How to Buy a Good Business at a Great Price
Deciding on whether you will buy an existing business or establish a new one or franchise one can be a tough job.
Nevertheless, if you are decided on just buying a business, you must consider some factors first.
There are different factors that you must consider when buying a business. One is the purchase price of the business versus the actual business value. Paying more than the actual value of the business can definitely cause some problems that may result to failure. Then, in addition to the purchasing cost, there are also some personal factors that you need to consider. It includes:
- Financial status
- Risk tolerance
- Suitability on your skills and experience
Deciding whether you will buy a business must only be established after you have investigated the business thoroughly as well as considering those mentioned factors. Your success rate is clearly the best when you purchase an existing and profitable business. However, franchising can be most appealing to many people however; they must not purchase a new location. The best way is to purchase a resale that is profiting and already successful instead of establishing a new one.
New Business versus Existing Business
You have 2 challenges on starting up a business and that is developing your own product or service and guessing the amount people will pay for it. It requires a lot of research and guessing. You can see that it usually sounds great on paper but the actual tells you differently. According to studies, almost 96% of start up businesses does not succeed in the first 5 years of start up. You may want to startup a new business but to be able to reduce the risk of failure it is best to buy a good business at a great price and continue profiting.
Buying a good business usually involves much larger capital cost however; you can still reduce the cost and buy a good business at a great price. The hardest part is to find the right business, do some research, value the business, negotiate with the business seller, navigate around the obstacles and safely complete transactions in satisfactory manner. You can ask a business broker to guide you get a business at a great price. You can also seek help from your local government’s small business advisor. Nevertheless, you must be fully informed and fully knowledgeable about the business since you will be the one taking full and ultimate responsibility on securing your investment. It really pays off to search and research and does your homework first before jumping into any decision regarding the purchasing and establishment of a business.