To alleviate the risk of business failure, you could buy an existing business instead of starting out from scratch. This isn’t to say failure is guaranteed if you start out on your own, of course, but with an established brand image and customer base, an existing business can be advantageous.
However, before signing on the lines of any contract, there are a few things you need to consider first. After all, you don’t want to regret buying the business months down the line, so a little bit (or a lot) of wisdom is important at the beginning.
Consider the following and keep them in mind if you’re currently researching businesses in your area.
#1: Your finances
Can you afford to buy a business? Your answer might be yes if you can meet the seller’s asking price, but there are all of the other expenses that need to be factored in. We are thinking of utility and insurance costs, for example, as well as the supplies needed for the successful running of the business. It might be possible to negotiate with the seller of course but commit to a reality check first. If you realize you can’t afford the business, you have two options. You could walk away and look for something within your price range. Or you could raise money to give you more financial power. So, you might seek help from friends and family or take out a commercial mortgage. You could also sell an annuity or consider crowdfunding as other ways to raise capital if you decide to buy the business.
#2: The seller’s motive
Why is the seller giving up their business? It might be that they’re retiring or have plans to do something else with their time. On the other hand, it could be because the business isn’t as profitable as they had hoped, so selling it could be their only way out of a financial jam. It’s important to find out the answer before you agree to a deal so don’t be afraid to question the seller. Check for negative online reviews too and look for mentions in the media. If the business has a bad reputation, or if you decide it won’t be profitable for you to run, it’s in your best interests to consider buying a different business.
#3: Your passions
After finding a business you believe will be profitable, you should still resist the urge to sign a contract with the seller. Before putting your name to ink, ask yourself this question: Am I passionate about the business in question? If your interest is solely making money, the business could be destined to fail. However, if you have a passion for the industry and the product or service being sold, you stand a greater chance of success. This is because you will be driven to keep going when you face obstacles on your business journey and less likely to quit. So, don’t buy any business on a whim or for the sole purposes of financial security. Instead, look for something that will get you out of bed in the morning to improve your chances of success and long-term happiness.
There’s a lot more to think about and we haven’t scratched the surface. However, we hope this article was useful to you. Continue your research online and around our site, and take all the steps necessary before buying. We wish you every success!