When you make the decision to buy a business, you are automatically assuming a risk. This is true whether the business if new or old. While no guarantee exists that the purchase in Minnesota or California will result in developing or running a successful enterprise, you can reduce the risk factors. You need to work with a business broker. With their help, and those of an attorney, you can gather the information you require to help ensure the risk is an acceptable one.
Information, Documents and Data
No matter what business you intend to purchase, you need to look at the “baggage” that comes with it. You need to do a thorough examination of everything. Among the data you and your representatives need to acquire are the following. They include financial information and material on the more ethereal but nonetheless important characteristics of the business:
- Inventory and its contents
- Sales
- Customer base and patterns of sale
- Opinions of the customers
- Staff and employees attitudes and opinions
- Location
- Growth potential
- Reputation in business
- Reputation in the community
- Reputation among competitors, suppliers, and related individuals and companies
- Current situation in the marketplace as it currently stands and is projected to place in the future
- Marketing strategy and its effectiveness or lack of same
- Current legal obligations re: contracts to buyers, suppliers, etc.
- Insurance on the business, type and validity
This will provide you with a context in which to place the business. This is an important aspect of the decision making process on whether to buy a business or not in Minnesota, New York or anywhere else around the United States. Of equal importance is making sure the valuation of the business is complete and accurate. This means focusing on the financial aspects of the business.
Financial Nature
If you plan to buy any business, you need to have an accurate and complete financial picture. You must know whether it is healthy or in need of a remedy. If it is in trouble, the valuation and subsequent financial information will make this clear. As a conscientious potential buyer, you will need to gather information such as
- Tax returns and Statements
- Sales records
- Liabilities
- Accounts receivable
- All accounts payable
- Debt disclosure
This basic financial information will provide enough information as to how it stands in this area.
Reducing Risk Before You Buy a Business
Whenever you consider buying a business, you need to make understand the risks involved. These are inherent in any purchase. If you want to mitigate the potential for making a mistake in judgement, you need to have the right personnel such as a business broker and an attorney, work with you. They can gather the information you require. Once you have had a chance to go over the data, documents and other items, you can go ahead and make an informed decision on whether the smart move is to buy a business of this type in Minnesota or to look at something else.
