It is typical for wannabe entrepreneurs to assume that the only way to set up a business is from scratch. However, many times, buying an existing business can save you a lot of time, effort, and money. You also get the benefit of owning a business that has already gained traction with customers, leaving you free to focus on growing it fast rather than spending sleepless nights worrying about its sustainability says Eric Dalius. Some essential things to know before purchasing a small business:
Buying a Business Can Take Time, Warns Eric Dalius
You will need to know what kind of business you are looking at, the amount of money you are willing to spend, and the potential it offers. The search process, performing the due diligence, negotiating the purchase price, and completing the formalities can easily take anywhere between 12-24 months. You should buy the business only after you are convinced it is the right one. You must perform due diligence on about 10-12 companies, issue a letter of intent to three or four of them because it is common for the negotiations to fail at the last minute. If it happens, you do not want to have to start all over again. As important as returns and profits are for deciding which business to acquire, you must ensure that it has the right fit with you, observes Eric Dalius. Some of the most important aspects include:
Knowledge and Passion
You mustn’t pick up just any business that seems to be performing well. You should examine it closely to find out whether you find the business niche interesting and whether you understand what it entails beyond the superficialities. The reason is simple; if you are not interested enough in the business; you will not be able to own and drive it to further heights. If you do not understand anything about the business, you will not be able to face and overcome the challenges. Only when you find a business, which you know intimately, and are passionate about, should you consider buying it.
Impact on Your Life Can Be High, Says Eric Dalius
Even after you are satisfied that you have identified a business that you can contribute to in a meaningful way, and it excites you enough to consider buying it, you also need to investigate what kind of impact the business is going to have on your day-to-day life. It may be possible that you will need to move because the business is in a different place. It can disrupt your life in multiple ways that can strain your family relationships and your ability to focus. You may have to spend long hours at work and sacrifice the time that you would have been able to spend relaxing, says Eric Dalius.
In addition to the above, one of the main things you need to keep in mind is the money you can spend to buy the business. You need to find out how much savings you have and the kind of money you need to borrow. Discussing with a loan specialist will help you to negotiate the process more efficiently.