Starting your business from scratch can be stressful, time consuming and overwhelming. While you might have a mind of an entrepreneur and want to be your own boss, you might not want to deal with the stress of starting one from the ground up. There is a solution. You could buy a business. There are many other advantages of getting into something that already has a build client base, however, there are also other things to keep in mind.
Cost
While buying a business is most likely less risky because it already has a clientele, procedures, and systems in place, all of this comes with a cost. Depending on the type of business, however, many can be started today with minimal cost, if you are building from the ground up. However, if you are looking to purchase something that is already up and running, it will require you to pay significantly more to inquire it. With that being said, it is important to keep in mind that financing may be much easier to obtain as bankers and investors feel more comfortable dealing with businesses that have already proven to be profitable.
Choosing the Right Business
You must also ensure that the business you are purchasing is not only something you are interested in, but also something that you have knowledge about. It may be very difficult, at least to begin with, to run a restaurant, if you have no experience in doing so and do not understand what it takes to keep one going. Too often businesses fail after being purchased because the new owner did not have enough knowledge about the industry to keep it going the correct way.
Legal Aspect
While you may be able to look at the business’ books and see that it is profitable, there are also many other aspects when purchasing a business that must be fully examined. First and foremost, all contracts and legal documents you enter into, should be carefully reviewed and analyzed by an attorney to ensure that they protect your interests. Those documents may contain certain conditions and terms of other binding contracts, subcontractor agreements, incorporation information, registered trademarks or copyrights, etc.
In addition, all lists of liabilities should be carefully examined by an attorney or accountant to determine costs and legal ramifications.
You should also ensure that you fully understand the relationships you may have with any other companies, like suppliers.
Lastly, depending on the type of business, you might need certain licenses, insurance or will be held to a certain safety standards, for example by OSHA. Again, having a full legal representation through the process will help you ensure that you fully understand all the details that go into running a business that is already performing.
We Can Help
Have further questions or need assistance purchasing a business? Contact Sobon Law LLC today to help you (216) 586-4246.
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