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IMPORTANT FACTS TO REMEMBER WHEN CONSIDERING A BUSINESS
In most instances in order to successfully purchase a business, it must provide two items:
1. Cover your Debt Service
2. Earn you a Living
When considering buying a particular business, think of a TRIANGLE and remember that you should receive and have benefit of at least two of the points of the triangle as outlined below.
If the cash flow needed for debt service and to provide you with a comfortable “living” is poor, then you should consider the selling price and terms. Are they both very attractive? If they are, then you still are safe to consider the business.
If the Cash Flow is relatively good, then you MUST have either attractive terms or an attractive price as the second point of the triangle. NOTE: You really should be more interested in attractive terms then in the total price of the business.
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