How to check to see if start ups that are for sale are worth buying

If you are thinking about starting a business you should also look into buying an existing business. While buying an existing business can cost a lot of money upfront you also have certain advantages that can outweigh the high cost. But the thing is that sometimes it can be rather hard to tell if the businesses that are for sale are going to be worth buying or if they are just going to be a complete waste of time.

Difficulty rating: Moderate

Step one:
The first thing that you are going to want to do is to ask yourself some important questions, basically you are going to need to figure out if this business is right for you and if the concept will work for you. In order to figure out this information you are going to really need to know a lot about yourself and why you are interested in that type of business. You should also make sure that you have some kind of knowledge about that kind of business. So when trying to figure out if the business is worth buying you are going to want to ask yourself does it work for you, does it fit with your interests, do you have the skills required to run that type of business, etc.

Step two:
Now that you have figured out that the start up business is going to be perfect for you to buy you are going to want to really take a look at the business itself to make sure that it is worth buying. When you are looking at the business you are going to be trying to make sure that the business is going to be successful rather than a money draining investment that you end up quitting on after a few years.

Step three:
The first thing that you are going to want to do is to ask the current owner for the company's business plan. The business plan is like the blueprint for the business and can give you a lot of great advice, not to mention it can tell you about the actual potential of the business. If they don't have a business plan you should be rather leery about buying the business.

Step four:
The next thing that you are going to want to take a look at is the actual numbers of the business; basically you are going to want to take a look at the company's financial statements so you can see what is really going on with the business. The financial statements are going to give you an even better picture about the business than the business plan. But something that you need to be aware of when it comes to looking at the statements is that many business owners don't like to let that information out even if they are selling because of numerous reasons. So make sure you ask them plenty of questions about the financial statements so you get accurate information.

Step five:
You are also going to want to make sure that the business you are going to be is actually worth the price that they are asking. Some of the things that you want to consider when trying to determine the actual worth of the business is:

• Value of the company's assets
• How much debt does the company have
• What are the sources of the company's current revenues and profits
• How volatile is the business
• What is the competitive environment like
• Is the business's industry growing or declining
• Is the business established

Step six:
Now that you have determined that the business is worth buying you are going to need to set up the deal to actually purchase the business you are going to need to set up the deal to actually purchase the business. To do this you are going to want to use some professionals to ensure that everything goes right. Two of the most commonly used professionals that are used when purchasing a start up business are accountants and lawyers.