Taking over a business that has already been established may be an ideal choice as long as you go into it with your eyes open. Carefully considering several important factors before you take the leap can ensure that you make the decision that is right for you.
Know What You Want
Obviously, you should have a good idea of your goals and priorities before moving to the next step. Consider factors such as where you want the business to be located, how big and busy you want it to be, the industry in which it is located and the lifestyle you will need to adopt as its owner. If you possess expertise in a particular area and are passionate about it, this might be the perfect avenue for you to pursue.
Put Out Feelers
Once you know which road to take and have a business type in mind, begin to do some careful research. This is where networking can make a major impact. Of course, you certainly go online as well when doing your research, but do so with care. There are many unscrupulous sellers just waiting to unload their flawed companies on the first unsuspecting potential entrepreneur.
Consider Hiring A Business Broker
If your own personal reconnaissance comes up empty, you may want to hire a business broker. Similar to realtors, these professionals can help you with the prescreening process and can negotiate the terms of the deal. Since they only earn a commission when they make a sale, however, beware of being pushed into a decision prematurely. If someone seems too pushy, find a different broker.
Hire a Team of Professionals
Once you have zeroed in on the business you want to buy, it is very important that you put together a team of knowledgeable people who can accurately assess the health and viability of the company before you make the purchase. This should include an independent business acquisitions firm, an accountant and an attorney. One question in particular that you should answer is whether the sale of the business will lead to a loss of established clients, who may opt to follow the previous owner. Furthermore, meticulously check to be sure that there are not any heavy liability burdens that you will be forced to take on once you become the new owner. Your team of experts should be well-versed in these issues as well as the many other important factors involved in assessing a company’s viability before purchase.
See if you qualify
Unless you have a trust fund or a financial backer, you will need to investigate sources to pay for the business you want to buy. Some possibilities include the following:
- Seller financing. You and the seller arrive at a purchase price and a payment schedule that you follow to buy the business. It usually includes interest payments.
- Venture capital. Someone offers to pony up the money you need for the sale. In exchange, you agree to run the business. If your enterprise succeeds, you will lose a significant portion of your profits to the investor; however, you will not be left holding the bag if the company fails.
- Business acquisition loans. There are many types of long-term business acquisition loans. Some are offered by conventional banks or credit unions while others are furnished by nontraditional online lenders. Determining which is right for you is a process that requires careful consideration. Since you are buying a business that already exists, many lenders are laxer with their requirements. Even so, your credit history will still come into play. Consulting with an independent adviser can help you to wade through the intricacies in this sometimes confusing and overwhelming search.
Once you have taken these steps, all that remains is to draft the sales agreement and sign on the dotted line. Enlist the help of an acquisitions attorney who can assist you in understanding all aspects of what you are signing before you pick up the pen. Once you have done the deed and taken the reins of your new but pre-owned business, you can begin to make it yours. With the correct diligence and planning, your enterprise can make a huge, positive impact on you, your employees and your community for the foreseeable future.
