Buying a business is not a decision that anyone should take lightly. Everyone likes to talk about the revenue streams and the prestige of ownership, but there are many other things to consider as well.
Here are five questions to ask yourself if you are thinking of buying a business.
Contrary to popular belief, not all businesses are passive income machines that you can just run on autopilot. The majority of businesses, especially small businesses, are time intensive activities that will require your active participation. You may not be on the floor of the business making sales, but you will likely need to be involved in strategic decisions, important paperwork, and day to day budgets — not to mention the inevitable emergencies that will happen.
It doesn’t matter what business author you read, all of them give similar advice: It is your love of the business that gets you through the tough times. Anyone can be a business owner when times are good. When they are bad, that’s what separates the successful owners from the failures. Make sure you can tough it out during the bad times using love for the industry as your primary fuel.
Are you nearing retirement and looking for a business to supplement your fixed income every month? Are you taking on this business because it has a brand you want to uphold or a cause you need to see through? Your answer to this question determines when you want to get out of the business, which can drastically change whether you should own that business or not. For instance, if you are looking for monthly income from a business that is known to be seasonal, you may want to think twice before closing that deal.
The level of income in some businesses is not what people think it is. Would be business owners will often receive a huge wake up call when they look through the books of businesses they thought made a certain level of income. By the same token, some businesses you never thought would be cash cows are. The point is that you often cannot tell from first glance. You need to read through the books, and you need to know what you are looking at.
Many people go into a purchase without asking how long they want to actually be in the industry. You need an endgame.
If you have gone through these questions and you still want to make a purchase, let the dedicated experts at Murphy Business help you. Our decades of experience in the local area will help guide you into deals that make sense and keep you away from the pitfalls that many new business buyers face. Give us a call at (727) 725-7090 or fill out our email form directly from the website.