Consider These 7 Factors before Buying a Small Business
Startups are very tough ventures because one needs to select a good location, carry out various construction tasks, market it, and a whole host of other activities. These reasons and other make it worthwhile to buy a business that is already running. However, you cannot just put your money in the first business for sale you come across. Let's take a look at the 7 factors you should consider before you buy a small business.
A Carolina Biz that is bought from an elderly person is bound to succeed more than one purchased from a young person. The reason being the fact that their decisions are motivated by their desire to retire. Buying from a young person is very risky because he or she could have discovered that the future of the business is no longer as promising as it once seemed.
Get information on how the selling price has been computed. This consideration is critical because you will get to gauge how much bargaining power you have. The existence of an elaborate price breakdown will diminish your bargaining power. However, if the price has been arrived at arbitrarily, luck may be on your side.
You cannot possibly assume that you know everything about the business you wish to buy. It is prudent to assume that there is a skeleton in the closet so that you can tread carefully. Related articles pertaining to this are provided at http://www.ehow.com/business/small-businesses/. Whether there is one or not, you need to prepare yourself for any unwanted eventualities that you may encounter. This situation is best dealt with by reserving some cash to deal with such issues.
Consult a business strategist, accountant or tax professional before you buy a small business. Such professionals will enable you to see things from a different, and more informed perspective. Ask them to help you in valuing the assets of the firm in question, offer strategies for continuity, taxation and other crucial aspects of the venture.
The best business to buy are those that are operated by several people as opposed to a single individual. Note that majority of the small business on sale from this website are operated solely by their owners, which is not so good for your intentions. The reason for this is that you may lose customers who may later on learn of the ownership change, unless there is an effective succession plan in place. Make arrangements with the current owners to remain visible to such customers for some time, which will also give them the chance to get to know you.
Inquire into the presence of past, present or future lawsuits. This step will ensure that you do not take over a business that is riddled with legal issues. A written confirmation from the seller is, therefore, critical in this respect.
Speak to a few current and past customers of the business. Failure to do so may work to your disadvantage. The information you receive will help you determine the viability of the business. It is also advisable to avoid a small business that depend on a single client for profits and survival because your operations could cease if you lose that customer due to one reason or the other.
