by Carmen
Buying a business can be an
excellent way to become a business owner. It saves you from many of the
headaches, heartaches, and risks associated with unproven start-ups. It’s
important, however, to be fully informed as you embark on the process.
Here are four “must-knows” about buying your first business.
Buy
the Business that Fits Who You Are
Don’t buy a coffee shop just because
someone told you that coffee shops are profitable. Buy a coffee shop
because you genuinely love coffee. Buy it because you can think of a
dozen ways to make your coffee shop experience just a little bit better.
You should also look at your skills, capabilities, and job history.
There’s nothing that says you can’t become a success in a completely unfamiliar
industry—but you’ll enjoy your best level of success and happiness
by pursuing a business that tackles a field you know and love. After all,
you’re going to spend a whole lot of time with your business. Shouldn’t
it be something you’ll enjoy?
The
Classified Ads May Not Be Your Best Bet
If you don’t look any further than
the classified ads, you might miss out on some truly outstanding
opportunities. Try asking local business owners who might be selling
their business soon. Try making a list of local businesses you’d love to
own—you can always approach the owner to see if they’re interested in
selling. Professionals who are in the business of buying and selling
businesses, such as CPAs and CVAs, often have insider information on people who
are interested in selling but haven’t gotten around to looking for buyers yet.
You’ll likely pay a premium for these companies, but they may net you
stronger a business than searching the classifieds, going online, or
advertising that you’re ready to buy. You can also try business brokers,
but be careful—brokers work on behalf of sellers, not on behalf of buyers, and
might not have your best interests at heart.
Gather
a Team of Experts
At minimum you should be working
with a good attorney, a CPA, and a CVA, or certified valuation analyst. A CVA
is exclusively in the business of creating accurate pictures of how much a
business is actually worth. All three of these individuals can help you
avoid spending too much money or making dangerous legal mistakes. They
can catch legal and financial problems, spot negative aspects of the company
the seller might rather keep hidden, and keep you from allowing excitement
overrule your good senses. They also know the buying process inside and
out and can help you conduct yourself in a way that ensures you are taken
seriously by sellers.
Be
Prepared for an Investment of Time
Buying a business usually takes 18
months—at minimum—if everything goes well. Furthermore, depending on your
involvement, it can require your full time attention. It’s not something
you do out of desperation or on impulse. To protect yourself, it’s a good
idea to have living expenses saved up for at least one year, because it might
be difficult to hold down a full time job while you are attending meetings,
scouting opportunities, and performing other tasks for your business.
Buying a business is much like
starting your own. You have to be fully committed, have the necessary
expertise, and possess the desire to make it succeed.
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