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Business Brokering
Newsletters Courtesy
of
Broker Service
Network Inc. II
Index
The acceptable
Return On Investment on
business brokers businesses
for sale.
Don't be fooled - or let
business brokers deceive you -
by the misconception that you
can make back your investment
within the first year on
businesses for sale. Yes, it
is possible - if you have a
heavy note being held or you
drastically increase sales -
but it's not the norm. The
more accepted Return On
Investment - ROI - is
two and a half to three years
after purchase. See our
business broker rules of thumb
for a definitive break down on
businesses for sale. If you
are waiting to find 100% ROI
the first year then you may be
waiting a long time.
That is not to
say that you will not make
money. If you invested
$450,000 in cash and make
$150,000 per year in profit
then you will have a 3-year
ROI yet be making 150K per
year. Unethical business
brokers will try to deceive
you here - be careful.
Keep in mind
that ROI is determined on the
businesses for sale current
cash flow. Increasing current
sales will decrease the ROI
time frame. IE: double the
sales will decrease ROI time
by 50%.
General Rules
Of Thumb...
-
100% cash =
5 year ROI ( BUT no ongoing
loan payments)
-
80% cash = 4
year ROI ( and small ongoing
loan payments)
-
60-70% cash
= 3 year ROI ( and
manageable ongoing loan
payments)
-
40-50% cash
= 2 year ROI ( and high
ongoing loan payments)
-
20-30% cash
= 1-2 year ROI ( and very
high ongoing loan payments)
-
The more cash
down, the better return rate
- less debt expense
-
The more
financed, the quicker ROI
-
If you are
going to spend more than 25%
of sales on debt expense
then it's a huge risk
Most businesses for sale
through our business brokers
will fall into these ratios
BSN has certified all business
brokers in our network
Talk to your broker about
this newsletter
ALL BSN business brokers
have completed our
comprehensive 3-day training
seminar and are active
members in our ongoing
training and vast support
network.
We train and support
business brokers throughout
North America with the most
comprehensive network in any
industry. BSN Brokers
complete a 3 day
comprehensive training
certification program then
find his or herself
supported and backed by toll
free support, the world's
largest interactive broker
network and/or any other
help they need to succeed.
Brought to you by certified
brokers of
Broker
Service Network Inc.
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Businesses For Sale Newsletters by Broker Service Network Inc.
Ethical brokering practices