12 Questions to Ask Yourself Before You Buy a Business
Going into business has so many advantages over being employed. It is challenging, that’s no doubt, but the benefits are worth every challenge. You experience financial freedom like never before, you become your own boss and most importantly, your life becomes one of learning and experiencing new things every day. You may decide to start a business from scratch though this carries a number of risks. A good alternative is. With this option, the risks are much fewer. To be sure that you are making the right decision, here are 12 questions to ask yourself before you .
1. Why is the business being sold?
Sometimes, the reason why the business owner is selling the business could be your downfall. For instance, if the owner knew that a big franchise was opening up nearby, he or she might decide to sell the business before it is wiped away by the competition.
2. Do you have the right entrepreneurial skills and mindset?
Being an entrepreneur is not about and simply picking up where the previous owner left off. You have to have the right skills to run a business. In addition to skills, you need an entrepreneur’s mindset, which consists of characteristics such as discipline, perseverance, risk taking, time management and others.
3. Are you suited to that type of business?
Yes you may have what entrepreneurship calls for in terms of skills and mindset. However, not every entrepreneur can run a certain type of business. Each has his own niche where he or she performs best. Same for you, you need to decide whether that is right for you.
4. Do you have enough money to buy a business and keep it running?
You have to be sure that you have enough financial resources to finalize the purchase of the business and operate it. The cost of buying and running a business varies greatly depending on factors such as size, value and type of business.
5. What competition does the business face now and in the future?
You need to know with whom you will be fighting for market share with after you buy the business. You need to assess the type and level of competition that currently exists and what might come up in the future.
6. Are you ready and able to make a lasting commitment?
Running a business is very different from being employed. A business takes over a large part of your life and becomes an integral part of it. This means that at times you have to sacrifice personal time for the sake of the business. So be sure that you want to and can do this before making this big decision.
7. What is the legal status of the business?
Don’t just blindly without finding out about certain legal aspects. Most importantly, is it registered? Secondly, are there any past or pending lawsuits that the business is involved in? Getting these answers will ensure that you take the plunge with your eyes open.
8. What is the financial status of the business?
The business owner may be a good source of financial information concerning the business, but ultimately you have to dig up the details yourself. Investigate into the financial aspects such as tax returns, revenue and financial trends over the years.
9. What size of business are you well equipped to handle?
You may go for a large business with over 500 employees only to realize that a 50-100 employees company would have been a better fit for you. On the other hand, you may buy a small company while you could easily run a bigger one. It is all about understanding where your strengths and weaknesses lie.
10. Do you have the right negotiation skills?
Once you have decided to purchase a business, the next step is to sit down with the owner and negotiate a final purchase price. Having the right negotiation skills is crucial in getting a fair deal. If you do not negotiate, you may pay more than what the business is really worth.
11. How large is the business’s customer base?
One of the biggest benefits of is finding an existing customer base. This means that you don’t have to spend a lot of money on initial marketing, so be sure that you find out approximately how many customers the business currently has. This will help you determine what to do in terms of marketing once you purchase the business.
12. Why are you doing it?
This is the most important question to ask. What do you expect to achieve by purchasing the business. Are you seeking a better lifestyle, do you want more financial security, or is it because you want to pursue your passion? Knowing this will help you define your business and personal goals.
After honestly answering the above 12 questions, do you still feel willing, ready and able to?