Note Factor It When You Buy A Business
You have a lot of money, but do not want to invest to start a new business? Buying an established business that might be suitable for you. The reason these businesses more certainty, less risk or at least stable enough.
Buying a business will be one of the appropriate solution. You no longer need to bother looking for customers because they already exist. In addition, it provided a record of what could sold and what is not, which is collected from the experience of the previous manager. You only have to focus on improving the business rather than start from scratch because almost all of the necessary infrastructure and equipment already available. To buy a business, here are some factors you should consider:
The most important asset that you can obtain in buying a business is the customer. Although there have been a good product or adequate infrastructure, building a customer base is one thing that takes a long time. It takes patience and consistency are high in order to foster the number of customers, not including foster customer loyalty to a product or service is launched. Make sure also that the customer is satisfied and they will not switch to other providers of products or services despite business owners who now have to sell it to you.
Know the value of each employee that you have. Hold a meeting with them. Ask them about how the importance of existing employees to the development of the overall business? Is the sales staff have a close relationship with key customers? You might be able to consider providing incentives to ensure that the employees will continue to do business at least through period transition.
Leasing is not an integral part of the balance sheet but it could be a hidden liabilities outstanding. Find out if the owner is now in private rental deposit and determine whether they can provide assurance to you as well.
There are important regulations to be considered as well. Especially environmental legislation places the burden of cleaning polluted property to the owner of the property now and in some cases, to the leaseholders. Know also whether the property was once owned or leased by the manufacturer engaged in activities that generate hazardous waste that can pollute the environment. Find out whether the cleaning action has been performed.
Do not judge the historical financial statements of the surface of it, especially if it is not accompanied by an audit letter assured of certified public accounting firm. Do not get confused in distinguishing a compilation of reviews / review. Only an audit that requires a certified public accountant examine financial information. If the seller offers an estimate to you, do not ever take it.
Most likely if the business has receivables, its value will be inflated. Check carefully changes in accounts receivable and determine what amount that exceeds the normal threshold is in practice similar industry (nominal value terms are often ignored). Then suppose that some amount of the receivables (valid) will also turn into debt.
The market value of the inventory will always decrease of the amount paid when purchasing. Although some larger businesses tend to have goods slower moving, many small businesses are even more hesitant to enter or selling an item that is already considered obsolete.
Rest assured that you do not walk to get into a minefield. Is the price war going on? Are the competitors cut their profit margins to the minimum? Is the seller who now hear about the report on the company that enters their market niche?
You need to consult with an attorney who really understand the field of small business before signing the purchase agreement. This is important because it can show on your hidden things like contract, work obligations, legal proceedings, claims to vendors, ewa, and others.
You must have a strong agreement with the current owners about with anyone, at any level of negotiations, and under what conditions you can talk about your interest in buying a business. Tell customers it is important that you are considering to buy a business that has not been declared in the general sale will bring risks to the business and can make you sued by the owner of the business in question