The Best 7 Tips For Buying a Business

The process of starting a company from scratch can be overwhelming. That’s why having the ability to buy a business that is already running makes so much sense. An income stream, employees, vendors, and customers are available to the new owner immediately. But, if you’re considering buying a small business, even with professional advisors, the process requires time, research, and careful planning.

1. Buy a business that is already running

If you are going to spend the time, effort, and money in buying a business, it will be much easier if that business is already established. Starting from scratch means finding customers, suppliers, financing, and employees. All of that takes too long when starting a new venture. On the other hand, buying an existing business gives you instant access to everything listed above, plus existing cash flow and credit lines.

2. Conduct research to find the best fit for your skills and interests

In buying any business, hiring the right employees is critical. It makes sense to find a company that matches your skills and interests, so you can minimize employee turnover and maximize productivity. This research will help you determine if your prospective company’s products or services are in demand, which customers they serve best, how long the current owner has owned the company, and where additional growth opportunities exist.

You want to make sure to buy a company that matches your skillset because you don’t want to have to learn how to run an existing business on the fly. Be careful not to get caught up in a venture that is completely different from your experience and expertise when making decisions about buying a business.

3. Meet with professionals such as lawyers, accountants, and consultants

After narrowing the list of potential businesses to purchase, hiring experts to evaluate and negotiate a deal is a wise move.

• Lawyers can help by reviewing contracts and advising on how to structure the transaction.
• Accountants can assess if the financial statements are accurate.
• Consultants will analyze the company’s sales volume, profitability, management structure, and other factors that affect its value.

4. Find financing options if needed

If you don’t have the funds to purchase a business right off the market, you might need to consider getting a business loan. A business loan will allow you to secure financing for your purchase. In addition, they come with a great tax benefit of deducting the interest on the loan from your income taxes.

5. Be aware of any liabilities or debts the company may have before buying it

In most instances, you will be responsible for any business liability or debt when you buy it. You need to do your due diligence and make sure that you understand any existing liabilities before agreeing to a purchase price. This is why working with your attorney and accountants is so important. They can help explain the financials of the company before agreeing on a sales price.

This includes being aware of potential lawsuits, bankruptcy proceedings, employee benefits, or lawsuits because any costs associated with these issues become part of the purchase agreement and are ultimately paid by the new owner.

6. Know what type of industry you’re getting into – some industries are riskier than others when it comes to buyouts like restaurants, retail stores, and manufacturing businesses

When it comes to small business buyouts, some industries are fraught with risk compared to others. For instance, restaurants and retail stores tend to have higher failure rates than manufacturing businesses because of the number of start-up costs needed.

The most important thing you should consider when buying a business is your motivation. You must know why you want to own a small business because this will help determine your risk tolerance level as well as how much time you spend working at the company each day. Knowing why you want a particular venture will help determine whether it will be worth the risk or not.

7. Get professional advice

Sunbelt Business Brokers can help you find a business that matches your skill set and interests. We work with you every step of the way, and we will be able to evaluate all of your strengths and weakness.

Our team is not just about matching people with businesses but also finding the right fit for the customer. We look at a business’s products or services to determine if it’s in demand, which customers they serve best, how long the current owner has owned the company, and where additional growth opportunities exist.

Sunbelt Brokers also meet with professionals such as lawyers, accountants, and consultants so we can offer you advice. Our team takes the risk out of buying a business, so you know that your future is in safe hands.

Contact us today to get started!