With the economy in this country being what it is right now—full of uncertainty—it can still be a good time to buy a business, if you go about it the right way.

“Financing is difficult right now,” said Tawnya Gilreath, who works in Sales and Acquisitions at First Choice Business Brokers in Van Nuys. “The lenders have tightened up the money supply across the board, so business loans are difficult to begin with because there’s nothing to really secure the loan. Generally they look to if the buyer wants to put a lean on their property but because property values have declined, a lot of time there is little equity remaining to use for collateral.”

Gilreath shared with theSFVnews some of her tips to keep in mind for people beginning the process of buying a business.

1. Be prepared to make a deposit. “The good businesses go quickly. They need to be prepared,” Gilreath said. “When they find a business they like, they need to make a good offer and have a 10 percent deposit ready, because otherwise the sellers don’t take them seriously.”

2. Be clear with a broker about what you want. “If they are looking for a fire sale they should tell the broker that’s what they want,” Gilreath said. “The brokers know which of them is in their inventory. It saves (brokers) paperwork when the seller isn’t going to consider.”

3. Understand where you are at financially. “Make sure their financing is in order. If they have $100,000 to put down, then they shouldn’t be looking at a million- dollar business unless they have an equity line somewhere else where they can get $300,000- $400,000,” Gilreath said.

4. Go with what you know. “Look at businesses they understand. If you’ve never been in a machine shop before, it’s probably not a good idea to buy a machine shop, because you are going to have to hire somebody and that’s going to dip into the cash flow that was going to be generated,” Gilreath said. “(You) need to look into something where (you) have a background and some experience.”

5. Find someone who understands the process. “If they’ve never owned a business before, they should probably hire someone to do their due diligence. Unless they are an accountant or familiar with bookkeeping, they need to hire somebody to help with that process so they know what the business is really generating.”

For more information contact First Choice Business Brokers at (818) 781-0082