Tips for Buying an Existing Business

buying a business

When the time comes to start your journey towards entrepreneurship, one option that can help you get up and running fast is to buy an existing business. There are a lot of benefits to taking this approach, with a few pitfalls as well. You’ll want to take the right steps to make sure everything goes as smoothly as possible. Learn these tips and tricks to buy a business, including the benefits and drawbacks, so that you can make the best decision.

Buy a Business: Benefits and Pitfalls

Perhaps the biggest benefit of choosing to buy a business rather than open a brand new one is that an existing business is already up and running. You’ve got no startup decisions to make, no new equipment to buy, no staff to hire and little startup overhead. You’re picking up something that’s already running and continuing it along. Sure, you’ll make changes as you go, but a lot of the hard work of establishing a business has been done for you.

The downfall is that the business will also come with pre-existing problems. Staff tensions, resistance to new management styles and even any poor customer relations from the past can come back to haunt you. You’ll need to be prepared to deal with these issues as well as any pre-existing financial obligations to the business.

Make the Proper Choice

Buying a business is never as easy as walking into a place, making an offer and closing a deal. You want to be sure you’re buying the right kind of business for your needs. When you start a new business, you’re building exactly what you want. When you buy, you’re getting something established. Only buy if it’s very close to what you’re looking for already.

Do Your Research

Read books. Hit the Internet. Hire a professional business broker. Do everything you can to research businesses for sale in the region as well as the benefits and pitfalls of each. The more you know about the business you’re buying at the outset, the less likely you are to encounter unpleasant surprises down the road.

Look In-Depth

When you’ve settled on one or two businesses that may suit your needs, perform an in-depth research, analysis and cost valuation of the businesses in question. Bring in your broker, your banker, your attorney and any investors you’ve got to look at the acquisition from all angles. Again, the goal is to make sure you know exactly what you’re getting and don’t hit any unexpected complications.

Consider everything you can about the business from the smallest details to the biggest picture, including:

  • Furnishing and amenities
  • Equipment
  • Incorporation status
  • Tax returns and financial statements
  • Sales and performance records
  • Location
  • Liabilities
  • Accounts
  • Debts
  • Customer reviews
  • Organizational charts
  • OSHA compliance
  • Corporate history

The more you know, the better off you’ll be.

As mentioned, one of the best resources to buying a pre-existing business in Memphis is to hire an expert business broker. Read a bit more about what a broker can do for you, and get in touch with us for answers to any of your questions today.

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