Franchises

How do I buy out my employer's new, failing business?

min read
Opinions expressed by Entrepreneur contributors are their own.
You can offer to buy your employer's business by making an offer to
purchase it. The assets, the customer list, the lease--all will have a dollar value. However, as the business is failing, you might also find yourself saddled with the debts of the business if you're not careful. And the landlord may not be willing to lease the space to a recent graduate without 1. Your personal guaranty that you'll make good on the rent payments or 2. A co-signer who has assets to attach in the event you default.

Buying a business--especially a failing one--requires careful due diligence. You'll want to figure out exactly why the business wasn't doing well. It could be more than just "bad marketing." It could be poor location, inadequate parking and/or the skyrocketing cost of supplies.

If your boss has really made a mess of things, your bright-eyed and bushy-tailed attitude may not be enough to turn around the "bad will" (as opposed to "good will," an asset worth paying for) that customers will associate with the spa.

Due diligence will also involve valuing the business properly and seeing if there are any obligations--such as the lease or equipment--for which your employer may have signed a personal guaranty. Do not take this step without the sound advice of an attorney and an accountant.

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