Are you thinking about buying a business? In today’s world, there’s a whole market available of business owners and founders looking to sell businesses they’ve worked hard on to establish and now want to cash in on their investments.
If you’re looking to buy a business this year or in the near future, here are some hard questions you should be asking yourself.
Why buying a business isn’t always the shortcut it seems
Buying a business isn’t always the easiest of shortcuts to take when you’re looking to own a company. While it offers an existing customer base and cash flow, it might also come with a lot of upfront costs, hidden problems, and low staff morale.
Those hidden costs can put you on the back burner, especially when you’re not expecting it. There’s much research to be done when it comes to buying a business and making sure that it’s the right fit, not just for you as the new owner but for ensuring its continued success on the market.
The reality of running a business, even one in existence, is that it’s still a lot of work. There’s no easy route to making it a success, especially if it’s become bankrupt or dipped significantly in market performance. It’s important not to fall into the romanticized trap of owning a business.
The personal and financial questions that reveal if you’re ready
If you’re looking to buy a business, here are some personal and financial questions to ask that will reveal if you’re ready or not.
What’s your time commitment?
It’s good to ask yourself what time commitments you have. Be realistic about the hours you have per week to dedicate to the business demands, as well as fitting around your existing lifestyle.
Do you have the right skills and knowledge?
Are you able to handle the stress? It’s good to consider your tolerance for the potential pressure and stress that comes with ownership.
It’s important to evaluate whether or not you have the necessary skills required to run the business. If you don’t, then it might not be the best option for you at this time.
Why is the owner selling?
Ask the question, Why is the current owner selling? It’s important to extract the truthful information before committing to a sale, as this may uncover some hidden problems that you might not be prepared for.
Can you afford the initial and ongoing running costs?
It’s good to check if the purchase price and the ongoing costs, both initially and over time, are something that you can afford right now. What are the liabilities, and will key employees stay, or will you have to take on the cost of hiring new staff and onboarding them?
These are all costs that are important to clarify before committing to a sale of any kind.
Take caution when buying a business
When you’re looking at how to buy a business, it’s imperative that you get all of the above answered and that you’re making the right decisions on the business in question so that you have the best chance of success.
