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2 Things to Consider While Buying a Business

Existing businesses can be enticing but one should be cautious before making a decision
BY Jaspreet Kaur
Feature Writer, BusinessEx
Oct 31,2018

The future glimpse of running a business often entices people and correspondingly incites them to commence a business or invest in the existing business. Both the options have certain attributes connected to them.  The former option would be challenging for the aspirants as they would have to make ends meet and could not give up the business whilst the latter option would require less struggle as revenue generation and the brand image would be definite. As a result, procuring an operating business becomes a probable decision of the investors. However, buying a business should be a thought-out decision as pros, as well as cons, should be measured while making a deal.

Why do Existing Businesses Seem Alluring?

An existing business serves various benefits compared to the non-existing or newly established business. In case of a new business, an entrepreneur needs to work day and night to make the brand prominent. Further, he would have to make a lot of investments to stabilize the company in the initial five years. Therefore, it does not seem to be a promising affair.  

However, buying a business that has a good turnover, is a prominent brand, has a wide customer base and generates satisfactory revenue, seems a profitable option. Though, there are negative aspects too that are associated with the deal which are deception, forged marketing figures, and inappropriate product and services. To avert choosing this kind of business, it is recommended doing a thorough investigation.

Other than this, interested buyers should also reflect on two things before buying a business. These things are eminent advises that they should follow while buying a business.  

  1.    Does the Business Build Interest?

Initially, all existing businesses captivate buyers as the sellers work a lot of the business models to attract potential buyers. Owing to this, there are chances that the buyer can make the mind of buying the business at first glance. However, the buyers should avoid making a swift move. Despite the growth prospects of the business, the buyer should ponder and realize if the business actually interests him, will he be able to handle the business on his own?  Can he devote time as well as energy to comprehend the business model?

These questions eventually answer intrinsic thoughts of the restless mind and would help to know the interest of the buyer.

  1.    Is Buying the Business a Profitable Investment?  

Once the buyer builds his interest in purchasing the business, the next step involves determining the potential of the business. This step basically entails ascertaining profitability and stability in the market. To seek answers to these questions, the buyer needs to delve deeper, and research about the background of the company and correspondingly ascertain the root cause of selling the business. Furthermore, to ascertain better financial reports the buyer should garner the financial report of the last two years. A detailed report would answer various questions which would surround the deal.

Imbibe these steps into the practice and thus, buy the best business in the industry.  

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