5 Essential Tips When Buying an Existing Business
Sometimes starting a new business is a hard way to become your own boss. What about purchasing an existing business and taking it to the next level? Many entrepreneurs find success with that business model—instead of starting from scratch with a new business idea.
When the time is right to buy an existing business, make sure you follow the right steps to take advantage of the opportunity. Buying an existing business requires understanding the market, products or services, and understanding the legal process for becoming the business’s owner.
With the right approach, you could purchase a ready-made company that’s already generating income! Follow these five tips to buy a business.
Make Sure It’s the Right Fit
What’s your passion? What industry is your specialty? You don’t have to be an expert in a specific sector to buy a business, but it can help your success if the company offers products or services you enjoy.
A too-good-to-be-true business might seem like a good idea, but make sure you can surround yourself with the right team to make it profitable. A company should also fit your style! Choose a business that’s a good fit for you if you plan to make it your primary source of income.
Research the Market and Company
Is the business already doing well? Does it have a price tag that seems too low? Why are the owners selling?
Ask these questions (and more), then research the answers when learning how to buy a small business. If there’s a reason the business is struggling, take notice. A bad location or poorly managed business model could be signs that the company will never be successful.
However, if you can take a business with “good bones” and revamp the business plan, you could have a profitable company where others have failed.
Read the Fine Print
You don’t want to buy a business with a history of legal and financial problems. Review the financial and legal history of the business before committing to the sale—especially if the price of the company seems too low.
Bring in your team of professionals to help you with this research. A lawyer and accountant should review all financial and legal documents, then provide insight into the health of the business.
Negotiate a Deal That Works
Working with a business broker can keep you from overpaying for a business. Hire a business broker to handle the transaction paperwork and help you negotiate a deal that works for your financial goals.
Find Your Funding
Unless you’re writing a check or paying cash, you’ll need business financing to complete the sale! Know your budget and be prepared with the funding you need when it’s time to close on your “new” business.
Be Smart When Buying an Existing Business
Buying an existing business can be a smart (and profitable) way to build your income—but make sure you don’t cut corners to expedite a sale! Follow these tips and set yourself up for success.