Buying Your First Business: What You Need to Know

Owning your own business means working for yourself and your own success rather than someone else’s. The rewards nearly always outweigh the risks. However, before you take the plunge, there are some things you need to know.

Some of these are tough questions to answer, and you’ll want to talk to a business broker like those in the Sunbelt network from the start to make sure you are getting the right answers. Even with a business broker on your side you want to consider these things right away when looking at buying your first business.

Are You Interested?
First of all, you will be dedicating hours of your life to this enterprise, so you should pick a business you are interested in. In the same vein, you will need the right skills and experience to run the business as well, so you don’t want to go too far outside what you are have already done, especially for your first business purchase.

For instance, if you have never worked in the restaurant industry, you might not want to purchase a café as your first business. You might want to stick with something you have experience in or go and get some experience in that field first.

Will the Business Be Successful?
Is this an existing business or a franchise? Or are you embarking on a new venture? You want your first business to be successful, and so you need to know how to evaluate and be sure that the idea and business practices are sound.

When buying your first business, you want to stick with something you know and are interested in, but also something that is a proven concept with clear business practices. You are much more likely to be successful with this kind of formula.

Does it Fit Your Budget and Goals?
There are plenty of ways to find a business that meets all the criteria that you have set for it. One of the best ways is to work with a business broker. Good businesses that are priced right sell fast, and you need to know what is for sale when, and what the business will actually cost in time and money to run.

While you can find businesses for sale other places, working with an established network of business brokers means you will have choices, including existing businesses that are well-established and have proven track records while aligning with your interests.

Have You Done Your Due Diligence?
Due diligence is really the process of gathering and analyzing as much information as you can about a business before you buy it. Why is it for sale? What are the forecasted earnings for a business, and what is the industry outlook?

Also, you need to know that all business licenses are current, taxes are paid, contracts are up to date, inventory, equipment, organizational charts, and more. This is to ensure that you won’t discover any issues with the business and how it is working after you have already made a purchase.

How Will You Structure the Purchase?
There are different ways a business purchase can be structured. One is an asset purchase, the other is a stock purchase. Within those types there are other types of structures with different tax benefits and penalties. Navigating these types takes specialized knowledge, and you will want to carefully consider which one is right for you.

Buying your first business is thrilling, and being your own boss has its own intrinsic rewards. There are some things you really need to know before you buy. Ready to take the plunge but still have questions? Contact a Sunbelt business broker today to learn more.

Don Pippin Jr, CBI CMSBB
Certified Business Intermediary