Buying An Existing Business Part 2
We've already told you about the first five things you should check into before buying an existing business. Here are six more you should be sure to investigate.
6. Who are the suppliers? Are they in good shape financially and able to continue providing you with necessary supplies? Does the business have lines of credit with them?
7. Are there any licenses or patents due to expire soon?
8. Is the company adequately insured?
9. Is the equipment in good working order? How old is it, and are there warranties or service agreements? What are the terms of those agreements and when do they expire? If property is involved, what kind of shape is it in?
10. Is there anything occurring in the industry that has long-range implications for the business? If, for instance, it's an import/export business and a new law will prohibit the sale of your product to certain countries, this could negatively affect earnings. Or worse, the product or service could be in danger of becoming obsolete. Locate such critical information from trade journals and trade associations, or consult a broker or business consultant who specializes in that industry.
11. Are there any judgments or lawsuits lurking? Has an employee filed a discrimination or sexual harassment complaint? If so, you need a contract that holds you harmless from future actions.