Avoid These Mistakes When Buying A Business

Buying a Business? Avoid These 5 Major Mistakes

Here is a quick summary of items to check so that you have a better chance of buying a business and ensuring a successful outcome years down the road.

Avoid these 5 major mistakes when buying a business:

1) Due Diligence, Due Diligence, Due Diligence
Doing a solid job of due diligence will help you avoid buying the wrong business or paying too much for the business. Executing a structured plan is critical to ensure by the financial and business operations aspects of a business are understood

2) Not Having Enough Cash Reserves
Do not buy a business until you have the necessary funds to both buy the business and the necessary funds to keep it open after the purchase. 

3) Assuming Cash Flow will Cover Debt
There will always be a transition period when buying a new business. The transition can impact cash flow. Most buyer under estimate this impact.

4) Paying for Potential 
In many businesses the value of the business is based on the condition at the time that you purchase it.  There may be circumstances where potential is worth $, such as in a franchise or other proven situation, areas such as patents, devices and other situations where there is value in potential.  Potential is something that typically requires your expertise & research to continue & make prosper, then it becomes your choice to gauge the potential and possibly negotiate the price through an earn-out agreement to avoid full risk. 

5) Wrong Entity Structure
Consult an attorney and possibly an accountant or financial advisor to help determine what the best entity structure for you is.

For a complimentary consultation:
Contact  Cecil Williams (cecil@bizbrokerflorida.com) or call  at 888-925-5055 ext.206.  Visit my personal website to search for business for sale in Florida www.bizbrokerflorida.com  Also, visit our Florida Business Exchange website at www.fbxbrokers.com