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Factors To Consider When Buying A Business For Sale

by gbaf mag

What should you do before you even start selling on eBay? That’s right – you should do your homework first! That means doing research to find out what you’re really looking for in an eBay business for sale. The more informed you are, the better your chances will be of finding a successful eBay business for sale. So, what exactly should you do to make sure you’re getting the most out of selling on eBay?

First, you want to find out the product or service you’re interested in. Research is important because it allows you to familiarize yourself with the market. When you have an idea of what you’re looking for, you’ll be able to research the best products to buy, the best prices to charge, and the best methods for getting started. Research is what 10 percent of successful eBay business owners always do – and they only spend ten percent of their time doing it!

The next thing to do is focus on receivables. This means understanding how much money you owe on your business for sale. Is it a few hundred dollars or several thousand? If it’s less than a couple of hundred, consider asking for a cash flow quote. This can provide you with an idea of your receivables per month – as well as your monthly income. This allows you to see where your money is going and whether or not you should ask for a cash flow quote on your business for sale.

It’s also important to understand capitalized earnings. This refers to the amount of your total income that is realized from your sales. Some business owners choose to exclude capitalized earnings when buying an eBay business for sale. This can help you avoid paying taxes on the difference between what your income would be if you sold your current business for a full price and what you would be earning selling your eBay business for a price less than you paid in capitalized earnings.

The last step is to review your financial statements and prepare them for tax purposes. This includes determining your taxable income and filing your federal and state income tax returns. Some small business owners choose not to prepare their own tax returns. They instead hire a CPA (certified public accountants) to prepare their financial statements and tax returns. Even then, this could be a good option because it lets you know what your gross profit was versus your cost of goods sold on eBay.

Many eBay business owners also include the purchase price of their inventory in their financial statements. But keep in mind that these inventories are “hot” and therefore have a limited time to turn a profit before they are included in the financial statements. So buyers beware that if you’re buying a business for sale – before you get physical possession of the property – you may already have recourses. Your seller’s inventory is likely to be lower than your net worth even after you consider only the gross profits.

The final step is to consider your receivables. Usually the receivables will be the result of a direct transaction between a customer and a seller. But some sellers allow their customers to take possession of their property within a specified period of time called a holding period. Whether you’re buying a business for sale or holding an existing asset, consider how quickly you can settle receivables to determine your liquidity position.

You should also include all of your liabilities when calculating your net worth or your gross profit because these will impact future cash flows more than your receivables. Your outstanding inventory is a liability. If you’re buying a business for sale, consider whether you’ll have the time and ability to liquidate it quickly if you should encounter unexpected circumstances. If you’re just starting out, start with a small percentage of your purchase price – you’ll need to increase your cash flow in later years if you expect to earn substantial profits from your business.

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