Business loans

[JJSmitches]

Has anyone here every purchased a sales route or sales territory?

I am just starting to look into this as of last night and was curious if anyone has experience.

Where should I look?
What should I expect to provide in order to apply?

Thanks

[Bill Howell]

What are you going to be selling???
Most of these type "new businesses" are just a ploy to sell YOU something, like candy machines, or products that you then have to pedal. Be careful or you and your money will soon part ways.

[Jim Nilsen]

When you are buying a route or business from someone, the only true way to find out if you have a chance to make money at it is to see their tax returns. It seems like an invasion of privacy to some but if they truly are making money and are just tired of the work and have something better to go on or have to leave it for medical or other reasons it will show on their tax return if done right and legal. If they balk at showing you then they are probably not making money and trying to get back their investment before it cost them everything. Checking both business and personal returns might not be a bad idea depending on the type of business since you can turn inventory to look like profit if shady things have been going on for a long time. Look at all the paperwork and become familiar with they way they were running the show. Most people sell because they can't make enough money at it.

[CraigMBA]

I own a route sales franchise. You'll be hard pressed to get a conventional bank to finance one. Usually the parent franchisor has some financing options availible to you for this reason.

Tax returns aren't terriblly useful either because the revenues tend to be really small and expenses artifically large.

I would suggest you call other routes that surround the route you are planning on buying. Ask them:

"What is wrong with this route I'm planning on buying?"

If they say the route is good but the guy running it is a bum, that means something.

If they say "I don't know, but that route has failed 5 dealers in twenty years" look real real close and start calling the other folks who failed.

Don't be afraid to walk away if the deal isn't perfect. "Good enough" isn't on one of these deals.

Good luck.

[vintageracer]

Start your business with your own cash or not at all! Most business's started with PERSONAL debt fail and then you are responsible for the payoff. DON'T DO DEBT!

If you are unsure about a business, go to work for the seller for FREE for 3 months to see if this is a business that interests you AND if there is really is any profit in this business. Tax returns and review of the P&L statement will also help but getting dirty and involved will really tell the tale.

You think I am kidding? Try it and you will find that most business's look MUCH better from the outside looking in than the reality of working the business!

[CraigMBA]

Start your business with your own cash or not at all! Most business's started with PERSONAL debt fail and then you are responsible for the payoff. DON'T DO DEBT!

I don't know if thats always appropriate.

I had about $40K and borrowed another $100K. I had a ten year repayment schedule and I'll finish in seven.

If I'd waited till I had $140K I wouldn't of done it at all.

[vintageracer]

CraigMBA,

Congratulations! You are one of the few who are/will be successful AND repay their loan in a timely fashion.

Given the fact that I am now in my late 40's, I still know LOT's of my peers that STILL have huge debt/loans from College 20+ years ago that still have not been repaid and these folks wonder why they cannot get ahead in this world.

For whatever reason it is VERY easy to borrow money with good intentions and VERY hard to repay in a timely fashion. The sad part is that most of the people I know that STILL have huge college debt acquired that debt obtaining a degree that provided them with an education in a field where they would NEVER have ANY expectation of making enough money to pay back the student loan.

Fortunately for us, the taxpayers, you cannot bankrupt a student loan.

[JJSmitches]

I appreciate all of your input and I will give some more details here so you guys can tell me just how risky you think it might or might not be.

The business is car care products. The territory/sales route already exist and the current sales person is a good friend of mine and we would be partners. He knows the gross sales for the route over the last two years as well as the cost of all products.

We would not be purchasing the business, instead we would pay for the rights to be exclusive dealers in a territory. He is good at sales but believes he could use help with paperwork, accounting, operations etc.

It is something he has mentioned to me in the past. However, he believed he had a child on the way and put it on hold. Unfortunately, it didnt work out so now he is now considering this again.

It is by no means a business that is going to allow me to get rich quick or slow for that matter. However, it looks like it could provide a decent income, possibly even replace my current full time position EVENTUALLY (3-5 years down the road). There is also the possibility that a second territory (with much more potential) could be aquired in the future.

In doing some research I found lots of information about business loans but as I read more it looked like very few would be able to apply to such a venture. I am going to do more research and contact a couple of banks for more information this week.

thanks for all of your info, and anything else you have is appreciated.

[CraigMBA]

Mike:

Thank you.

I never had a student loan, mostly because I worked two part time jobs as an undergrad. Tuesday and Thursday were class day - all day.

My first job out of college I was a loan officer for a bank that did farm loans. Later, I did a work out of a 'distressed' farm.

This business I'm in now has margins where farming your gross margin was never bigger than 15% - not when I was around it anyway.

The success to any business is to quickly figure out - figure out what you can usefully make, and spend less.