The risks of buying a business are great.\u00a0 That\u2019s one reason that our Broker Service Acknowledgment form that potential buyers have to fill out clearly states that there is risk associated with buying a business.\u00a0 The question that buyers need to ask themselves is whether the reward is worth it?\u00a0 Only the buyer will know the answer to that.<\/p>\n
Do I have the business aptitude to successfully continue to run the operation?\u00a0 Do I have management experience?\u00a0 Do I have industry knowledge?\u00a0 If not, what can I do to ensure that I continue to run this business successfully?\u00a0 These are just a few of the questions with regards to skills that a buyer needs to be thinking about as they are determining if the risk is worth the reward.<\/p>\n
Other questions buyers need to think about involve finances.\u00a0 Does this business produce enough cash flow for me to support my family in the manner that they\u2019re accustomed?\u00a0 Do I have sufficient funds for a down payment if I need bank financing?\u00a0 How is my credit?\u00a0 It\u2019s not just the bank that is going to be interested in your financials, but also the sellers if they have to carry a note.<\/p>\n
I\u2019ve been teaching a Junior Achievement class for the last several weeks and we\u2019re discussing entrepreneurs.\u00a0 Last week\u2019s topic was about analyzing risks and rewards in a business.\u00a0 Those decisions don\u2019t stop once you\u2019ve made the decision to buy.\u00a0 In fact, now you will be facing these decisions on a daily basis.\u00a0 What happens if you\u2019re supplier\u2019s truck breaks down and can\u2019t get you your materials in time?\u00a0 Do you try to find a supplier that\u2019s closer that has the material?\u00a0 Do you call your customers and tell them you\u2019re going to be late delivering?\u00a0 Do you offer a discount for the late delivery?\u00a0 These are all decisions you may have to make.\u00a0 What are the consequences of those decisions and do you have the stomach to be making them every day?<\/p>\n
Your livelihood is dependent on the decisions that you make.\u00a0 Some of them will work out well for you, but others won\u2019t.\u00a0 All you can do is learn from those experiences.<\/p>\n
And to be honest, it\u2019s okay if you don\u2019t have the stomach for it, but that means that you probably shouldn\u2019t be buying a business.\u00a0\u00a0\u00a0 As my father use to say to me, \u201cyou can lie to me, but don\u2019t lie to yourself.\u201d\u00a0 If there is ever a time to be honest with yourself, this is it.<\/p>\n","protected":false},"excerpt":{"rendered":"
The risks of buying a business are great.\u00a0 That\u2019s one reason that our Broker Service Acknowledgment form that potential buyers have to fill out clearly states that there is risk associated with buying a business.\u00a0 The question that buyers need to ask themselves is whether the reward is worth it?\u00a0 Only the buyer will know […]<\/p>\n","protected":false},"author":52,"featured_media":11737,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"om_disable_all_campaigns":false,"footnotes":""},"categories":[3,17],"tags":[28],"class_list":["post-2020","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-buying-a-business","category-general","tag-risk-vs-reward"],"acf":[],"yoast_head":"\n