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Things to Consider Before Buying Your First Business

Insights from Rob Randels of Northwestern Mutual Wealth Management Copmany

Have you ever thought about buying a business?  Many of my clients already own one or more, and many more flirt with the idea on a regular basis.  Questions to ask yourself include, "Am I buying a job?" or "Is this an investment?"  Maybe both?  Many of the most successful businesses have significant owner involvement or a trusted individual directly involved in the day-to-day operations, which is critical.

Owning a business can be a form of diversification to an already successful investor.  You may have personal investments, a retirement plan, rental property, or other assets.  Entrepreneurs have a unique ability to manage multiple venture at a time.

When you ask business owners about their decision, many will tell you it was the best decision they have ever made.  This doesn't mean it doesn't come with a lot of hard work and added stress at times.  Remember, "Nothing ventured, nothing gained," Benjamin Franklin quipped.

How will the financing transact?  Are you able to pay cash?  Will this transaction be financed?  Remember, you are likely to need at least 10% down in order for your friendly banker to partner with you.  The bank will like to see you have some "skin in the game" to demonstrate your true commitment.  Having a great relationship with a commercial banker is a must and, with their experience, they can often protect you from a deal that they recognize is just "not right".

"Every worthwhile accomplishment, big or little, has its stages of drudgery and triumph: a beginning, a struggle, and a victory," as Gandhi said.

I wish you the best with your pursuit.  Have a happy, successful and profitable 2014 and beyond!

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The Firm makes no warranties or representation in consideration to the information provided above. All communication regarding this business must occur directly with The Firm Advisors, LLC. The Firm is not a real estate brokerage and does not sell real estate. The Firm solely advises on exit strategy.