Pointers on Buying a Company or Enterprise

When a person becomes ready to spread his wings and run a business on his own, the first impulse is usually to build an enterprise from scratch. Starting a new business would entail some groundwork which includes concept development, market research, business design, marketing and financial plan, operational framework, manpower among others.

However, there is another way to have your own business with less challenges and risks than starting a new one from scratch, and that is buying an existing company or enterprise.

buying a company

Acquiring an existing enterprise would mean that everything you need for the business operations is in place already. This means there is no need to worry about building a customer base, establishing market presence, steady cash flow, and getting qualified employees because they are all part of the package when a company is bought. You simply have to take over the operations and work with a tried and tested business formula. Of course, you can always make a few tweaks in the formula or change it for the improvement of the business. The downside in buying an enterprise is that it is definitely more costly than starting a business from scratch, but there are also banks and lending institutions that can help you finance the purchase. These institutions are more at ease with lending funds for buying companies with good track records than in starting new businesses that are still unheard of.

In choosing a company to buy, one must weigh their options carefully and do some research on the enterprise that he intends to buy. Know your skills, experience and level of expertise and match it against the type and size of business that you would like to purchase. It is always best to get into an industry that you can easily navigate or one that you are familiar with, in order to make good business decisions. Carefully evaluate the company that you intend to buy especially the ones that are sold with unrealistically low prices. Watch out for ones with outdated processes, high operational costs, resentful staff and obsolete stocks. These are ventures that may cause your finances more harm than good.

Finally, get the right people to help you in buying your own company. You may need a broker in finding and negotiating on a suitable business for you especially for first time buyers. Broker services come with a fee which is usually around 5% to 10% of the sale price.

One can also hunt for “buys” on their own through ads or in local papers and referrals from personal network. Once you find a company to buy, you’ll need a banker, accountant and lawyer to help you process the deal properly.

 

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