If you are looking to get into business, you have two options: building a business from the ground up or buying an existing one. And while you might want to build a business from the scratch, the truth is, starting a brand-new business is no easy task.
Buying an existing business can be less stressful. After all, you are taking over an existing venture, complete with an established brand, loyal customers and a proven cash flow.
However, acquiring an existing business comes with its share of challenges too. The difference between success and failure while acquiring an already existing business lies in avoiding these costly mistakes.
1. Failing to do your homework before signing the paperwork
Business acquisition is a big-money undertaking. As such, it only makes sense that you get into the process with your eyes wide open to ensure that you are getting value for money.
Just because the business in question appears to be successful does not mean there are no nasty skeletons in the closet. Here are a few questions you want to ask as far as the subject of due diligence is concerned:
- What are the values of the company’s assets and liabilities?
- Is the business involved in any ongoing legal issues?
- Are there any liens on the business?
- What is the industry’s performance like?
2. Not paying attention to your key people
Changes in a company’s ownership can make employees very nervous. Many may be wondering about their job security. If you hope to keep key people in their jobs so that your business continues to operate smoothly, make sure you communicate your goals clearly and often to those employees you value.
Buying an existing business can be a great way to venture into the business world or expand an existing one. Find out how you can safeguard your rights and interests while purchasing an existing business.