Buying your first business can be exciting, but it can also be nerve-wracking if you try to handle everything on your own. The following tips can help you have a successful foray into first-time business ownership.
Tip #1: Set the Parameters
You need to set your parameters before you even begin to look for a potential business opportunity. These parameters must include the types of businesses that you are interested in as well as your budget. Other considerations to decide before shopping include the ideal location, employee turnover, professional licensing requirements, and the profit and loss history.
Tip #2: Contact a Business Broker
Once you have an idea of what you want in a business, it is time to hire a business broker to help you find the perfect opportunity. Research brokers in your area so that you can find one that has experience in the business field in which you hope to purchase. The broker should be able to provide references from past clients as well as provide information on past sales they helped their clients complete.
Tip #3: Request Marketing Packets
Your broker will help hunt down the opportunities that best fit your parameters. When a possible business is found, you need to request the marketing packet so you can fully research the business before taking the next step. A marketing packet includes the business's history, the cash flow statements from at least the prior three years, and any other information that is pertinent to the value and future of the business. You may need to do some of your own research to verify the information in the packet, but your broker can help.
Tip #4: Prepare for a Seller Meeting
If the business looks good after the marketing packet review, then your broker will set up a meeting with the seller. This meeting includes both a Q&A session as well as a complete tour of the business property. Review the marketing information a second time, and this time take the time to write up some questions for the seller. Once you have the initial question list prepared, meet with your broker so they can go over the questions with you and guide you on any further information you request at the seller meeting.
Tip #5: Perform Due Diligence
After the seller meeting, your next step is to decide whether to place an offer on the business. Once an offer has been placed and accepted by the seller, you are in a period where you need to do your due diligence to make sure everything about the business is being fully disclosed. Since an offer has been accepted, the seller is legally required to provide you with all information as it pertains to the business. Your broker will help you look for any potential red flags that may require a severing of the deal.
Reach out to a business broker for more assistance.
When entering a market, one of the most challenging things to do is to show how your brand is fundamentally different from the brands of other companies that offer similar products. If this is your struggle, you have come to the right website. My name is Daniel Rutkowski and I am a brand fanatic. I used to be fascinated with how new tech products were brought to the market. But over time, I have developed a passion for the marketing of all sorts of products, from furniture to washers, both the hardware and the appliance varieties. This blog may seem eclectic, but you'll never know what useful information you might find.