Factors to Consider Before You Buy a BusinessOnce you have found the type of business you feel comfortable running, a number of other considerations should be taken into account before you buy a business. These include:
- Has the business you intend to buy been profitable, or are you buying a business in trouble? Find out as many details about the business as you can.
- Review the business' financial records, contracts and leases. Tax returns for the last five years should also be reviewed to determine what kind of tax liabilities could be incurred.
- In addition, a thorough review of the business' bank accounts, sales records, customer lists, payroll benefits and employee pension plans, as well as an employee roster should be taken into account before committing to purchasing the business.
Get Professional AssistancePurchasing an existing business may save a lot of time versus starting a business on your own. Nevertheless, unless you are a lawyer or an accountant, reviewing all of the documents of an existing business before making an offer could be overwhelming.
Enlisting the services of a competent attorney and accountant could save you considerable time and expense. Depending on the size and nature of the business you plan to buy, other professionals may also be needed to consult.
After doing all the preliminary work, you can then make an offer through a letter of intent, followed by a formal offer of cash or other assets. You should have all your bases covered before you make a formal offer.