For many people, starting a business from scratch either seems too risky or too scary. Sometimes people cannot decide the kind of business that they want to stop. If you fall into either of these categories, then buying an existing business may be a solution for you. The first obvious advantage of buying an existing business is that you buy a system that is already in place. You do not spend too much money, effort into finding new customers, creating marketing strategies, generating sales, hiring new people etc. When you buy an existing, you usually buy a business that is up and running and has its basic infrastructure in place. Unless you intend to bring about some major changes in the running of the business, buying a business could be as simple as paying the money, putting your sign on the door and letting the revenues coming.
However, what is very important understand is that before you buy a business, you need to do very careful research. Your decision to buy a business has to be based on a careful assimilation of data and information regarding the business. Typically, you will need to examine the financial documents of the business such as income tax returns for the past three years, all legal existing contracts, statement for future projection of income, check the records for any lawsuits, bankruptcies or violations of the federal trade law etc. In order to accomplish the job of checking out an existing business before you buy it, you will usually require the assistance of an attorney, an accountant and even a banker. The reason for doing a thorough check of the business before you buy is that normally buying an existing business proves to be a much more expensive proposition than starting a business of your own. The high price is a cost that you paid for getting a working and successful system that is already in place.
Whenever you are considering buying a business, consider the following points.
Make sure that the business you’re buying is a fit with your requirements and personality.
If you buy into a franchisee, you should know that they usually require the business owner to adhere to a strict system of rules, procedures and policies. If you’re not comfortable with being told how to do business or being restricted in any manner, then buying a business franchise may not be the right option for you. However, if you’re most comfortable with doing executive jobs for a business such as making calls, managing employees, attending to paperwork etc. than the franchise might be very good option for you.
Make sure that there is an existing market.
One of the first questions that need to be asked when purchasing an existing business is why the business is for sale in the first place. The reason should not be that it is a dwindling demand for the product or the surface. If the business is indeed not doing well, then the reason for the lack of success should be something that you can fix after buying it.
Make sure that the company has a good reputation and is well-known.
This is an extremely important points to consider when buying a business. It is a fact that more than 90% of the businesses that offer franchise, direct selling and business opportunities go defunct within five years leaving their homes high and dry and sometimes even bankrupt. Make sure that the company were planning to do business with has been in business for more than five years.