You longer need to start a business from the scratch anymore. It’s a hard strenuous process. Plus, growth could take forever. Some intelligent entrepreneurs don’t have enough energy and patience for that, they just short-circuit the whole process by just buying a business that’s worth buying.
And the good thing is, bankers feel more comfortable giving their nod to businesses with a proven track record. But on the downside, buying an existing business could be more expensive than starting and building one. Here’s how to go about the whole process.
Choose the right one for you
Buying a business goes beyond buying one that just fits your fancy. You need to choose one that’s perfect for you and has a good profitability ratio or sales record. Carefulness is very much required in this stage. Look at this website to know what it means to make the right decision.
How financially capable are you? Review your financial landscape and consider the size of the business, the number of employees, geographical area and the costs of doing business in that area, taxes, customer patterns, return of investment, growth plan, etc.
Sometimes, you may have to seek professional help or advice, especially if you don’t have any professional experience yourself. These include business brokers, corporate financiers, lawyers, transfer agents, chartered surveyors, etc.
When looking for a business to buy, consulting google should only be a second option after you have asked your family, friends, and small business owners around you. Sometimes you may just have to keep it local.
Negotiate
Have you finally found a business owner who’s willing to sell his business? It’s time to move on to the next stage. I hope you have an idea of how much the business is worth too? You’ll have to negotiate the price with the seller now. However, you must have to brush up on your negotiation skills or find a better negotiator who can score a good deal. Decide on how you want it done—in verbal or in a written form.
As a rule of thumb, it’s good to have a budget in mind and consider the economic condition before you go to the negotiating table. Some businesses sell higher when the economy is expanding and vice-versa. Plus, don’t rush things, and don’t take things personally too!
Close the deal
Now you have the money, and you have reached an agreement with the seller. At this stage, you need to hire a lawyer. You must hire a lawyer that’s familiar with the whole process of buying a business. Remember, this means so much to you, so don’t make the mistake of hiring a novice.
Your lawyer will also offer you all the necessary legal advice and walk you through the process. You should know that this stage may go back and forth and may take time. So, it’s not as easy and straight as it sounds.
Mistakes to Avoid
Here is a list of the common and biggest mistakes to avoid when purchasing a business. Novices are fond of them. You don’t to be one of them.
Poor diligence. Due diligence is required of you when buying a business. You need to find out why the company owners are selling their company. Are they involved in any lawsuit? What about litigation holds? These are questions you should be asking before rushing to sign the deal.
Signing in your name. New business owners make the mistake of signing every contract in their name. This will make you responsible for any loss that may be incurred while running the business. You should enquire from your accountant the best entity structure for you.
Doing it alone. Many new business owners make the mistake of walking through the whole process alone. This is a ticking time bomb. The truth is you will require the help of a business broker and a lawyer no matter how street-smart you are.
The Takeaway
It’s also important you know the type of business you want and the value of any business you are about to buy. Plus, due diligence is required at every stage. Are you interested in learning more? Get More Information here.
