By Kathleen McNamara

It may be part of the American Dream to own your own business. But not every businessperson is cut out to be an entrepreneur. So, how to tell if you've got the gusto? And how to decide when the time and financial outlook are right to walk into your own business?

In a new book, "You Can Buy a Business -- How to Become Happily Self Employed," entrepreneur and professor Ted di Stefanfo offers a straightforward way to research, finance and purchase a business venture. He wrote the book from experience: after deciding that he didn't want to work for someone else, he bought his own company. Over the years, he acquired and purchased more than a dozen others -- some that he enjoyed, some that he did not. In his guide, he shares his experiences as he provides guidelines for those looking to purchase an existing business.

The book is divided into nine chapters, taking the reader from start to finish of the buying process. As an overview of the guide, we'll look at highlights of a few of these chapters:

Should You Be in Business for Yourself? -- Before you go looking for that perfect company, Di Stefano recommends you examine your business strengths and weaknesses. You can take psychological surveys or even consult an industrial psychologist to get an objective opinion.

If you're certain you have excellent fundamental basic business skills, di Stefano recommends looking for answers to deeper questions including the following: Are you willing to take risks? Can you handle this kind of investment of time and energy? Can your family?

Which Business to Choose and the Role You'll Play -- Next you'll need to master the art of due diligence. The ease of entry, competition, niche opportunities, technical and/or professional prerequisites, industry maturity, regulatory hurdles, organized labor and managerial strength should be main points of consideration.

And don't just look at profit, says di Stefano: "The simplest solution may not be the best one, and in this case the simplest solution -- go for the bottom line -- may be the worst choice you could make. ... You run the risk of being so dazzled by a fancy saddle that you fail to notice that the horse is on its last legs."

Locating the Right Sellers --In one of the best chapters in the book, di Stefano shows some creative ways to get the word out that you're looking to buy a business. He suggests that you first narrow down the specifications for the company you're seeking out, then begin networking. A good place to start is with your accountant. "An enormous number of businesses are bought and sold though accountants acting as intermediaries," he writes. You can also approach your lawyer in the same frame of mind.

Di Stefano further suggests ways to advertise your intent, even giving tips on placing ads in national publications such as The Wall Street Journal or your local newspaper.

And once you've found a potential business, you'll need to start asking questions, including not only the obvious ("Why is the business being sold?"), but the more detailed financial questions pertaining to agreement terms and how much up-front cash might be required.

Determining the Purchase Price and The Numbers -- In chapters four and six, di Stefano tackles the nuts-and-bolts financial side of the buying process. Part of his approach is psychological, showing how to draw up a financial "wish list" criteria.

He also offers the criteria you'll need to consider for calculating your offer: an independent appraisal, fair market price, cash-flow, gross-volume multiple and value added -- as well as the less tangible "gut factor."

Looking at the financial statements for a company, di Stefano recommends the help of a professional ("Let the number crunchers do what they do best," he advises). Yet, he offers a very easy-to-understand analysis of the main points you should look for when viewing the numbers for your potential business.

Using the fictional Marking Twain Appliance Company as an example, di Stefano takes you though balance sheets and income statements, breaking them down into their components. In this exercise, you can follow along, plugging your own numbers into the equation -- a good way to break down the intimidation factor for non-financial types.

Where to go for Financing and Structuring Your Leveraged Buyout -- Di Stefano offers two other excellent chapters on financing. In chapter seven, "Where to go for Financing," he discusses what to expect when approaching traditional banks or the Small Business Administration. Additionally, he discusses how you might finance the business though vendors, the seller him/herself, fixed payments, deferred compensation, sales commissions, pledges of accounts receivable, pledges of company stock and personal guarantees, among others.

There's also the option of placing your home mortgage up as collateral, but di Stefano advises caution. "Even if you have this level of confidence," he says. "It's important that the person who holds the title with you, most likely your spouse, concurs with your decision."

Chapter eight is devoted to ways to get financing from the business itself -- how to structure a leveraged buyout with the seller. You'll need to do your homework ahead of time with a cash-flow projection for the business, so that you can discover any underutilized assets such as uncollected receivables, excess inventories or real estate. And look beyond the tangible. "Many of a company's most valuable assets may not even show up on the balance sheet," di Stefano writes. "You don't have to go much further than Jell-O or Kleenex to recognize that a trade name can be of great value." Patents and copyrights can also fall into that category.

Courtship and Seduction: How to Buy a Company on Your Own Terms -- In the last chapter of the book, you'll discover why di Stefano was so successful in his own business ventures. He discuses how a great deal of self-confidence -- and the appearance of financial stability -- can make or break the deal.

After you've completed the book, you've presumably made it through the process. "You've made it through the complex, challenging path of business acquisition," di Stefano says. "It's time to celebrate until the wee hours, maybe take a day or two off.

"And this may be the last chance at a vacation you see for a while," he adds. "Good luck."

In summary, "You Can Buy a Business" is a quick yet comprehensive guide for purchasing your own business. Di Stefano, who formerly taught business part-time at the University of Rhode Island, gives a very straightforward and easy-to-understand overview of the many points you'll need to consider before you buy. He also offers some good examples -- both positive and negative -- from his own experiences.

There are a few points that di Stefano breezes through too quickly. The guide's chapter on building a business plan isn't as comprehensive as it could be. And there's only a small section devoted to taxes, when there should be an entire chapter. Overall, however, this book packs in a lot of useful information in an easy-to-understand format.

A last note: make sure that you read the appendices of the guide. These helpful tidbits include lists of Internet addresses for self-testing, local SBA contacts, and a section about franchising.