Buying An Existing Business Part 1

When you're thinking about going into business for yourself, it's a smart idea to buy an existing business. But before you sign on the dotted line, make sure the company is all it's cracked up to be.

You've found a business that's right for you, put avalue on it and decided on a purchase price. Now, make sureeverything else checks out. Here are the first five things toconsider before the deal goes through:

1. Is the location leased? If there are less than threeyears left on the lease, look into getting a new term or aguaranteed extension from the landlord. A good location meansnothing if you have to move out in a year when the leaseexpires.

2. Will the employees stay? A key employee'sdeparture could profoundly affect the business's futureoperations and earnings. Also, is there an employee who can run thecompany in your absence?

3. Who are the customers? Do any of the clients accountfor more than 10 percent of the business's gross sales? Doesthe company have a binding contract with these customers?

4. What about training? Is the owner willing to stay fora specified period of time to train you or at least be availablefor phone consultations? If not, is there a key employee who cantrain you?

5. Who's your competition? Check the surrounding areaand industry records. If you're planning to buy a doughnut shopand another one is due to open down the street, the company may notbe such a good investment.

Related Topics

Editor's Pick

Have More Responsibilities at Work, But No Pay Bump? Use This Script to Get the Raise You Deserve.
Black and Asian Founders Face Opposition at All Levels — Here's Why That Has to Change
Marketing

6 Ways to Wring All the Value from Your Earned Media Coverage

Press coverage can help your brand gain visibility and increase credibility — but not if no one sees it. What can you do to get more value from the media placements you've worked so hard to earn?

Thought Leaders

5 Small Daily Habits Self-Made Millionaires Use to Grow Their Wealth

We've all seen what self-made millionaires look like on TV, but it's a lot more subtle than that. Brian Tracy researched what small daily habits these successful entrepreneurs adopted on their journey from rags to riches.

Business Solutions

What Bill Gates and Steve Jobs Taught Me About Getting to Know Your Customers

Despite the push toward chatbots and technology-driven customer service, nothing can replace determining what your customers want through personal social interaction.

Business News

Out With the Kibble and In With the Steak. The World's Richest Dog Has a Net Worth of $400 Million – And a New Netflix Docuseries Too

'Gunther's Millions' is set to unpack the pooch's mysterious fortune and what those around him have done with his inheritance.

Living

Invest in Yourself: 10 Things Every Working Woman Should Do This Year

When striving for success, it is easy to forget about your mental and physical health. But without health, you cannot fully succeed. Follow these ten lifestyle strategies for success in your personal and professional life.