If you’ve been presented with an opportunity for taking over an existing business then you need to understand how much of a responsibility you’re assuming with this transaction. Not only are you going to be owning and operating someone else’s business, but you need to be sure this is an arrangement you should be entering into in the first place.
That puts the onus on you to do your due diligence ahead of time, before you enter into any agreement to purchase an existing business you will have many critical factors you must consider. The following are five of the most important that you need to keep in mind as you conduct your research into any business for sale phoenix.
The first place you must start in your research is to find out about the history of the business. The length of time it’s been in operation, the financial strength and viability, what pitfalls have threatened it along the way and what positive impacts have been made over time?
This typically starts with a full review of the company’s background and financial history. We’re talking about things like financial statements, accounts payable, receivables, contracts, employee histories, any lawsuits that may be pending or previously won, lost, or settled. The more you know, the better.
2. Company Assets
What components are part of the business purchase? Are you taking over a brick and mortar location, any important equipment or other fixtures? What about trade secrets or inventory? Are you expected to assume any sort of debt and, of course, you need to know how much you will end up owing in the process. Based on this information, you may want to adjust your purchase as to the assets instead of the business as a whole.
3. Reasons for Selling
This one is very important. Why is the owner selling? Some owners really want to get out because they plan to retire for one reason or another. Other owners are looking to sell for reasons they may not wish to disclose up front and that could be a problem. The more questions you ask and the more research you conduct could reveal the true reason for this sale.
A great way to learn more about any business is by asking what the customers think of it. Is this a business that is known for customer satisfaction or do they disappoint often? Does the business have a loyal following or does it lack any sort of fanbase? Ask the clientele what they think about every facet of the business and your involvement in it. You may find they have a lot to tell you.
Finally, what kind of work will you need to in attracting clientele to your business? What has the previous owner done and has it worked? These are crucial questions to ask as you plan to take this business over. Taking over a business and making it successful may require you to devise an entirely new marketing plan and that may take up more resources than you had originally anticipated.