Buying a business is exciting and it can be hard not to rush right into it. However, it is important to make sure you understand all the fine print before jumping into any purchase, especially a business. Be sure to invest the proper time and research into the minor details that can make or break your business deal.
1. Financials: This is a no-brainer! Financials are one of the most important pieces of the puzzle to evaluate when purchasing a business. Unless you are a finance professional yourself, do not go at this alone, make sure you bring on an experienced business broker to help you evaluate the company finances. You should review the last 3-5 years of company records to make sure you understand the complete financial picture of the business.
2. Assess Assets: Make sure that you take a close look at the company assets and understand exactly what you will be acquiring in the sale of the business. Don’t assume that you will be taking ownership of all items, it is important to take the time to discuss and compose a detailed list of all assets that will be included in the sale of the business. For example, if the company owns vehicles, equipment, or inventory, you will want to clearly outline what you intend to purchase.
3. Business Plan: Having a good business plan is key and you can never have too much information when forming your own business plan. Aside from your own ideas, talk to the current owners and your broker and take notes! Pay close attention to what works and what doesn’t for the company, if they don’t mention these things, never hesitate to ask those questions. Information is key when formulating your plan. Using successful business plan tactics from current owners and incorporating them with fresh ideas you bring to the table for the business will enhance your business plan overall.
4. Guidance: Buying a business can be scary enough which is why we can’t recommend it strongly enough, get yourself a good business broker to help guide you through the process of purchasing a business. There are many ins and outs and having the guidance of an experienced brokerage is worth its weight in gold. If not way more than that.
5. Legal liabilities: It is important to have a good grasp on the legalities that are exchanged when approaching the sale of a business. Hiring a professional, like a business broker, will make sure you understand all the legal ins and outs and that all of the paperwork and red tape is being handled correctly. Because there will indeed be plenty of it that will come along with purchasing a business.
While it is important that you do your due diligence when buying a new business it is equally as important, if not more so to find the right business broker to help you through the process from start to finish. If you are looking to buy a business and not sure where to start or need help with some of the finer details please reach out to us at 469-569-8347 or email us at Allen@pacificmergergroup.com
