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 shapefinancially and able to continue providing you with necessarysupplies? Does the business have lines of credit with them?
7. Are there any licenses or patents due to expiresoon?
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 termsof those agreements and when do they expire? If property isinvolved, what kind of shape is it in?
10. Is there anything occurring in the industry that haslong-range implications for the business? If, for instance,it's an import/export business and a new law will prohibit thesale of your product to certain countries, this could negativelyaffect earnings. Or worse, the product or service could be indanger of becoming obsolete. Locate such critical information fromtrade journals and trade associations, or consult a broker orbusiness consultant who specializes in that industry.
11. Are there any judgments or lawsuits lurking? Has anemployee filed a discrimination or sexual harassment complaint? Ifso, you need a contract that holds you harmless from futureactions.
