Many of us that share an entrepreneurial spirit would like nothing more than to own our own business and to live the lifestyle that goes along with it. Unfortunately, starting your own business from scratch can be difficult, which is why many people are now looking to purchase a business that will give them instant gratification. If you are shopping for a business, make sure that you keep these 5 things in mind, as they will help to make a difference in the outcome.
Consider Current Profitability – One of the more important things for you to consider is the profitability of the business. In some cases, the business may have enjoyed a very profitable past but sales may have recently slumped. This is known as a pricing gap. If this is an issue, you may be able to set up an agreement with the seller to adjust the final payment according to the performance of the business.
Financing – A difficult problem that you may experience is a lack of enthusiasm on the part of banks to loan you the money that you need for a new business. Even if they are willing to lend you the money, they may expect a very high down payment. Many entrepreneurs that want to purchase a business look for seller financing, as it can get them up and running quickly and without the hassle of bank financing.
Get Help – Do not try to go through the process on your own. Seek the help of a qualified business broker that can look over the paperwork and can help you to negotiate, if necessary, any part of the contract that may be questionable. This may cost you some money up front but it will typically pay off in the long run.
Keep the Seller – You will generally find it beneficial if you have the previous owner of the business continue to work for the business, even after you own it. This often does not need to be a lengthy transition, but having them on board for a few weeks or a few months can help to iron out any issues that arise quickly. It can also help to introduce you to existing customers.
Look to the Future – Any research that is done on the business should not only be with a view to past sales, it should also look to the possibility of maintaining future profitability. Although you can never account for the unexpected, you can look at trends to see where you will likely be standing in a few months or a few years.