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Important things to know before buying a business

Starting from scratch can be very intimidating for some entrepreneurs. They might find it very difficult to build a customer base, develop new products, managing its first marketing campaign or hire reliable employees.

Important things to know before buying a business

To avoid these pains, an alternative is to buy a business and expand existing to reap more profits. All systems are already in place and might just have to be adjusted to make it more efficient. When buying a business, you should carefully consider the following:

Reasons for sale. If it’s so good, why sell it? Do not expect some owners tell the truth, but must find a way to validate the reasons given. You can talk to some of the employees or business partners.

Business image. Despite having a negative commercial reputation gives you the power to bargain for a lower cost of acquisition, it may be harmful to future business operations. You should meet with several customers and suppliers to assess the existing corporate image.

The financial statements and sales records. Get the financial statements of the last 5 years and hire an accountant to audit the books for accuracy and consistency with the declarations of tax s. This will also give a good estimate of corporate profitability and the way that the liabilities have to be assumed.

Legal documents. Some of the important legal contracts include articles of incorporation, purchase agreements, sales contracts, employment contracts, copyrights and trademarks. You should consult with legal experts to be exact.

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