Advertisement

Viewing tax filings in buying a business

Share via
Special to The Times

Dear Karen: I’m interested in buying a portrait studio in Texas. I went there, talked with the broker and the owner and looked over the facilities. I liked what I saw, but when I asked to see tax returns for the business the broker told me I could get access to them only after we agreed on a purchase price. Is this right?

Answer: Business owners are understandably reluctant to give their tax returns to just anyone. However, it’s nearly impossible for you to come up with an offer if you haven’t got a good idea of sales, expenses and profits.

“Who would make an offer on a house without seeing inside?” asked Gene Pepper, a Glendale business broker and consultant. “The seller can make this rule, but it will severely limit the number of prospective buyers.”

Advertisement

Pepper suggested that your offer be contingent on reviewing tax returns and on the acceptance of your financing terms. Adding this language may help: “Buyer reserves right to amend its purchase price after reviewing seller’s tax returns; buyer’s accountant and attorney must approve terms and purchase price of subject business.”

If the seller and broker refuse to accept that language, walk away from the deal, he said.

--

Running an eatery takes experience

Dear Karen: I’m thinking about taking out a loan on my house and buying a restaurant. Where can I attend a workshop on the restaurant business?

Answer: The restaurant business is complicated and high-risk. No short course or weekend workshop can give you enough information to be successful if you have no restaurant management experience, said Burbank food service consultant Art Manask of Manask & Associates.

Advertisement

“Unless you can attend a college that has a restaurant management curriculum, there is no way to gain the knowledge you need to do it yourself and risk your home equity in the process,” Manask said.

Without restaurant operating experience, purchasing and running an independent restaurant will be tough going. Buying one that is closed or struggling could prove to be a disaster. Your best bet would be to purchase a franchise outfit where you’ll get a lot of guidance, he said.

If you purchase an independent restaurant, “put aside part of your budget to engage a qualified and experienced restaurant accountant and consultant who can help with your concept, marketing and operations,” Manask said. “Also be sure you do your due diligence about any restaurant purchase, its financial history and potential.”

Advertisement

--

Keywords can unlock more sales

Dear Karen: I am a muralist advertising my services through my website. How can I use search engines to get more customers?

Answer: Identify the keywords that your customers would use to find your website from a search engine. Then put those words into the URLs, page titles and content of your Web pages. This will move you up in search listings, said Erin Presseau, strategic interactive manager for SilverTech, a New England website development firm.

“It’s surprising that more small businesses do not take advantage of search engine optimization. It’s virtually free and highly effective,” Presseau said. “This is one of the most important quick fixes you can make to your website to increase holiday sales, since more than 60% of online shoppers will use a search engine to find or compare products this holiday season.”

Look for search engine optimization tips and techniques online to help improve your rankings, Presseau said.

--

Got a question about running or starting a small enterprise? E-mail it to ke.klein@ latimes.com or mail it to In Box, Los Angeles Times, 202 W. 1st St., Los Angeles, CA 90012.

Advertisement