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Tips from a successful entrepreneurial business flipper

Randall Chambers

Updated: Aug 24, 2022

1) Your strategy should be to discover distressed business-for-sale where there is little or no personal financial risk. That is, businesses where the owner desires to retire and is thus motivated to sell. Other reasons include divorce where estate assets need to be sold and divided, high debt to earnings ratio where the reward is no longer worth it, burn-out from working sixteen-hour days, and prospective Chapter 11 Reorganization. In these situations, owners are likely to accept a high ratio of seller-financing, especially retirees seeking a reliable monthly income and the least personal income tax burden as a result of the sale of his business. Believe it or not, many businesses can be purchased for only a dollar since the sellers are so anxious to unload their six or seven day-a-week grind of a not-so-profitable enterprise.


2) A smart business buyer is one with the experience in knowing how to turn-around a failing enterprise in addition to having the ability to increase revenues and profitability where in two to three years be able to double or triple the value of the business compared to what was paid for it. For instance, if the business was approaching Chapter 11 eligibility, the buyer needs to immediately begin negotiations with creditors to reduce their demands or face a Chapter 11 filing and perhaps only receive ten cents on the dollar. With this kind of negotiating skills, the business buyer could quickly reap the awards of his negotiating adeptness.


3) Be willing walkaway from a deal if you discover the owner is prevaricating about the facts of his business, especially its true profitability. But especially one that's maintaining two sets of books; one for the tax authorities and one set for himself. However, for large enterprises that employ an accountant and/or CFO, the numbers will likely represent the truth of the outstanding debt and profitability.


4) the buyer's business model should also include NOT involving himself in the actual daily operations of the business, but instead should focus on the short-and long-term strategy to increase profitability. That could mean simply increasing the sales and marketing budget or replacing non-performing or incompetent staff by performing background checks after asking all staff to reapply for their jobs.


5) Target businesses that one is familiar with. Indeed, their is peace-of-mind in knowing how to turn-around a business because you already know how an efficient operation should be run.








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