People who buy established businesses in Washington statistically have better odds of becoming successful than people who start from scratch. However, it is critical to meticulously look through every important detail of the business you want to buy because any factor you miss can balloon into a serious issue that could make your business fail. Here are the main factors you should consider when acquiring an existing business.
Discover everything about the business’s finances
Buying an already established business can be quite expensive. The owners have put in a lot of hard work to see the business into fruition, and that usually comes at a price. Since you are making a significant investment, you also need to make sure that what you are buying is totally worth it, and the best way to determine that is through the business finances.
Check for profits and losses over the past five years, tax returns, business debts, liens on the company assets, etc. Pay more attention to a form known as UCC-1. It gives creditors the power to seize and sell the business assets if you fail to pay your debts within a certain period.
The legal status of the business
Find out if there are any business transactions or litigation that might affect you in the future. The business you want to buy must be in good standing with the state and federal laws before buying it, so it may be helpful to confirm with your lawyer if those issues can be easily solved.
The market standing of the business
Does the business you want to buy have a loyal customer base or products that you can easily sell? How’s the competition, and what is it that gives you an edge over them? Can the business grow beyond its current level?
Many entrepreneurs consider buying an already established business a safe investment. However, you must do thorough research to find out if it is truly right for you.