Some people prefer buying businesses because they want to avoid the hassle involved in creating one. Starting a business is pretty hard compared to buying a profitable business. Besides this, starting a business is risky and time-consuming. An entrepreneur has to look for capital, employees, and all resources required to enable the business start operating.
Therefore, people buy businesses because they enjoy the fact that everything is in place and they enjoy having the business bring in profit from day one.
If you don’t have the energy and time for starting a business, you can still own a business by buying one. However, you must consider these 5 factors before buying any business.
Before buying a business, evaluate and analyze the intensity of the competition that it faces. Do not buy a business if you realize that the competition is so intense for you to handle.
All industries always have at least one or two companies that have the larger share of the target market. Buying a business in that same industry that does not show potential of living up to existing competition may be a decision you end up regretting later on.
2. Know and Learn the founder’s skills
When taking over a fairly successful business, there are definitely factors that went into making the business successful. One such factor is the organization culture set by the founder. You are definitely your own person and have your skills and experience that you bring to the table. However, you can blend these into the existing culture.
Therefore, always find out what worked and what didn’t work so that you are more aware of what changes to make.
3. Political stability
Always ensure that the region or country in which you are buying the business is politically stable. Sometimes people sell their business enterprises after sensing political instability in their regions.
Always know the reasons for selling the business. Sometimes some entrepreneurs sell their businesses after noticing a big problem that the business might encounter in future.
Lastly, always check the profitability of the business because profitability greatly determines the price at which you will buy the business. For instance, if you discover that the business is not profitable, you have the right to buy it at a low price. On the other hand, the business owner is justified to sell the business at a high price if it’s a profitable business.
Purchasing a business enterprise is better than starting one. However, it might be a risky decision if you don’t check the above factors before buying one. Lastly, I believe there are several other factors to check before purchasing a business. You are therefore free to add some of them in the comment box below.
Good luck with buying your business.
Isaac Wechuli is a Kenyan entrepreneur, professional research writer, and founder of www.unboundedwisdom.com. He loves enlightening people on the factors that could help them live a happy, and successful life.