The Top Three Red Flags to Look For When Buying a Business

The city of Durham is on the rise and many people are looking to get their slice of the pie by buying a business. However, going into a purchase blind because you want to buy a Durham business is not the correct approach. When looking to buy a business in the Durham area, there are a few red flags that you should always be looking for.

3 major red flags that the buyer should be aware of are:

1. The financial statements are not complete. When buying a Durham business, bank statements, profit/ loss statements, contracts with the vendors and employees, tax returns, and the lease should all be available. The inability to produce these documents could show flaws in the business and why the owner is looking to sell.
2. The businesses’ success is tied to the owner. If clientele are coming to the business solely because of the owner and not because of the quality of the product or service being offered this could be trouble. If the owner leaves then the customers will leave with them.
3. The business is operating at a loss. This is the largest red flag to look for when buying a business not just in the Durham area, but anywhere. If you are buying the business for the purpose of making money and that is not happening, it could be a reflection of current ownership but it could be something deeper such as the business isn’t fulfilling a need of the local clientele, or there is already another business in the Durham area doing what the business your looking to buy is doing but better.

Becoming your own boss and buying a business in the Durham area can be a rewarding experience, but the process can turn sour if there are red flags that cause the business to meet its demise early on. By looking for these red flags you are insuring yourself success when buying a business. If you’re up for the task of buying a local Durham business then let our team at Sunbelt help you from beginning to end.