Buying a business is a huge step toward becoming financially successful and independent. Reaching the point where you can purchase a business is a huge accomplishment, however, knowing you can buy a business should not be one’s only motivation.
Although people might promote purchasing a business and being your own boss, there are serious considerations that need to be recognized before making the financial commitment. Here are several reasons why you need to ask the right questions before buying a business:
Will Buying the Business Help You?
This might seem like a self-explanatory question. Of course you need to consider if purchasing a business will help you and your current situation. Who would purchase a business without thinking about this? However, the detailed thought you might put into this question is important. Can you see yourself being the owner of this business? Can you see yourself going to this business weekly and directing decisions at the managers? Can you take responsibility for this business, including in bad times? In addition, if you are an owner of another business, can you realistically own and guide two or more different businesses? Which business would you focus on more, the new one or your previous business? Answering these questions are really important before you make the purchase.
What is the History of this Business to the Area?
This question involves how the business has been with its surrounding environment. Is the business in a bad environment or neighbourhood? Has it been robbed or vandalized in the past? Are there property problems with surrounding properties or the city? How good is the building infrastructure; does it need re-modelling or building investments in the near future? Has the government been involved with the business tax-wise or with criminal or civil matters? What do residents think of the business? Knowing what baggage comes with the business is important so you can navigate regular issues that afflict the business.
Are the Customers Happy?
Knowing what the business does is obviously important, but knowing how customers relate to the business is also important. A new ownership of a business can change customer relations and if customers expect certain behaviour from the business, you do not want to alienate those customers with your new approaches. Unless customer relations are abysmal, most customers would want things to stay the same with the company. Asking some top customers what they would like to keep the same or what they want changed with the company is crucial, so you don’t rock the boat too much.
Keeping Existing Employees?
Although one could change the management of a company, it is best to keep as many employees as possible to minimise disruptions. This would also avoid wasting time and money re-investing in new workers for the company. Since it is best to keep most of the managerial personnel, you need to ask yourself the following:
- Do they seem trustworthy?
- Do they have good corporate visions?
- How are their management styles?
- When they are not around, is their authority recognized by all workers?
These are important questions to answer to make sure the company is heading in the right direction.
Be Prepared for the Worst!
This is an important concept since everything might not go as planned with the business acquisition and moving right into ownership. Although this might go hand-in-hand with preparing yourself with a purchase, it more prepares you for the unexpected of what could happen to every business:
- Sales might reduce severely as a result of the purchase.
- Employees might leave.
- The general economy might go into a recession and the business might suffer as a result.
There could be personal investments as well that are not being accounted for. Such as:
- Is your family prepared for you to make such an investment?
- Are you willing to sacrifice your personal time to yourself, friends, family, and the community in order to help your new business?
Answering these questions may be seem daunting. However, if you do not seriously consider the dimensions of owning of new business before purchasing it, you may be sorry you made such an investment.
If you are in the market to buy a business, please visit www.bizlistings.com.au/buy-business.html.