you work through them.

• Insufficient leadership

• Vision for business is non-existent, not communicated, or not pursued diligently and skillfully

• Personnel is not adequately trained, motivated, and compensated

• Lack of capital

• Operational issues

• You don’t thrive working for someone else.

• Your job does little more than pay the bills. You’re not being fulfilled.

• You have the support of your spouse, family, and friends.

• You can’t stop thinking about owning a business.

• You have ideas for the business, plus the passion and drive to implement them.

• You sense that owning a business would improve your overall attitude and approach to life, and would benefit your family.

• You suspect that in your later years you will regret not pursuing your dream to own a business. You only live once!

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If you want to own a business, there are basically three ways to go:

Statistically speaking, start-ups are very risky. While the particulars may vary from one source to another, it’s generally known that the vast majority (as high as 90% by some estimates) of new businesses fail within the first year or two. Many business owners enter into the market unprepared mentally or financially to withstand the difficult early years in the life of a business. It's no wonder this is true when you consider what it takes to start a business from scratch. While the following list not all-inclusive, it gets your imagination on track with what it takes to start a new business. The process goes something like this:

1. Decide on a business that excites you and is marketable.

2. Develop the product, learn a trade for a service business, or build a brand name.

3. Lease or buy a facility and make improvements to accommodate the business.

4. Purchase inventory for start-up.

5. Develop systems for daily operations (payroll, scheduling, business hours, billing, policy manual)

6. Contract with vendors (utilities, insurance, suppliers)

7. Hire & train employees.

8. Develop and implement a marketing strategy.

9. Open for business and hope your income builds fast enough to pay the bills and pay down whatever debt you accumulated during start-up

It can take years to successfully implement all these steps, and not coincidentally, most new businesses don't survive long enough to see the process to fruition. The battle between the time needed to get established verses the immediate and constant demand for income and working capital can be brutal!

8. Working relationships with vendors and suppliers

9. Time, money and effort invested in promotion (name recognition)

10. Important benefits for first-time business owners:

-These businesses are the right size and manageable for a new owner

-The seller may finance a significant portion of the sale.

-The new owner receives training and mentoring from the previous owner

Depending on your goals, any of these three choices might be your best course of action. If you have a revolutionary idea or profound new product, and you have the know-how and connections to obtain financial backing, then starting a new business may be your best option. However, most of us do not enjoy the brilliance or good fortune the likes of a Bill Gates. Therefore, it makes sense to take full advantage of the opportunities that exist in established businesses.

Privately owned business afford the first-time buyer a wealth of invested time, money and experience, which would otherwise take years to accrue. By purchasing an established business you benefit from someone else’s hard work and devotion, and put yourself in the best position to succeed.

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