5 SECRETS TO BUYING A BUSINESS
When looking to buy a business, you must know what you’re getting into. Buying a business is exciting, but it can also be a minefield without the right advice. That’s why we’ve put together this list of 5 secrets to buying a business.
1. Buy What You Know
It’s always best to “Buy What You Know”. This does not mean you need to know every single detail about the business. At the very least, you should understand the principles of the business you are buying. The best place to start is to look at an industry you are familiar with and understand. Next, make sure the business you’re interested in is something you’re capable of running. Finally, don’t forget to factor in your skillset and experience – you don’t want to jump into a business that’s too challenging for you.
2. Do Your Homework
Starting a business can be a gratifying experience, but you must be upfront and honest with yourself; you’ve got a lot of homework! A few things to consider before purchasing: What is the business worth? What are the current financials? What is the company’s history? What are the potential risks and rewards? How well do you know the industry? How much money do you have to invest? Representations made by the seller may not always be accurate, so you must verify those details on your own. Check the facts before you buy.
3. Get Your Finances Ready
When you’re ready to buy a business, it’s essential to have your finances in order. Unfortunately, many people mistakenly believe that the business is the only asset they need to worry about. The reality is that the business is just one piece of the puzzle.
If you’re looking to buy a business, it’s essential to make sure you’re financially ready. Financing a business can be tricky, so start by getting your finances in order. Calculate how much money you’ll need to cover the purchase price and monthly expenses, and save as much as possible.
When it comes to financing your business, you can take out a loan from a bank. You may also want to consider less traditional sources of finance, such as angel investors or venture capitalists. Friends, family, and fools may be potential sources of capital. These sources should be approached cautiously, as they may have ulterior motives or be unaware of the full extent of the investment.
4. Seek Professional Help
If you are ready to buy the business, make sure you have your “acquisition team” – your banker, accountant, and lawyer – to help you. Your acquisition team is an absolute must to assist you in completing the necessary checks and verification. Once these checks and verification have been carried out, you will know precisely what you are buying and from whom you are buying.
5. Negotiate & Bargain
When buying a business, one must be aware of the dangers involved. The critical consideration is to figure out what the business is worth. It is essential to get a reasonable business valuation when considering buying it. Still, you should also be aware of the potential dangers involved in doing so. Always figure out what the business is worth, and do not rely solely on the books of account to give you an accurate picture.
FINAL TIP: Always remember, if something doesn’t smell right, no matter how many months you’ve put into the process or how much you want the business, you should not go through with the deal. If everything goes well, your lawyer can help you finalize and sign the sale agreement; the company is legally yours at that point.
Are you looking to buy a business? We offer video consultation via Lawyer Anywhere so that you can get the help you need. We will walk you through the process and answer any questions you may have. Contact us today to get started.