If you want to be an entrepreneur with your very own business, oftentimes it can be less risky to buy than an existing business than to start a new one all on your own. But even buying a business requires careful forethought and planning. Make sure you are completely aware of the terms, and do the necessary prep work!
Read on for a list of the things you must do or consider before purchasing a business.
1. Identify Your Passion
You won’t even feel like you’re going to work every morning if your business is something that you love. Consider your skills, experiences, and talents when making the decision about what kind of small business you’d like to own. What kind of business would you be an expert in?
2. Identify Conditions
What factors in your business are non-negotiable to you? For example, does it have to be in close physical proximity to your home? Does the time commitment have to be reasonable – as in, 40 hours a week?
3. Determine Why It’s For Sale
Make sure you know why the business is being sold. Check out previous financial statements, tax returns, contracts and leases, and other important documents. Be sure to speak to the owner extensively about the company’s history. You don’t want to end up with a failing business that would be nearly impossible to save.
4. Draft a Sales Agreement
…preferably with the help of a lawyer! This agreement finalizes the purchase and the terms of the purchase, and it will include everything you intend to buy (including business assets, intellectual property, etc.).
5. Have the Seller Sign a Covenant
A covenant not to compete against the business will help protect your new business from interference by the previous owner.
6. Seek a Loan
Most people don’t have enough money to cover the cost of opening a business. You’ll likely have to take out a bank loan in order to pay for the business, and you’ll slowly pay back the loan as profit begins flowing in.
Need help with the loan application process? Visit https://www.biz2credit.com for help!