6 things you should do before buying a business

mm Paul Verbiton March 4, 2019
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business for sale

You have seen a business for sale banner, and you have made a decision – you are going for it!

Business financing is not a problem for you because you have many options, and an auto loan will help you buy vehicles with ease. Within a few days, you will be the sole owner of an already established enterprise.

Not so fast…

Look, if you rush to buy a business, there is a chance that you will succeed in it, but we cannot be wholly optimistic. If you don’t do everything right, doing this could be one of the biggest mistakes you make in your life.

Therefore, don’t wake up one morning and decide to buy a business. Doing this should be a well-thought-of process. Below are some things you should do before you dive in it:

1. Set goals

The reasons why some entrepreneurs fail is because they buy a business without setting goals from the outset. Before you hit the market, make sure you ask yourself this question: what do I want to achieve?

Nonetheless, your business won’t yield much if you set unrealistic goals. You may want to increase its revenue within one year, or maybe add significant value to it, and resell it for a profit. Regardless of the direction you choose to take, ensure that you have a well-laid-out plan that will help you achieve your goals and objectives in the shortest time possible.

2. Do some research

Why is the business being sold? Who are the owners of the business? Is it involved in legal and legit dealings? What’s its history? Has it been implicated in any misconduct in the past? What do its previous clients have to say about it? Is it worth buying? These are some of the questions you need to get answers for before you proceed and gain ownership of an already established business.

Remember, clients won’t mind whether the management of the business has changed or not, as long as they get quality services. Likewise, it will take time, effort, and resources to convince them to return to the business, if they weren’t satisfied by a service they received in the past. For this reason, you shouldn’t compromise the power of research before purchasing a business.

Also, you need to remember that multiple websites sell businesses. Therefore, don’t have limited choices. Explore as much as you can, and make sure you are going for a site that gives you the best deals.

3. Choose the right industry

Remember, not all industries do well in the area you want to buy a business. Also, you are not a Jack of all trades; hence you have a specific industry that you are sure you are good at. Therefore, when looking for a business to buy, choose a sector that is ideal for you. Go for one that you believe you will be able to manage efficiently, and which will help you realize your business and personal goals sooner or later.

4. Do an initial viewing

Whether you are buying a business online or in your local area, don’t pay for it until you do an initial viewing. You can even spend a day in the business, and get a glimpse of its operations. Look at how the management team is working, how employees relate to each other, and how well the clients are served. Simply put, study its culture.

Remember, buying a bad business is an expensive mistake that you cannot afford to make. Ensure that the person who wants to sell the business to you have made the employees aware of the same so that they can get prepared psychologically for the change and maintain their performance.

5. Do a thorough reality check

Now you know everything about the business. You know how they carry out their daily activities, and you know its culture inside out. However, this doesn’t mean that you need to proceed and buy it.

Doing a reality check is a process you cannot skip. Look at the underlying risks that you noticed during initial viewing, and look at whether or not you have the skills to fix them. Analyze your strengths and weaknesses, and determine whether they are fit for running the business as it is.

In case the success of the business is highly dependent on its current owner or key staff, be very careful. Key personnel might be the first to leave when you take over, and this might adversely affect the business. A reality check will help you choose the right business for your needs.

6. Ask for help

Finally, asking for help is not a crime, but one of the wisest decisions you can make before buying a business. Part with a few hundred dollars and pay for consultancy services. Also, you will need to pay a solicitor and accountant to go over contracts and figures, and advice you on the best path to take. It is advisable to spend money now and uncover risks now than do so one year after you have already purchased the business.

Also, you can ask your friends and family members what they think, and this might help a great deal during the decision-making process.

Category: Blog, Business
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Paul Verbiton

I enjoy spotting opportunities and doing my best to grab them if I can. I am eager to see the world, I love taking photos and writing, coming up with topics that are pleasant to read, funny, and interesting at the same time.

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