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Key questions to consider before buying a business

ArticleID 71  
Writer Grace Odinga
Category Personal Article

Many people love to start their own businesses from scratch but in today’s world, entrepreneurs choose to buy and improve an existing business. However, it would be unwise to plunge right in without asking some critical questions like the following;

• Is it the right type of business for sale in the market in which you want to operate?

• What experience do you have in this particular business and the industry in which it operates?

• How critical is experience in the business to your ultimate success?

• What price and payment method are reasonable for you and acceptable to the seller?

• What price and payment method are reasonable for you and acceptable to the seller?

Once you ask yourself these questions it is also important to consider the advantages and disadvantages of buying a business so that you can get into it with clear goals.

Advantages of buying a business

• It may continue to be successful

• It may already have the best location

• Employees and suppliers are established

• Equipment is already installed

• Inventory is in place and trade credit established may continue to be successful

• You can “hit the ground running”

• You can use the previous owner’s experience

• Easier financing

Disadvantages of buying a business

• “It’s a loser”

• Previous owner may have created ill will

• “Inherited” employees may be unsuitable

• Location may have become unsatisfactory

• Equipment may be obsolete

• Changes can be difficult to implement

• Inventory may be stale

• Accounts receivable may be worth less than face value

• It may be overpriced

Entrepreneurs need to weigh all these factors before buying a business as they may help in making a clear decision. If the advantages outweigh the disadvantages, you can buy the business and you will certainly be successful. It is also necessary to have a lawyer guide you through the buying process so that you don’t get a raw deal.

Buying a Business, Advantages, Disadvantages, Owning a Business
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