Buying a Business? Don't Fall In Love At First Sight.

Buying a business can be very exciting... almost romantic. You see the numbers. You like the location. The business has a great reputation. Maybe you can already picture yourself sitting behind the desk, calling the shots and watching the profits roll in. But here's a pro tip - slow down.

Before you fall in love with the business, make sure you UNDERSTAND the business. Buying a company is a significant investment, and emotions can make it easy to overlook things that deserve more due diligence and a closer look.

Look Beyond the Asking Price

The asking price is only one piece of the puzzle. A smart buyer wants to understand what they're actually getting for that price.

Consider:

• How profitable is the business?

• How consistent is the revenue?

• How dependent is the business on the current owner?

• Is there a strong customer base already established?

• How stable is the employee team and their processes?

• What equipment, real estate, inventory or other assets are included?

• Where are there opportunities for growth?

• What risks could affect the business after the sale?
  

A business with a higher asking price may ultimately be a better opportunity than a cheaper business with significant challenges. Price matters...but remember, value matters more when it comes to the long haul and your sanity.

Ask the Questions That Matter

Don't be afraid to ask questions. In fact, you should ask a lot of them. Why is the owner selling? What does a typical day look like? How involved is the owner? Who are the key employees? Are customers concentrated among a small number of accounts? What does the owner do that someone else would need to take over? What opportunities has the current owner not pursued? The answers can tell you just as much as the financial statements.

Don't Buy the Business You Wish It Was

Maybe you see a business and immediately start imagining all the things you could do with it. New marketing. New products. A bigger location.

Those ideas may be fantastic and necessary. But don't let the romance fool you; lean on the data. First, determine whether the existing business is fundamentally sound. Don't pay a premium for potential that only exists in your imagination. Understand what you're buying today, then determine whether the opportunity for future growth makes sense.

Take a Step Back

The goal isn't to find a business you love, but to find one that makes sense for you, your interests and your future. Your experience, financial situation, goals, lifestyle, and willingness to be involved should all factor into the decision. The right business for one buyer could be completely wrong for another, and that's ok. That's why objective external evaluation matters.

A Sunbelt business broker can help you understand the opportunity, ask the right questions, evaluate the information available, and navigate the process from initial interest through closing. Pick our brains and make sure you're making the right decision!

Long story short, buying a business isn't like buying a new pair of shoes. You don't want to find out they're the wrong fit after you've already paid for them. Do your homework. Ask the hard questions. Look beyond the shiny parts. And make sure the business you're buying is the business you actually want to own.