Buying your own business
Buying your own business is a big step!
If you are an individual considering the purchase of an existing business, you may be doing some soul-searching about your own capabilities. If you are a business owner considering expansion through acquisition, you may be unsure of how to carry out this unfamiliar responsibility. Buying a business can be overwhelming for the novice buyer.
There are many complexities involved in a purchase, and many pitfalls for the inexperienced buyer. A successful purchaser develops goals and plans, identifies and locates candidates for purchase, evaluates selected companies, formulates the purchase proposal, obtains required funds, negotiates and closes the purchase and integrates operations after closing.
It is not easy to find a successful business that an owner is willing to sell at a fair market value. The following information will lead you through the buying transaction and point out problems and opportunities.
Many buyers decide to buy a business for the wrong reasons or they chose the wrong business to buy. They may have been laid off and, as a result, become disenchanted with corporate life. They may have been forced to retire early or they may feel that they can make more money on their own. While all of these reasons are legitimate, they are not sufficient to warrant a business purchase.
Before rushing into the purchase of a business, evaluate yourself and your skills objectively. Make sure you have the psychological as well as financial resources to run a business.
- Have you worked in this type of business before?
- Are you willing to make the time and energy commitment necessary to learn to run the business?
- Do you have the money (and credit) to acquire the business you want?
- How does your family feel about the commitment that you must make to run a business? Do you have their wholehearted support?
- Are you an optimistic, enthusiastic person who does not get discouraged easily?
- Can you make decisions quickly and easily?
- Do you have the skills of a salesperson (if required in the business you are looking to purchase)?
- If you have chosen a specific business to buy, have you made that decision based on rational reasons or do you have a large emotional stake in the outcome?
- Do you have the skills to take over the full range of management tasks necessary in running a business successfully?