Despite the many advantages that purchasing an existing business offer, the business’ strong financial and operational track record alone is not an absolute guarantee of continued success.
Choosing a business that fits your interests, experience and financial capacity is paramount. Below are suggestions to help you identify a such an opportunity.
Will the business allow you to capitalize on your qualifications and experience? Identify what you do best, whether it’s business development or interacting with the public, and assess if this will be a driving factor in sustaining and growing revenue.
Will you enjoy this occupation? Owning a small business can be hard work. An enthusiastic owner who enjoys his or her job will be able to motivate staff and deal more successfully with clients.
Why is the current owner selling? There are many legitimate reasons to sell a perfectly good business. Retirement, partnership difficulties, health issues, other business interests, or even just simple burn-out are all valid reasons.
Do you clearly understand the capital requirements to run the business? In addition to the purchase cost, you will need sufficient working capital to finance inventory, accounts receivable and overhead. Working capital requirements differ substantially between retail, wholesale, manufacturing and service companies.
Do you understand the cash flow characteristics, including any seasonality? A year-end profit does not necessarily mean that there will be cash available at critical times to meet necessary costs, such as interest, taxes and living expenses.
Ensure you have the means to purchase the business, the experience to operate it, and the funds to finance any planned growth. If you are confident you have selected a potentially good opportunity, the next step is to contact us. Please feel free to download and print SGA’s helpful guide Selecting a Business Checklist.