Around 500,000 existing businesses hang up the “under new ownership” sign every year after changing hands — mostly because it’s often easier to buy an existing business than to start one from scratch.
Entrepreneurs and family businesses sell their enterprises all the time. People get bored with their current businesses and have a new passion they want to pursue, some retire and others just decide that they don’t enjoy what they’re doing. That gives people who want to step into an existing business and run it their way plenty of opportunities.
Before you jump on an offer to buy an existing business, however, take the following steps:
1. Figure out if it is really something you want to do.
Take your time and look at the day-to-day operations and spend some time shadowing the owner, if possible. Find out if this is truly your passion and not just a passing idea. Just because a business is successful doesn’t make it right for you.
2. Find out exactly why the business is for sale.
Don’t assume that the story you’re being told is the whole story. Do your research and ask around to find out if the owner is being honest about their reasons for selling. You don’t want to buy a business thinking that the owner just wants to retire and find out that there’s been quiet trouble brewing under the surface of the business for some time.
3. Make sure that you’re buying the right thing.
You want to buy the assets of the business — but you don’t want to take on unnecessary liabilities (like pending lawsuits or other major problems). Due diligence on your part should uncover any hidden problems that might haunt you after closing the deal.
It’s always wise to have experienced legal assistance when you’re making the decision to buy an existing business. It’s also essential to have help with the actual paperwork involved to make certain that you’re getting exactly what you expect — and no more.