What to consider when buying a business
If you dream of being a business owner, but don't want to go through all the hassle and stress of setting up a business to run, then you may want to consider buying an existing business. This way you can still have your dream of running your own business, without the demands of trying to get a business up and running. Buying an existing business can also give you a leg up, when it comes to having a business that succeeds. If you buy carefully you can end up with a small business that is well on its way to becoming a larger and more successful business. However, it is important to keep in mind that buying a new business, will most likely be far more expensive then starting your own. If you take the time to plan and do the appropriate research, you can find the right business, already in existence, for you to run. Here is what to consider when buying a business-
- Choose a business that you have the skill set for-While there will be always things that you need to learn about your business, you will most likely find it easier and improve your chances of success, if you buy a business that you are already qualified to run. You want to be both knowledgeable and passionate about any business that you choose to buy. Keep in mind that because the business is already in existence, you won't have time to learn as you go. While you may be able to get away with knowing less, when starting your own business, you will need to be as informed as possible, when buying an existing business. Once you have decided what type of business, you are most likely to be able to run, that will automatically narrow down your choices. Once you have a list of possible candidates, then you can begin taking an in-depth look at their profitability and potential.
- Look at every aspect of the business-You want to take the time to carefully go over any business that you are considering. You should give every aspect of the business a careful and thorough going over. One of the first things that you should ask the current business owner for, is the business plan. This will tell you a lot about the real state of the business. If the business owner has a well thought out and well written business plan, that the business appears to be following, chances are the business is on a track to success. Keep in mind that if you ask for a business plan, and the owner looks at you blankly, then this is a red flag. You should move onto another candidate. After going over the business plan, you should also carefully check out all of the financials. While many businesses seem to be profitable, from the outside, only the financials can tell the real story. The financial documents should give you a clearer picture of the health of the company, you are considering buying. While the business owner may be hesitant to show you the financials, if they completely refuse to show them, this is usually an indication that the business is not doing well. You should then carefully consider if this is the right business, for you to buy.
- Don't rush the process-Many times' prospective business owners feel that they should rush through the process, and buy the first business they come across. It is important to remember that this is a very large and possibly life changing purchase. You should not have any money exchange hands until you are completely informed and feel 100% comfortable about your decision. You want to make sure that the business is has real value, carries as little debt as possible, is profitable now and in the future, and most importantly has real growth potential.