There are certainly pros and cons to both buying and starting a business. But you could also get caught holding a lemon. How long is their lease? These are all things you need to know. Network everywhere you go. They will make sure that contracts are valid and the income projections are reasonable.
Best of luck to you with your plans to buy a business. If you rely on retail sales, is the location one that will continue to attract traffic? Do you have specialized technical knowledge in a certain area?
That includes articles of incorporation, leases and tax returns for the last five years. A broker could be a good idea. Have they made use of cheap sources to fund the business? How long have the employees been there? The seller has already laid the foundation and taken care of the time-consuming, tedious start-up work.
Have prices fallen because of a dwindling demand? Just be sure that you make decisions on the business based on your judgment as the new owners and what is right for the business under your ownership.
Here is a partial list of questions you need answers for.
An Internet search can allow you to see what people are saying about the company. Think carefully about whether the business falls within the scope of your business plan and area of expertise. In addition to a day care license, you need an appropriate business license; acquiring it may form part of the requirements for obtaining your service license.
Determine whether the equipment is part of the sale. Typically, a sale is structured so you can cover the debt service, take a reasonable salary, and have some left over to take the business to the next level. What is the marketing plan? It took the seller time to find those employees, develop them and assimilate them into the company culture.
Look for the right fit Evaluate your skills, interests and experience. However, you may also be acquiring someone else's problems. How long have those receivables been on the books?
Then evaluate it carefully. According to Michael Gerber, author of The E-Myth Revisited, 40 percent of new businesses fail in the first year, and 80 percent fail within five years.
Ask yourself what level of skills and training the employees have and how their know-how can improve your existing business. How are they doing? Becoming your own boss always involves a risk. The same thing goes with accounts payable.
The on-going benefits of any marketing or networking the prior owner has done will transfer to you. Put your team together. By buying an existing business, you want to avoid the pitfalls of opening your own shop.
For example, state laws mandate specific levels of fire safety equipment, facility design and furnishings for day care centers.The SBA connects entrepreneurs with lenders and funding to help them plan, start and grow their business.
We support America's small businesses. The SBA connects entrepreneurs with lenders and funding to help them plan, start and grow their business. Choosing to buy an existing business is a valuable entrepreneurial feat that will impact your life, your community and the lives of your employees for years.
With the right connection and a lot of. There are many favorable aspects to buying an existing business such as an existing customer base, a team of employees and drastic reduction in startup costs.
You may be able to jump start your cash flow immediately because of existing inventory and receivables. But when you purchase an existing business, the "dirty work" has already been done. If the business you want to buy offers a product or a service, you can evaluate the operating history and better understand the demonstrated market.
By buying an existing business, you want to avoid the pitfalls of opening your own shop. Look for a business with a strong customer base, growing sales, good staff, established procedures and (most important) positive cash flow. With the purchase of an existing business, you will also be buying an existing customer base and vendor base that took years to build.
It’s very common for the seller to stay on and transition with the business for a short time to transfer those relationships to the buyer.Download