The Upside of Buying a Business
In reality, there are a lot of reasons why business owners sell their businesses. Business owners might be in the stages of their lives that their businesses aren’t fitted for them, or they just want to venture to other types of business, or maybe they’ve just grown tired and bored of their business.
You are not starting from scratch.
When you buy a business, you are handed a proven business model. Compared to starting your own, where you have to build from the ground up, buying a business entails fewer works to get the business running. What goes with buying a business for sale are employees, an existing inventory, established processes, inflow of cash, and financial records. As they say, time is money. The lesser time it takes for the business to start operating, the quicker the money will come in.
More secured cash flow.
Steps to Take When Buying A Business
Look for a business that suits your passion and interest.
Figure out the resources you are willing to invest in your business.
For example, in a franchised business, you will have less control of the biz, but you will have stronger support. On the other hand, should you decide to purchase an independent business, you will need to be more hands-on in running the business, which means more time to spend on it as you will not have the kind of support offered by a franchise business.
To also give you an idea of how much time is required in running the business, get insights from the business owner. Other indicators to consider are business size, location, and complexity of running the biz.
Have a strong support base. Hire experts.
Prepare a business acquisition checklist. Acquire all information needed for smooth business operation.
On industry and market:
Operations and company details:
Staffing and Management:
Get ready with your financial needs to close the deal.
After going over every step above, you’re now closer to your plan of purchasing a business. At this time, make sure you have already secured the necessary financial needs to make the purchase. There are several ways to secure financing; you can opt for bank loans, or you may forge a partnership with someone you trust. There are other financial institutions that also offer business financing if your bank disapproves of your loans or if you do not qualify for one.
Set a clear agreement on how the purchase will be made.
You can opt for an outright sale where payment and ownership are transferred immediately as the business is paid in full. You may also agree on a gradual sale term wherein a more flexible, long-term payment option is offered. In this type of acquisition, the ownership rights are transferred once full payment is made. Another route to take on how to buy a business when you do not have the full amount upfront is through a lease agreement. The buyer has temporary rights to run the business provided that contract conditions are met.
Have your lawyer assist you when closing the deal. As you make the final arrangements to sign the papers, make your lawyer is present. They will help you avoid legal pitfalls you may have missed along the way. As this is the most crucial step on how to buy a business, make sure you are ready for this day and are fully equipped with all the information needed to purchase, start, and maintain the business.