Make sure your lawyer and CPA go over these with a fine-tooth comb. They will make sure that contracts are valid and the income projections are reasonable.
They should be broken down by product or service. Get a detailed list of all liabilities too. Has the owner borrowed money against any of the assets? Have they made use of cheap sources to fund the business? Are there any pending lawsuits? Are there any employee benefit claims to be settled in the foreseeable future? Your attorney and CPA can help establish this.
Are the accounts receivable good? How long have those receivables been on the books? What is the quality of those receivables? The same thing goes with accounts payable. Make sure the business owner is able to pay her bills on time. Look at the price list. Has the owner been able to increase prices over time? Have prices fallen because of a dwindling demand?
If you rely on retail sales, is the location one that will continue to attract traffic? You depend on Starbucks to bring you the traffic. How long has Starbucks been there? How are they doing? How long is their lease? These are all things you need to know. Are you trying to buy an existing business now? Have you bought a business in the past? What was the process like?
What do you wish you had done differently? Please note that the opinions of the commenters are not necessarily the opinions of this site. Checklist of some of the basic things to lookout for when buying a business! Do your due diligence! I think it is important to clarify one point on item 4. Yes, brokers will negotiate the selling price, but if you contact a broker they will only show you businesses that are in their inventory.
When they negotiate the price they are working for the seller. The broker gets paid a percentage of the actual selling price so it is in their interest to keep the price as high as possible.
But just remember that they work for, and are paid by, the seller. If negotiations or business valuation are not your strong suits, you should have an experienced person — perhaps your CPA or attorney negotiating for you.
In my experience, buyers hiring a broker and paying them a fee to negotiate a deal is extremely rare. I started my business on a folding table 25 years ago. Your detailed article about opening a business offline reminds me of the similar hassles of opening a business online.
There are so many things to prepare for to initiate a business and sustain it but it seems that many people take these initial preparations lightly. I have known people who would open 3 restaurants in a row and failed, so they have plenty to say about how to fail in business. I prefer business with low-start up cost and low maintenance cost with reasonable profit. To help you determine a fair price, seek advice from a solicitor, accountant or business advisor.
When starting a business, you will need to decide whether you are selling products or providing a service. Changing the structure of your business can be a big step. Assessing yourself and your business idea is essential before starting a business. It can help you prepare for any hurdles and help you overcome them. Home Planning New businesses Buy an existing business. Buy an existing business Last Updated: Thanks for your feedback. Please provide your comments in the feedback form. Feedback News Subscribe Share.
Dec 12, · Plan for a new business or an existing one? As you plan for the business you purchase, you start by making an important choice: business plans can be either for startup new businesses or for already-existing and ongoing business. When you buy a business from somebody else, either option is acceptable. This is a choice you make/5(4).
But when you purchase an existing business, the "dirty work" has already been done. If the business you want to buy offers a product or a service, you can evaluate the operating history and better understand the demonstrated market.
We would like to show you a description here but the site won’t allow us. Whenever you take out a loan to buy a business, there is a high chance that your lender will want your business assets as collateral. If you pledge your assets as collateral, the lender will likely file a UCC lien to make sure any future financing you want to get is aware of their claim to your assets.
Jul 11, · Expert Reviewed. How to Write a Business Plan for a Small Business. Three Parts: Preparing To Write Your Business Plan Writing Your Business Plan Finalizing Your Business Plan Community Q&A A business plan refers to a written document that comprehensively outlines what your business is, where it is going, and how it will get there%(). There can be many good reasons why buying an existing business could make good business sense. Remember though, that you will be taking on the legacy of the previous business owner. You need to be aware of every aspect of the business you're about to buy.