Question

Mike remembers his grandfather telling him, "If you can find something you like to do, and somebody is willing to pay you to do it, that's the secret to a great life." The way Mike saw it, this was his chance. For the past five years, he's been splitting his time between school and working at a local tree farm. The owner recently announced he was ready to retire. As Mike began creating a business plan, he contemplated what the business might be worth. How much will he need to buy this business

Answer 1

Options:

For starters, Mike

A. needs to understand that it's difficult to buy an existing business, rather than start your own. The key will be to meet with the company's accountant, and explain your interest. The accountant will have all the answers.

B. will want to determine the assessed value of the acreage that the business owns, and then bid competitively.

C. should speak with the current owner and determine the total value of assets (what the business owns), its earning potential, and its unique advantage.

D. needs to find a government database that outlines what nursery businesses are worth, on average, across the country.

Answer:

C. should speak with the current owner and determine the total value of assets (what the business owns), its earning potential, and its unique advantage.

Explanation:

It is somewhat inaccurate to say "it's difficult to buy an existing business", because there are several advantages of doing , such as already established market etc.

Mike's speaking to the current owner not the company's accountant may provide more information than what is known by the company accountant.

Having proper knowledge about the earning potentials and unique advantages of the company would enable Mike know what the business he is about to venture into is really worth.