Buy a business correctly or don’t buy it at all.
The headline sounds obvious, right? Do you really want to buy a business? Yes? Be careful. A business broker will help a seller value his/her business in a number of different ways. Some are better than others but the result should be a fair market value against what other businesses (similar to the one the owner is selling) are asking. In other words, the seller and broker should come to a rational and realistic asking price. Often times, this doesn’t happen.
How do you buy a business correctly? Here are some (not all) of the very important things to consider:
1. Only 30% of small businesses actually sell.
2. Don’t buy the inventory. Buy the aged inventory.
3. Break up the offer and asking price into parts. Don’t just “make an offer.”
4. Get a valuation.
5. Get professional advice from an attorney and accountant.
6. Demand transparency.
7. Get accurate/up to date numbers.
8. Due diligence is critical.
9. Don’t forget to consider the impact on lifestyle.
10. Do big customers or one part of the business account for a large percentage of sales?
About:
Peer Business Group helps buyers buy a small business. We can guide you through the 6 stages of buying a business.
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