When you’re working hard for a company, it’s not hard to dream of owning your own enterprise in which you get to make the decisions and chase your own goals. However, it’s no secret that starting a business and making it past the first critical years is a very difficult undertaking. If you’re not sure whether you have the skills or patience to build something from the ground up, buying an existing business is another option. But before you make your purchase, consider these tips.
Know what you want
Before you launch yourself into the world of business ownership, you should ensure you have your priorities in order. This includes determining what your personal strengths are and what you want out of your work lifestyle. For example, if you hate animals, owning a pet store would obviously not be the best decision. Jared Hecht of Entrepreneur points out that you should also know what industry you want to buy into (based on your strengths), as well as the approximate size and location of your ideal business.
Find a business candidate
Finding businesses for sale can be tricky, but sometimes a perfect opportunity finds you. Entrepreneur recommends that you start looking for an establishment in your area first by utilizing your personal network. Depending on the size of business you are looking for, maybe you know of a personal favorite that is up for sale, like a coffee shop or a small store. If you’re looking for bigger fish or your local search is unsuccessful, move on to resources online, such as BizBuySell. Be extra cautious if you search online, though, because bad deals or scams could be lurking.
Do your homework
Let’s say that you find a business that looks appealing and is in your price range. Norm Silverstein of SCORE told the Small Business Administration (SBA) that this is when the real hard work begins. Called the “due diligence” process, this is when you ask for access to financial documents to make sure you have a clear picture of what’s going on behind the scenes. A shop might look nice and busy as an observer, but a close look at profit and loss statements might show that it is actually losing money. You want to see as much as possible, from lease conditions to cancelled checks to tax returns and more. At this point in the process, the SBA really recommends the support of an expert, such as an attorney or accountant.
Ask for help
You’ve seen the documents and you feel sure that you have found the business that is right for you, but you shouldn’t sign any papers quite yet. Just as you would have a house inspected by a third party before you close the sale, you should consider bringing in an expert to go through everything and confirm your choice. For instance, SCORE, a nonprofit association supported by the SBA, provides access to volunteer mentors in more than 60 industries that can offer you assistance. On a local level, consider a business contact you trust, like a lawyer or an accountant. It’s possible that in your excitement, you might have missed an issue you should be aware of before it becomes your problem, and another pair of eyes can help point such issues out.
Buying a business is an appealing way to become a small business owner without having to suffer through the difficult startup process. If you ask the right questions and pay attention to all the facts, you could finally live the dream of being your own boss.
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