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Should You buy a business in a downturn ?

buyingabusinessThe US economy has been very patchy lately. Many small to medium businesses have been on hard times since 2008..

Consider this:

During boom times businesses are mostly all doing well.

Businesses for sale are selling at a premium price. It’s a good time to buy a business, but only if you have loads of capital and are sure about the prospects of the business should there be a downturn.

Conversely:

During a downturn as we are experiencing in many parts of America in 2013/14,

Many small to medium businesses are running little to no profit. Net profit that is.

Its ok for the big listed companies who have the ability to manufacture overseas and sell into overseas markets. They can keep their costs down by moving from country to country.

But the little guy. The coffee shop two blocks down , he relies on local trade, and local suppliers.

The small/medium business in the next county he has the same problem.

What all small/medium businesses have in common today is … they are still in business despite the downturn.

Some/ many are running at a loss and will either go broke soon or get sold soon.

That is a good thing because when you are looking for a small business to purchase, the bones are raw to see.

If a business is running at an ok net profit in these bad times and there is no apparent risk of a large shopping center or a multinational opening up near by, then provided all the research is done and it proves it is doing what the owners say it is doing, then it’s a good buy and now is a good time to buy it.


October 1, 2009
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