What to know before you buy a business

Before buying a business get your thinking right, because the quality of your choices will play a large part in your success.

What to ask:

1. Are you business ready? do you understand your skills, strengths and weaknesses, and have the necessary resources and support?
2. Do you have the skills? is the business in an industry you have or can gain experience in? Will it support the lifestyle you want?
3. Is there a market now and tomorrow for the product or services this business provides?
4. Who the competitors? Are they a threat, and how competitive is the market in which it operates?
5. Who are the key customers? What do they represent? Are they are friends or related to the current owner?
6. Customer contracts – what’s in-place, the terms, and contractual arrangements with suppliers – can these be readily transferred?
7. Why is it for sale? How profitable has the business been over the last three years, what are the trends? Your accountant will help here.
8. The leases, contracts, employment matters and or intellectual property – ensure it’s all legally sound – use your lawyer to assist here.
9. That what you pay is fair and reasonable; that all plant and equipment required is in good order and listed, that the stock has been accounted for and valued appropriately, and that any goodwill is appropriate.
10. Define the legal structure you will use to operate the business, how you will fund and service the borrowing of the business plus how you will contribute to its success.

Owning a business can be very rewarding, apart from the potential to amass wealth, you get to decide when and how long you work, who you work with, and the manner in which you produce the product or service. In buying any business, always do your homework and consult with professionals. For more on this watch our 3 min video on What to know before you Buy a Business http://youtu.be/sQoB3oz1e7I