Buying a business makes it easy to skip the challenges that are associated with opening a start-up. Or, you may be planning to make a purchase that expands your current small business or eliminates some competition. Whatever your goals may be, making sure to follow the proper steps for purchasing an existing company is essential.
Make Sure Your Goals Are Aligned
Aspiring entrepreneurs sometimes make the mistake of buying a business solely based on profits. While it does help to know that the company is already successful, you could find yourself in misery if your skills and abilities don’t land within its daily operations. If this is your first business to own, then make sure to choose one that falls within your interests. Current business owners will also need to make sure that the new company is aligned with their established one, if they plan to merge the two.
Explore Why the Business Is Up for Sale
Businesses go up for sale all the time, and you might luck out and find one that is merely being sold because the owner is making a lifestyle choice, such as going into retirement. However, most businesses have other reasons why they are being sold, and it pays off to do some research. Don’t be afraid to ask the current owners why they are selling, and you can also do your due diligence to check for any existing issues such as having too many competitors in the same field or supply delays. Figuring out why a company might be struggling helps you to decide if the challenges outweigh the investment.
Work With a Professional Team to Do Due Diligence
Once you start getting to the serious negotiations of a purchase, the seller is likely to ask you to sign a non-disclosure or confidentiality agreement. This part of the process is common if you are expected to see information such as the financial accounts of the business. You’ll also need to use your legal and financial support team to help you make sure that the business has all of the appropriate licenses and permits in place to operate legally. Your business purchase may also require reaching out to the company’s current landlords, suppliers and customers to make sure that contracts, leases and other legal agreements will be supported after the change in ownership.
Secure the Capital and Close the Deal
Funding your purchase can be achieved by tapping into your personal funds, but most small business owners choose to go the finance route. New Jersey has many options for small business owners to secure loans that they can use as capital to purchase an existing business. Once you have funding, you’ll then be able to move forward with the final steps of the closing process, such as receiving the bill of sale.
Finalizing your purchase of a business is a milestone to celebrate. Yet, you might be wondering what to do next after you’ve had your ribbon-cutting ceremony. Remember that even established businesses are vulnerable to downfalls during ownership changes. Building a strong network of support can help you navigate each new challenge so that you can look forward to watching the company grow under your leadership.