Online Store7 Most Important Factors on Buying Business
- First, ask why the seller is selling. It may be the most important question you ask. Talk to customers. Are they satisfied with the business?
- Do a background check on owners and key personnel. Have they left a trail of unpaid debt, or do they offer you a clean slate of bill?
- Inspect all recent tax returns, and don’t take any financial statements at face value. It is best if the financial statements are accompanied by an audit letter from reputable CPA firm.
- Investigate for hidden liabilities that don’t show up on the balance sheet, and consult with an attorney.
- Assess the true value of the assets. These include hard assets such as equipment and inventory as well as soft assets such as the company’s name and reputation. Review the property that you will be purchasing along with the business and make sure it is transferred properly to you as the new owner.
- Find out whether industry competition has recently heated up and whether that’s the reason the owner is selling.
- Consider asking for a non-compete clause so the seller doesn’t open a similar business and steal back the customers and goodwill you think you’re buying.
What you must consider is successful businesses do not come cheap. The current owners have worked hard to build their profitable enterprise, and the price will reflect the lessened risk that such success represents. If you have the capital to buy the company, the skills to run it, and the stamina to stick with it, you may well be on your way to financial freedom.
