Making the most of businesses for sale means going that extra step to find the best locations to advertise your business and value your business. Choose the best type of advertisement that gets your business noticed and puts it above the rest.

Many businesses are for sale in these times. If you are buying, check business directories that allow you to see many listings at once. Look at the following when making the most of businesses for sale:

1. Make a valuation of the companies for sale.

2. Find business directories of resources for large companies for sale and small businesses for sale.

3. Advertise small businesses for sale creatively.

Action Steps to Shop for Small Businesses for Sale
The best contacts and resources to help you get it done

Choose to buy or sell a business with a valuation plan

Determine business prices and if they accurately reflect the business worth. Ask how the value was determined before you buy the business. Make sure you can justify your price if you are selling the business.

I recommend: Biz Pep Online offers a business valuation model that you can download and run to evaluate your business. There is a free trial period before purchase. Enter the fields according to your subjective views, since there is more to valuation of a business than just concrete facts. Valu Adder provides definitions on what business valuation is and what it means. Read this information carefully when deciding on your business value. RWS Business Valuation Services will make a business valuation that determines the true worth of your business so you get a fair price in selling it.

Use business directories to buy a company

Instead of listing the business for sale in just one place, use business directories to get the word out to multiple markets at once. Often this does not cost more than individual listings but your business for sale message now reaches people nationwide.

I recommend: Business Buy offers a comprehensive list of business for sale resources. Start here to find the business you want to buy. Use one of these resources to sell your business. Biz Hwy offers a comprehensive list of businesses for sale. The owner or manager of the selling company placed these ads directly. Browse the listings by price, location, type and other criteria.

Purchase business opportunities from unique advertisements

When a business is for sale it must stand out from the crowd just to draw a looker. Eventually one of the lookers will purchase. If the ad is dry or looks like all the rest of the ads, no one will give it a second glance.

I recommend: Biz Buy Sell offers business for sale advertisement so you can reach a large audience with your business for sale listing. SCORE Counselors to America's Small Business, offers an informative article on the importance of advertising your business for sale and how to go about doing this. Read this so you do not make costly mistakes in selling your business. Business Nation offers business for sale listings. Browse the listings or find out how to add your own.

Tips & Tactics for Closing the Deal on a Small Business for Sale

Helpful advice for making the most of this Guide

• •  Business for sale by owner is another method to sell your business. Find business for sale by owner listings in your local area and sign your business up. If buying a business, look at these ads and save broker charges on your business sale.

Determining the value of a privately held small business for sale is far trickier than figuring out the value of a new home. One reason why: Business owners have every reason to keep profits looking low at tax time and many reasons to inflate the value when it comes time to sell. Here are a few keys to valuing a small business for sale:

1. Know the selling prices of similar businesses that have been purchased in the last year or two.
2. Know the key value drivers for businesses in the industry you're considering. For instance, if you want to buy a bowling center, you should know that league play brings in about 60 percent of revenue for the average bowling business. If the center you've fallen in love with relies mainly on kids' birthday parties, buying it may be a dicey proposition.
3. Many business brokers specialize in specific kinds of businesses: Some only sell restaurants, funeral homes or bowling alleys. An industry expert can be helpful.
4. Rule-of-thumb formulas can help you value a small business for sale, such as multiples of revenue or of "EBITDA" — earnings before interest, taxes, depreciation and amortization. Be cautious about relying solely on formulas, though — every business is unique.

Action Steps
The best contacts and resources to help you get it done

Do your homework

In the real estate business, 'comps' are recent sales of comparable houses in the same area; they tell you a ballpark figure for the value of a house. When you're evaluating a business, consider both what similar businesses have sold for and the typical 'multiple' by which companies like it are evaluated. A multiple means, for instance, 'six times cash flow' or 'two times revenue.'

I recommend: Ask your business broker for comps and multiples. (To find a broker, visit BizBuySell's Broker Pages or BusinessBroker.net.) If you're on your own or want to double-check the broker's numbers, look up the SIC code on the U.S. Department of Labor's SIC search page, or check the NAICS code. Once you know the industry code, search Pratt's Stats database of private company sales for comps and multiples.

Try a different formula for small businesses for sale in emerging industries

For businesses in new industries, evaluate the maturity of the business - does it have a lot of growth potential or has it had unchanging profits for the last several years?

I recommend: For expertise, turn to a business appraiser or CPA. To find one, follow the association links on Valuation Resources.com, or search the directories of the Institute of Business Appraisers or the National Association of Certified Valuation Analysts or find business valuation software and services on Business.com.

Turn to an industry-specific business broker

A specialist can tell you the 'inside scoop' on industry trends and the dramatic effects they can have on business valuation. They can also tell you how much of a deposit you'll need to come up with; money 'down' varies by industry and also by whether a potential owner has industry expertise. Keep in mind, though, that the broker works for the seller.

I recommend: The International Business Brokers Association (IBBA) offers a directory searchable by Zip code. Call the IBBA directly for help finding a specialty broker. Check Business.com for a listing of brokers of businesses for sale.

Know your demographics, the real estate market and the business climate

If you're buying a business whose customers are mostly local, learn as much as you can about the area's demographics.

I recommend: Check 2004 county business patterns and the U.S. Census Bureau's American Community Survey for trends. Looking for a local economic development agency? Visit the Economic Development Directory for a list of links by state and province. Find vendors of demographic information, including site analysis for businesses for sale, at Business.com.

Interview the sellers

In addition to evaluating the numbers, you should evaluate the company's prospects for growth and any obstacles - including lifestyle issues - you may encounter. To do so, interview the owners extensively. Don't just ask them why they're selling; ask them how many hours they've worked weekly and how many hours a new owner would need to work to be successful. Do they know if any competitors are moving in? What are their ideas about how a new owner could grow the business?

I recommend: Get another evaluation of a small business for sale with a $39 customizable pricing report from BizBuySell.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Numerous factors can dramatically affect prices of small businesses for sale, including customer relationships and the owner's perception of the company's growth potential. If you're new to the industry, discuss the industry's future with neutral, expert parties.
• •  Talk to employees of a small business for sale. Are they willing to stay? Would you want them to?
• •  Ask the owners what it would cost for them to train you - or new managers - during the transition period.
• •  Before you sign on the dotted line, ask whether the business will require any capital improvements soon.
• •  Some owners will finance a portion of the sale. Don't hesitate to ask.
• •  An immature business with no debt should earn a rate of return of 40 percent; look for a 26 percent rate of return on a mature business. Divide the company's net profits by 0.26 or 0.40 for its estimated value.

Businesses for sale basics means finding out what businesses are out there and the best way to locate the business you want to buy. You can use a business broker or look at business listings. You must decide if you want to buy a large or small business. Do you want a franchise?

Scour the listings for businesses that fit your price range. Look for businesses by certain categories such as state, type and cost. Look at the following for businesses for sale basics:

1. Choose businesses for sale from business brokers.

2. Find large companies for sale or small businesses for sale within business listings.

3. Look for franchise business for sale listings.

Action Steps
The best contacts and resources to help you get it done

Locate a business broker for help with your business buying opportunity

Business brokers list businesses for sale. They will match you to the business you seek by price, size and other criteria you select. Compare prices that different business brokers charge before making a commitment to that broker.

I recommend: Business Mart offers a free service that allows you to view all kinds of business listings. You do have to sign up for this service but the service is free. Business Filter offers free business listings for buyers or sellers. They also offer a list of business brokers by state if you want to use a business broker for your business listing.

Check business listings for the specifications you want in your business

Check business listings on the Internet or in local newspapers to find the company that matches your desires. Many sites offer free business listings for your review. Look up business listings in your state, by type of business, by price or other criteria.

I recommend: Partner Up is a free online community that allows you to advertise your business listing along with other services. Join this community to purchase business or learn about a business listing. Biz Quest offers free business listings to buyers of businesses. Search by state, cost, profession and other criteria you set.

Select a franchise business buying opportunity from available franchise listings

Franchises offer a great way to get started in business. Use business listings for franchises to see what is available in your chosen field. Franchises have strict guidelines that you must adhere to, so before you purchase one, make sure you know the rules so you do not lose your business.

I recommend: All Options Franchising offers a free service to let you compare different franchise opportunities so you can buy the one that is right for you. Franchise Business lists all franchises currently available. Look for the type of business you want or choose by amount of money or other criteria.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Before you buy a business, check with the local Better Business Bureau for information about the business.

One of the most important aspects of buying a business for sale is determining its profitability. Few people want to purchase a business that is losing money unless they have a solid plan for how to turn it around. Knowing some of the lingo related to businesses for sale can help potential new business owners make a decision. For example, you may want to purchase a turnkey business or a franchise. Whatever you decide, try to look at the key value drivers and the EBITDA before signing on the dotted line.

Action Steps
The best contacts and resources to help you get it done

Turnkey business

When a business owner purchases a turnkey business, all he or she has to do is 'turn the key' to enter and start working. Basically, the term means a business that is established. The owner often purchases everything needed to run the business, including the business, store name and inventory.

I recommend: Home Business IT offers a good explanation, including types of turnkey businesses.

Franchise

A business owner that purchases a franchise purchases the right to market a particular product through a brand name. In addition, the business owner can receive training and marketing materials, making a franchise a good choice for first-time business owners. Fast-food places are franchises, but there are other types of franchises as well, such as tax preparation and cleaning services.

I recommend: Learn about franchises from the State of Wisconsin Department of Financial Institutions.

EBITDA

Earnings before interest, taxes, depreciation and amortization, or EBITDA, is one way that businesses report their earnings. It helps potential buyers to understand the cash flow before debts, but it may give investors in incomplete picture, making the company look like it's doing better than it really is.

I recommend: Learn more about EBITDA and its potential drawbacks from The Motley Fool.

Demographics

Demographics are the typical characteristics of your customers. Typical demographics include age, gender and education level. It's important to understand the demographics of a particular company before you purchase because you want to know who you will be marketing to.

I recommend: The U.S. Department of Labor collects demographics on workers in the U.S. You can see a brief description of demographics and examples of demographic studies on this site.

Business valuation

Business valuation is measuring a business' value. Before purchasing a business, an investor should have a good idea of the business' value to be sure that it will be a profitable investment.

I recommend: SCORE discusses the basics of business valuation and five myths associated with it.

Key value drivers

Key value drivers are the most important things that bring value to a company. These could include patents, products or brand names. When purchasing a business for sale, make sure that it includes the key value drivers.

I recommend: Evan Carmichael talks about key value drivers and how to determine them.