Finally, the New Year is here and you can embark on that new venture you have been dreaming of – being your own boss. Before you walk into the first building with a ‘Business For Sale’ sign, you need to know exactly what you are doing. It is not smart to jump into a situation simply because “it’s about time”.
There are several benefits of buying an existing business, over starting one from scratch, but there are also some pitfalls. You should ask yourself some important questions before you make this important decision.
1. What exactly do you want?
Do you want the business because it is a good move, or simply because everyone else is doing it and it is in your five-year plan? You need to note that running a business is a full time commitment. This is not something you can do on a whim.
You will be changing your whole life, and this will take a huge amount of your time, energy and resources. Make sure that you know the type of business you want to buy, and determine how involved to want to be in the business.
2. Do you have a business plan?
Before you can even think of buying a business, you need to have a business plan. You cannot start a journey without a direction or an idea of where you are going. Without a business plan, you will be setting yourself up for failure.
You need to know how much you want to put into the business, and how much you expect to get out of it. Having a business plan will allow you to set short and long-term goals. Unless you have substantial assets, you will need the plan to get financing from any institution.
3. What is the buying process?
If this is your first time buying a business, then you should be prepared for a process that can be quite complex. You need to get professional help in order to successfully negotiate and buy the business. Buying a small business for sale is a process that requires a lot of research and paperwork.
You have to carry out due diligence to know the value of the business, so that you can determine if the asking price is fair. You cannot assume that what the seller is asking is the real value of the business. A business valuation will help you in the negotiations.
Owning a business can be an exciting prospect, but you should be prepared to deal with challenges along the way. Understanding what you are getting into will prepare you for the responsibility.
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