Things to Consider When Purchasing a Business
Buying a business is really not considered the purest kind of entrepreneurship. However, it does have merits if you try it. As what they all say in movies, there’s always good in something. Here is the catch, buying an already existing business can be a bit risky as compared to building your own business. Why?
It is because several of the systems of an existing business are in place already. So here are some tips to make it a lot easier.
Search for Prospects
First thing for you to consider is to know what type of business you are going to buy. This can only be successful if you know yourself, your skills as well as past work experiences. So have a personality test. Once you know the result, list the business that you want to buy and match it to your personality. Ordinarily, buying an already existing business means you will be the owner and operator of it. Due to this, you must have a fairly good background about business hassles.
When you are going to have a list of businesses to buy, make sure that you search for it thoroughly. Ask reliable sources like your friends and colleagues. Inquire if they know a business that is for sale. You might also want to seek the assistance of your accountant and attorney as well as your banker in searching for business to buy. Shop around trade associations. You can also look in the classified ads of the newspaper or browse online.
Once you have your list ready, be critical with your prospects. Have a deliberate research and investigation on your target business before buying it. You will have to include in your research the background or history of the business, who and when it was founded, the inventory, supply sources, competition, and the reasons of the owner in selling it. Also include its profitability while it was operating, see if their profit is increasing or decreasing. Analyze its expenditures as well as the expenses of its business operation and compare your analysis to other business of similar type and nature. Consider also requesting from the owner a permit to have a look on the business establishment. The key for you to have the best buy is to spent a lot of time with your target business in order for you to form ideas about it as well as being familiar with its daily business operations.
Have a Purchase Strategy
Construct a strategy on your purchase. You have choice in this case. First is to buy the balance sheet. It includes the assets and liabilities of the business. Second is to purchase the assets only. It is, however, advisable for you to select the second choice. Purchase only the assets and let the owner take care of the liabilities. Furthermore, you have to check the business’ market value so that you can set the right price. Seek the help of an accountant in this case.