How to buy a small business

If you are someone who wants to own and run a small business but doesn't want to go through the process of starting your own, then buying a small business can be the right move for you. Many small business owners have gotten their start by buying an existing small business and bypassing the challenge of getting a business up and running. You should be aware that buying an existing small business will most likely cost you a great deal more then starting one. However, you will have the advantage of walking right in and running the business.

It cannot be stressed enough that anyone who is considering buying an existing small business will need to take the time and make the effort to do extensive research in order to insure that they are making a wise investment. If you are not prepared to do this then buying an existing small business may not be right for you. Here is what you need to know about how to buy a small business-
- Choose a small business that you fits your experience and expertise-You should never let your emotions be a factor when you are considering buying a small business. Just because you love a particular product or service or the people who provide it that is not a good enough reason to buy a small business. You should make sure that you are buying a small business that fits your experience and expertise. While buying a bakery can sound fun if you have never stepped inside a kitchen you will find the learning curve quite steep. Keep in mind that there won't be a lot of time to learn about the small business that you buy since you will need to be able to walk right in and run it. This makes choosing a small business to buy that is based on your experience and expertise quite important.
- Take the time to do the right amount of research-Buying a small business is not a decision that should be done quickly. You will need to be willing to commit the time needed in order to do the right amount of research. If for any reason you are being pressured to buy a particular small business this can be a red flag. Remember that this is a big investment and you want to know that you have found out everything you can about the small business before you put any money in it.
- Know what you are looking for when shopping for a business-The first thing that you should do is ask for the business plan for the small business that you are hoping to buy. If the owner does not have a business plan or refuses to show it to you this is red flag that means you should move on to another business. The business plan will be the tool that is able to show you how successful the business really is. You should also be granted access to all of the financial documentation. You want to know what assets the small business has, how much debt it is carrying, and what the cash flow is like. This will let you know how much risk is involved in buying that particular small business. You should also learn all you can about the competition and the market share that the small business has. Again if the small business owner refuses you access to any of this information you should not consider buying the business. Once you know the small business that you want to buy you should then involve the appropriate financial professionals to help guide you in the buying process.