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Do you feel like you have all the necessary requirements of an entrepreneur but do not feel like starting a business with a new idea? Or do you feel like you do not have an idea worth implementing into a business? Then you may be the ideal person to purchase a particular business in your area that the owner has already put up for sale.
To most individuals, buying an already existing business is an expensive move to make. While they are right, there is no doubt that the idea presents many benefits compared to starting from scratch. Other than saving time, buying a business presents fewer risks than starting one. For example, when it comes to finances, you will be looking at real profits and losses that have come with the business rather than working with rough estimates. You will have a clear history of the company operations and sales which gives you a perception of what to expect.
Moreover, it saves you the trouble of trying to acquire patents or copyrights. You also get a chance to drive a stagnant business in the direction you wish. However, buying a business is not as easy as a task as it may sound. You need to be careful before you indulge in looking for a business for sale. You need to ensure that you are positive about your decision and you are ready to go for it. Rushing into such decisions could lead to money and time wastage. Businesses are one of the biggest investments and must be treated with utmost care because after all, the aim of owning it in the first place is to make a profit and maximize it.
If you feel that you are ready to buy a business, and you are looking for a business for sale, it is advisable to ask the following questions to help you find the best.
What’s the business’s value?
The seller should at least explain how he or she reached the presented sale price. Although there is no formula for deciding how much a business should be sold, there is a formula to calculate its worth and it should be worth the price. Ensure that you are willing to pay for the price after evaluating its value. The price should be reasonable and the seller has to prove that it’s worth the amount they are trying to sell it for.
What will you acquire?
A business sale comes in different forms. It could either be in form of asset or share sale. It is up to you to decide first if you want shares of the business or all of its assets. If, for example, the business you are looking to acquire is a business for sale in Miami, and you are not looking to relocate to that area, you might be better off buying shares in the business and allowing the seller to stay on as a manager to run the business.
What is the company’s financial record?
Never forget to ask for a review of the business’s financial records and transactions. The sellers should at least have a record of the last two years financial accounts at hand. This includes the balance sheets, profit and loss account. Also, let them present the cash book so that you can track how the business has been performing. What about the business income tax return? It is also crucial to see a listing of all assets that the sale transaction will entail, inspect and evaluate them.
Do you have to look for employees or do you retain the existing ones
If it is an assets only sale, chances are that the current business owner will have to dismiss the employees and terminate the existing workers on the day of sale. It is up to you to decide if you want to renew the contract with them or find new employees to replace them. Consider talking to the employees and see of what value they are to the business before letting them go.
Are the stakeholders okay with the sale?
You have to ask what everyone involved with the business thinks about the sale. These include the staff, customers, and the suppliers. Ask them what they think about the business as they are likely to have interesting views that could be of help before you implement new strategies and tactics.
These are among the top questions that you should never miss. They will help you decide if you want to push on with the idea of buying a business or if you wish to reconsider. Doing all these by yourself can be a lot of work, especially if you know nothing how a business sale is performed. If you are looking for a business for sale for the first time, it is recommendable that you let professionals handle everything for you so that you can focus on other things like gathering and reviewing the finances of the business in question.