Things to Ensure While Buying an Established Business

In a highly competitive market, creating a business venture becomes daunting as you will have to develop a business plan, strategy and much more; however, in an alternate case, if you choose an established business for sale, then you would not have to struggle much
  • BY Jaspreet Kaur

    Feature Writer, BusinessEx

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  • Dec 11,2020
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  • 11 Mins Read

The Indian economy is returning to normal gradually. With the recently ended festive season, consumer demand was witnessed in the market, which was lower as compared to other economies. This helps MSMEs to revive from the crisis that has shook the entire economy. 

As per DGCIS data, survey reports have shown that disruptions caused by the Covid-19 pandemic have impacted MSMEs earnings by 20-50 per cent, micro and small enterprises faced the maximum heat, mainly due to liquidity crunch. Companies that could not bear this heavy blow stumbled in the race and crashed. There is not any other way out for them. However, interested buyers or industrialists can change this scenario. 

Why Buy Established Businesses ?

In a highly competitive market, creating a business venture becomes daunting as you will have to develop a business plan, strategy and much more. Finding the right employees is another toil for the entrepreneur as you would need to narrow down candidates. In an alternate case, if you choose an established business for sale, then you would not have to struggle much. 

There are a plethora of things that you receive ready-made such as a business plan, infrastructure, and skilled employees. All you need is to acquire the business and lead it expertly. 

Things to Ensure While Buying an Established Business 

When you are selecting a business for acquisition, you need to know various things about it prior such as how it was introduced, its customer network, monthly revenue, relations with vendors and so on. Besides this, here are some important things that you need to make sure before locking a deal. 

Financial Backdrop 

You need not get impressed by attractive prices that sellers place on their business. A thorough investigation has to be done before taking any decision. You have to know financial statements of the business along with other details. It is important to ascertain if the business is not debt-laden. 

You can primarily gauge its actual worth after finding out its financial background. For that, either talk to the business owner directly or consult an auditor. 

Market Reputation 

When a businessman sells his business, there are factors that enable him to do so. You, being a business buyer, have to search reasons. You need to know what factors led the established business to close down permanently and if you have capability to stand it upright again. 

Checking the market reputation of the business is also helpful. You can see how competitors work and what type of competition prevails in the market. Seeing the market you can decide whether you want to buy the business or look for other businesses. 

Customers 

To know if a business is promising, you have to calibrate its customers. Check if there are repeated customers or loyal customers, how many new customers have joined in the last few months, and what customer reviews are. 

Understanding customer trends will help you know if the business is worth investing in or not. Though, you should always prefer acquiring a business with a huge customer nexus. 

These reasons should be kept in mind while buying an established business for sale. If there are some more things that a business buyer should know then please write in the comment section below.

 

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