Thinking about buying an existing business? Make sure to take the time to investigate the business thoroughly before jumping in.
Investigate possible issues. It can be tempting to get into the business first and then worry about any problems once they’ve developed. Before making the commitment to buying the business, you should investigate any problem areas because they may actually indicate to you that you shouldn’t buy that business.
Make sure the price the seller is asking isn’t too high. You’re not only investing your money, but you’re also investing your time so it’s important to fully understand your expectations of return on your investment (purchase price and time). Analyze the past performance of the business to ensure that it will be able to satisfy those requirements.
Ask questions. Buying a business is a big investment. Make sure that you ask enough questions and ask for the financial history of the business so you can make an informed decision. Inability or unwillingness to answer your questions or provide proper financial information should be a red flag that indicates the business could be overpriced.