Acquiring an existing business is a process. It often focuses specifically on the legal process of transferring a business from an original owner to another owner. However, before you consider how the legal process works, consider the value in making such a transfer happen. It can be exciting and overwhelming to purchase an existing business. It also means taking on a great deal of responsibility in the process.
Before you consider buying a current business, ask yourself why you wish to buy it. What makes it an ideal choice right now? It could be that the business has excellent future opportunities. It could be that the price is right. However, consider the following before making the decision.
- Is the business still growing or has it reached its full potential and may begin to fall within the community?
- Does the business has the profit margin you need it to have to make the business a success?
- Would it be economically and fiscally stronger to start a new business from the ground up?
- Who is the customer base? Is that customer base too loyal to current owners or will it easily follow to the new owner?
- What is the true cost of owning this business? This includes legal costs, debts you will assume and the cost of running the establishment.
The more information you know about the business, the more educated a decision you can make. You may be purchasing the business from a family member or a friend. If that is the case, consider the overall economic sense it makes to purchase the business. In some cases, you may want to get a third party expert involved who can analyze the business’s true worth and help you to determine what the future holds for you if you should buy that property and invest in that business.
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