Learning to take over a shuttered business with no money is a little-known secret, which can help you get wealthy overnight with zero cash.
The reason is because when you take over a business, you also take over the salary of the owner.
And, that can often be as much as $150,000 yearly.
Unfortunately, a lot of businesses are shuttered due to coronavirus and won’t reopen.
As a result, many entrepreneurs will close their businesses and cease to operate; while others will seek a deal for someone to take over their business.
To get started, you should look for a business that is in deep trouble one that is about to go bankrupt.
Many of these businesses can be acquired with little or no down payment.
They could be manufacturing, service businesses, Real Estate based businesses, or almost any other type.
Why would someone offer a business for no money down?
Here’s why: The owner of a failing business will be glad to get out from under his bills and headaches.
He believes the business is beyond saving.
And, that finding a buyer for a heavily indebted business will be extremely difficult.
There are plenty of these cash-free takeovers available and even more will be advertised.
What you have to do is look for them.
Search through business ads in newspaper classifieds and trade magazines.
Check with local business brokers and local commercial Real Estate agents who also handle business sales.
Once you have found a suitable business, you must get all of the details concerning it.
For instance, you will have to find out how much the business owes and to whom, the value of the building and property itself.
What you are looking for are the firms whose inventory and assets are higher than their debts.
You must also consider the sales income and expenses in operating the business.
Look for such things as the gross sales, selling and labor costs, taxes, and so on.
This information can come from the firm’s account books, income tax returns, or from an account’s certified statement.
Explain your belief to the owner that you think you can turn the business around and make it profitable; but it will take at least two years.
Since this is your plan, here is a typical offer you make to the owner:
Now, be sure to have your lawyer draw up proper sales agreement before buying.
You should also try for an arrangement to pay the attorney’s legal fees from business funds, not your own pocket.
If you find that you absolutely must give the owner a nominal down payment, you can use any of the capital-raising methods described earlier.
However, you must insist on paying the bulk of the price with promissory notes.
And, you should insist that payments do not begin for a year, preferably two.
You will need that long to turn the business around and show a profit.
Once you have acquired your sick business, you must take steps to make it profitable.
The first step is to deal with the creditors.
Here is what you do:
Set up an appointment with each creditor to discuss the firm’s indebtedness.
Explain to them that you have just taken over the business and you would like to pay off all the debts as soon as possible.
Tell them the business has no cash at the moment, but that you help to start showing a profit in six months to a year.
Your strategy is to convince the creditor to accept a reduced settlement of the debt.
First, try to get a debt reduction of from 30 to 70 percent from the total debt.
You must also insist that no payments begin for at least one year.
Your third request will be for a long-term repayment plan for ten years, if possible.
Once your creditor has accepted the offer, make it legal by getting him to sign an agreement.
Through this technique alone, you will have reduced your debt by 30 to 70 percent, lowered payments by getting payoff time extended, and received complete debt relief for one year.
Taking care of the business debts has helped substantially.
It is now in a far better position to recover from its sickness, but you don’t stop here.
You can also:
Incredible as it may sound, there are many businesses that can be saved through these methods.
All too frequently, owners are completely unaware of the true value of their business.
In many cases, the owner has exhausted his operating capital and credit through mismanagement.
Your offer allows him to recoup some of his investment, and your offer may be the only one he gets!
You can use a variation of the promissory note method by offering the owner corporate stock as a down payment, or even as full payment if the owner is really desperate.
Assuming you set up a corporation with 10 other investors, the owner would be assured of a sales potential of ten customers for his stock once the business gets going.
Image By Gerd Altmann