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Buying a second business

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Buying a second business is an appropriate topic in these tumultuous economic times. The savvy entrepreneur should view the economic downturn as an opportunity to go shopping for future prosperity.

Key components necessary when evaluating a second business play is the following:

* Key Personnel
* Key Customer relationships
* Competitive edge with suppliers / vendors
* Valuation of business ( purchase price in multiples of revenue)

One hot spot to pay attention to is whether the business is cash healthy, asset healthy or both. For example, the second biggest reason businesses fail (management being #1) is cash problems. If a company is cash strapped you shouldn’t run from the opportunity but sift for gold. A business in need of a cash infusion will leave it desperate to make a deal forcing existing management to give up an equity stake or a sale.

Below is an embedded interview from BizWise.tv (cisco sponsored site) with tips on buying a second business

If you haven’t had a chance to scour the resources of bizwise.tv it’s well worth your time in content.

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