10 Killer Tips That Make Sense When Looking For a Business
- Article Author: Christina Lazuric
If you’re looking to buy a business follow these golden rules of pure common sense and avoid making a costly and painful mistake.
1) Be Objective! Some quick math can let you know in 5 minutes if what they are claiming is even possible. If the business is open 68 hours a week and the owner says he’s only working 10 hours a week then the payroll should be ($8.75 X 58hrs = $507.50 ) at least.
2) If the seller says that no family members are helping him out, I suggest going there at different times throughout a week to make sure. Next to COG and rent the biggest expense in a business is payroll.
3) Make sure that you will have access to the same pricing and term that the seller enjoys. The only reason they may be doing well is because of the prices they charge. If you can’t get the same thing you’ll be in trouble when you take over.
4) If you don’t have any experience in that industry then try to find a business with knowledgeable staff that can help you. If the business comes with a manger try your best to keep them until you learn the business well enough to do the job yourself.
5) If you want to include your family in the business then make sure that they will really help you. In other words if they’ve flaked on you before then they might flake on you again and in business that could cost you your shirt if you’re relying on them.
6) Due diligence be thorough. Ask questions, if something doesn’t make sense to you ask for an explanation.
7) Hire a lawyer to review the lease. You will be legally bound to that lease so you better know what your getting yourself into.
8) Be properly capitalized! Number one reason people fail in business is because by the time they figure out what they should be doing they run out of money. Don’t let that happen to you.
9) Inspect the equipment. Kicking the tires won’t cut it. In a restaurant or any business that has equipment it can be a very big expense to replace a compressor if you don’t have a background that is mechanical then spend a couple of hundred bucks to have someone qualified to tell you if it will be ok for a while or if it’s on it’s last leg.
10) Buy a business that’s you. Whether you left your corporate job, got laid off or had another business before. Life is too short not be doing what you really want to do so find something that makes you want to get out of bed in the morning. Something that feels right to you so you’ll be happy in your new business.