As any entrepreneur will attest, starting and running a small business is no picnic.  Dedicated business owners know that it is rare to “get rich quick” no matter how well you run the company, but the best entrepreneurs never stop learning.    One of the best tips for buying a small business in this economy involves learning how to manage cash flow.  This one skill alone can make a noticeable difference in how quickly the business grows.

Even when the business is doing well, cash resources can easily be sucked up by growth-oriented expenses.  In order to move to the next level, you must finance new real estate, hire more people, and lease more equipment.  On top of all this, you will need to pay a higher rate of taxes on corporate profits.  With so many businesses struggling to stay afloat, it’s not surprising that some have had to take out a loan to pay their taxes.  But managing cash flow wisely can do a lot to minimize a company’s tax burden.  The most important tips for buying a small business is to always keep your eye on tax liabilities.

One of the most reliable business directories, BizSale.com, has published a blog on this subject, entitled “Tips for Buying a Small Business and Creating Cash Flow”, and they recommend buying a new truck.  Rather than stashing away cash for your tax bill, take advantage of Section 179 in the tax code and deduct the full sale price of a used truck or other piece of equipment.  This law allows businesses to deduct the full value of a new asset, up to $250,000, rather than spreading out the depreciation over 5 to 7 years.   Getting the tax deduction for this purchase immediately will reduce your businesses’ taxable income and thereby increase cash flow.

This tip for buying a small business is nothing new, and was even recommended by a blog for the New York Times (“Buying  a Truck Can Create Cash Flow”, April 7, 2010).  Whether you’ve found an existing business that interests you, or you currently own and run a small business, BizSale.com offers a wide range of information for the entrepreneur.  In addition to one of the most comprehensive business-for-sale-by-owner directories, they also feature a regular column with tips for buying and selling a business.