Buying an existing business: Should you consider it?
dreaming is as easy as falling asleep, why should fulfilling your
dream be any more difficult, especially when it comes to owning
a business? Why not buy one already in full swing? You can step
into an operation with a reputation, cash flow and customers.
Most wanna-be entrepreneurs do end up weighing the
advantages of buying a business vs. baking one from scratch. Perhaps
they have accumulated some cash and no longer wish to work for someone
else. Maybe they have the experience and skills to run a small business,
but no desire to start it from the ground up.
Business Administration estimates that nearly one-third of all
independently owned, non-franchised business startups are discontinued
within their first year of operation and two-thirds are shut down
within the first five. Makes an established firm with a solid history
look pretty good.
But buying a business has its share of tedious legwork
and planning, too. You may not have to find a location or customers,
but you do have to make sure the business is in the right area and
What to consider
There are several key elements to consider when looking at a business
for sale, both tangible and intangible. But the first question you
want answered is "Why?" Why are the owners selling the business
if it's the gold mine they profess it to be? There should be a good
reason from the owners, anything from retirement to just plain boredom.
Take that answer and begin the detective work needed
to evaluate the business. Look at everything and ask questions of
everyone involved, not just the owner, but the competition, the
local chamber of commerce, neighborhood programs, trade associations,
suppliers and customers.
Of course, the seller may want the pending sale to
be kept quiet, so make sure he's aware that you plan to approach
outside sources. Best not to botch the deal before you've even begun
You can do much of the investigative labor, but eventually
you will need the help of an accountant and an attorney familiar
with the buying and selling of businesses. They can take an objective
view, and help you analyze the significance of the information you