What to look for when considering a business for sale.
There are advantages and disadvantages to purchasing a business for sale.
The advantages of purchasing a business for sale
- With careful investigation, you know what you're getting into
- You'll know what to expect
- You can start making money the day you take over
- You already have a running business and don't need to until the business builds momentum to get started
The disadvantages of purchasing a business for sale
- The business for sale is already moving in a set direction. If you want to make a lot of changes, it may not be a good idea because the customers may already be used to the way the business has been operated. A change may disrupt the flow of business.
- You may take on more liability than you think; the previous owner may have liabilities that could come back to haunt you.
- You could pay a lot for "good will," that is the customer base the business has acquired. You have to be sure it's worth it.
What to do when looking at a business for sale
1. Why is the owner selling?
2. Look at the books and previous tax returns
3. How long will it take to recoup your investment?
4. Once you're satisfied and willing to make the purchase, make sure you have a good lawyer to search for liabilities the business for sale may have, and create a contact that keeps you free from all past liabilities.
That's The Way I See It!
Acey Gaspard
Leave a comment