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October 6, 2010 / Tony Arena

Buying a Profitable Business – Tips

As people begin to wonder about the long-term viability of the stock market and question whether they should really classify their home as the most significant part of their retirement portfolio, they may begin to look at alternatives. Those investors who are more adventurous are considering the purchase of a business for sale, as part of their ongoing planning. Investment consultants and advisors would undoubtedly place this idea within one of the riskier investment brackets, but nevertheless if you have a certain skill or experience in a certain type of business, press on ahead. Always engage with competent professionals and make sure that your process of due diligence is complete and thorough. Remember, that if everything goes well, you will most certainly realize a significant return on your investment.

A few entrepreneurs are capable of snapping up a number of different businesses and then bringing in general managers or other executives to run them, but the majority of people would classify themselves as “hands on.” It is so important to dive into the business and understand what makes it tick, so you need to be able to get your hands dirty and undertake even the smallest of tasks as you educate yourself. Of course, you don’t want to be working 70 hour work weeks as part of the “pleasure” of owning a new business, but in the beginning you will need to allocate a good bit of your time and attention to this education. Generally, buy a business for sale only if you have a real interest in its field. You simply cannot afford to lose interest, just because you are somewhat passive about the products or services sold there.

Don’t go it alone when contemplating whether to buy business assets. Whether you buy the business or not, you must be willing to put aside a certain amount of funding to move the process forward and some of these funds should be allocated to your advisors. Seek out an accountant skilled in the particular line of business in question and one who is proficient in tax matters. Your attorney should be up-to-date with contract law and you should also get somebody to provide you with a separate business valuation. In all cases, it’s more than advisable to seek out competent professionals who engage in business in, or very near to, the target locality. They will be aware of certain facts, figures, trends or other unquantifiable details, some of which may seem to be petty, but may well turn out to be critical when viewed alongside a raft of other information. By all means rely on the hard facts and figures that will be revealed as the process of due diligence continues, but every single item of information that your local advisors will provide to you will ultimately help you to make your decision. You simply do not want to go it alone when considering a business purchase and remember that funds invested now will be well spent, especially if you are unfortunate enough to come across one of those “unforeseen circumstances” in the future.

Richard Parker is the President and founder of the prestigious Diomo Corporation – The Business Buyer Resource Center. His celebrated materials, seminars and consulting have encouraged thousands of aspiring business buyers from around the World to pursue their dream to buy a business.

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