Perhaps you have been looking for a business to buy for a good while, or perhaps such an opportunity recently appeared out of nowhere.
Many questions need answers before you commit to a purchase. Here are six points to consider before you buy the business you have in mind.
1. Business type
First, determine if this is the type of business you want and that you are capable of taking over the operations. Make sure the purchase will be within your budget.
2. Reasons for the sale
Find out why the business is up for sale. Rely on a professional review of all pertinent documents to ensure there are no hidden liabilities.
3. Information assessment
Request income statements and tax returns for the past few years for review. Learn about the employees and the customer base the current business owners have built.
4. Business valuation
Order a valuation of the business to make sure you are not going to pay a higher price than you should. You and the seller should also agree on the mode of payment.
5. Inventory and equipment
Make sure the equipment and systems have been well maintained and that inventories have not become obsolete.
6. Key suppliers
Make contact with key suppliers. Ask if they will continue working with you if you decide to buy the business.
You will need a team of professionals, including an accountant to ensure the financials are sound and an attorney to ensure you do not make any legal missteps in buying and assuming ownership of the business you want. Purchasing a business is an exciting time in your life and after you complete your due diligence, you have the right to expect years of success with this new enterprise.