What You Should Do First Before Buying a Business

Buying an existing business comes with a long list of benefits but before you take that leap, you need to make sure you are ready. There are many steps you should take before purchasing a business, all of which are there to ensure you are making the right choice for your future and budget. Here are five that I strongly recommend, and if you want to know more, message me!

Strategize What You Want?

Firstly, don’t go into this process blindly. The worst thing you can do for yourself is say you want to buy a business but then have no plan for what that looks like. You need a plan. This means establishing a budget, market, and timeline while considering what type of business you want to invest in and the level of risk you are willing to take on. I recommend going into an industry you already know so you can make insightful decisions down the road. Additionally, a budget is key so you don’t blow through your money or overspend on the initial purchase and don’t have enough for repairs or emergencies. All in all, have a plan.?

Conduct Your Own Market Research?

Once you have a plan and start narrowing down what industries you want to be in, conduct your own market research on those industries so you can have a clearer understanding of where they are now and where they are expected to be in the future. The last thing you want to do is invest in a dying industry. On top of this, if you have chosen a business of interest, research that business and its reputation until you’ve exhausted all your resources. Similarly to not wanting to buy in a dying industry, you don’t want to purchase a business with a crappy reputation if you don’t want to put the time and money in to remedy it. Taking the time to research can save you a headache later.?

Ask Questions – A Lot of Questions

If you are at the point of talking with business owners and getting a better idea of what they have built, don’t be afraid to ask questions. The more questions you ask, the better off you will be down the road if you choose to purchase their company. These questions are your chance to learn about its history, employees, processes, management systems, vendors, and everything under the sun that could show you whether the business is worth it in your eyes. These questions can also be your chance to visualize the possible risks within the business. Establishing a risk level early in the process can ensure you are not putting yourself in danger when obtaining a company. Questions are your way of finding out if it fits into your plan.

Do Your Due Diligence?

This is a big one. The due diligence you do now can save you a heartache later. Here’s what you should be looking for: financial statements, tax returns, current assets, debt, liabilities, liens, copyrights/trademarks, property leases, inventory, and reputation within the industry. All of these can give you a clear vision of where the business is financially, legally, and morally – three things you should strongly consider before purchasing a business. Don’t be afraid to dig too deep or be persistent. If you are not getting answers or getting vague responses, it could be time to move on.?

Reach Out to an Expert for Guidance?

Who says you need to purchase a business all on your lonesome? I certainly don’t. Buying a business is a significant task and takes a lot of time and effort from start to finish. If you want to find the perfect company at the perfect price, why don’t you find an M&A Advisor to help? They can help get down to the nitty-gritty of it all, ensuring the opportunity aligns with your objectives. The team at ReVera Capital has been partnering with people who want to buy businesses for a long time and can even help with the negotiation process, ensuring you get the best price possible. An expert could be what you need to take the right steps to success.?

There is so much that goes into buying business. If you want to learn more or want guidance through the process, send me a message or contact the team at ReVera Capital.