If you are interested in working for yourself, but you don’t want to start your own brand new business from the ground up, you have the option of buying a small business. This can be an easier option for you, or it can be a disaster if you don’t plan accordingly. The market for business buying requires people to know what they want and to be aggressive in getting it. Going into this process, make sure you prepare your finance plan and conduct your research. There’s some additional tips on the best way to buy a small business that you should keep in mind.
What’s the Best Approach for Purchasing a Small Company?
- Figure out why: if you’re not sure where to start, sit down and analyze why you’re interested in buying a business in the first place. Do you want a greater income, a more diverse business environment, or more personal work independence? Answering these questions will help you narrow down your options.
- Consider your work background: It might make more sense to buy a small business that’s in a business field you’re familiar with.
- Do your market research: Check out relevant websites to find companies in your interest field, and contact local business brokers to find companies near you.
- Determine the reason for the sale: Ask the current owner why the business is on the market; is he or she retiring? Or is there a deeper issue? Figuring out the problems and focusing on them will help you see if the business’ flaws are fixable or likely to be a constant problem. You can also observe the business to get a good feel of how the company runs and the quality of the workplace environment.
- Complete a financial review of the business: Once you have found a business you’re interested in buying, conduct a thorough financial review. This will include the company’s past income statements, cash flow statements, balance sheets, and any financial projections for the future. As the new owner of this business, you will be taking on any of the company’s debts or liabilities, so this is an important step.
- Prepare a business plan and determine valuation: If you need to raise capital, banks and other money lenders will want a detailed business plan of your growth plans for your business. Determine what you can afford to invest in, and then find out valuation.
If you want to buy a small business but you need some expert advice, your best bet is to hire a business law attorney. Contact Gelman Law, LLC today to speak with a skilled business lawyer who can help you through the business purchasing process.