Helpful Business Buying Tips for Buying the Right Business
Buying a pre-existing business has its benefits. There are chances that you could inherit a good location and hordes of repeat buyers. But it is important for you to realize if it is the right business for you. You need to consider if it is a business that you would be able to run for a long time or whether it would fizzle out when you eventually get bored?
Here are 3 helpful tips to ensure if you are investing your time and money in the right business.
It Must Be Right
This might look like a dumb thing to say. After all, how do you recognize the right business when you are not a psychic? But give it some thought for a minute and ask yourself these questions. Do you have a passion for the business? Is it a business that you would enjoy running even if you do not make any profits in the first 12 months?
A business is not a bed of roses. There would be highs and lows. You do not just walk away when the going gets tough. It is your baby to nurture and protect 24-7 and for 365 days in a year. If it is the right business for you, waving a white flag and giving up will never cross your mind. Besides, it might just be a phase. It could be a test of your resolve or a turning point for better things. If you have no drive for your business and just bought it because it was available for sale, you would probably bail out at the first signs of trouble.
Check Out the Books
Before you buy any business, check the books with your accountant. Profit and loss statements are only a scratch on the surface. They do not reveal the big picture. So never make a purchasing decision based on statements alone. Debts can be hidden and accounting practices can be crappy. You need to take out time to see how much comes in and how much goes out. In your bid to choose the right business in your situation, you need to see all the financial papers. This helps you to prepare a great business plan that you could use to attract investors or project properly into the future. It is imperative that you know what you are buying into.
Confidentiality is the Key
A business up for sale can have employees, contractors and even customers running helter-skelter. This can crash and burn your newly acquired business before it even takes off. If you are dealing with a business that has been advertised in the papers or by any other public means, ensure that you sign a non-disclosure agreement with emphasis on confidentiality. Try to also secure a non-solicit agreement where you can keep the seller around to help assure a smooth transition and not have employees jumping ship.
ABOUT THE AUTHOR: Alam Qureshi is a Certified Business Intermediary (CBI), Certified M&A Professional and Broker of Record at ProClient Brokers Inc., Brokerage. He helps business owners learn how to sell a business so they can get the maximum value for their company. call us 416 364 5550 or CONTACT US to get in touch.
Date modified: 6-8-2019