3 Important Considerations for Those Considering Buying a Business
For a first-time business owner, the prospect of buying a business can be quite overwhelming. You may not be certain where to start, what to do next, or even if you are making the right choice. That is why it is so important to work closely with an experienced business lawyer. A knowledgeable attorney can help you ensure that you have considered all of the necessary details and put in the best position for long-term success. As you consider your options for buying a business, there are very important things you should be keeping at the forefront of your mind.
Franchise or Standalone Company?
The first decision you will need to make when buying a business is whether you want to purchase an existing franchise location of a larger company or an independent private business. Both, of course, have unique advantages, as well as potential drawbacks, and your choice will depend on your leadership style and the type of business you wish to run. A franchise opportunity often includes brand recognition, advanced marketing, more in-depth training, and guidance from the parent corporation in exchange for franchise fees, percentages, and, often, less freedom to make decisions. An existing private company will generally offer substantial opportunities to impact the direction of the business, with less revenue-sharing, but, possibly without the proven business model and available training.
Why Is the Business Available?
Existing business owners do not simply sell their companies for no reason. One of the most important pieces of information you need in making your decision to buy is an understanding of why the current owner is willing to sell. Does he or she know something about the future of the market and feel that the window for profitability is closing? Or maybe, the business itself is hemorrhaging resources, and the owner is unable to fix the problems. If either of these are true, you may want to reconsider. However, if the owner is being forced to sell for personal reasons, such as a divorce, health concerns, or retirement, the health of the company may be just fine.
Research, Research, and More Research
You should never make an investment without an exhaustive investigation into a company’s history and financials. If you are considering buying a franchise, collect data on the parent company, the specific location in which you are interested, and other locations in your area. If you have your eyes on a small or medium private business, obtain records for as far back as you can. These documents should include profit and loss statements, inventory records, tax returns, contracts, lease agreements, accounts payable, accounts receivable, sales records, and financial projections. Review them carefully with a business attorney so that you can make a fully-informed decision.
Work With a Hoffman Estates Business Planning Lawyer
Just as with other aspects of the process of buying a business, you will also want to choose a lawyer carefully. You deserve a qualified legal advocate who will always keep your best interests and success as a top priority. At the Gierach Law Firm, our experienced Naperville business attorneys are ready and willing to work closely with you as you prepare to embark on your new adventure. Contact our office today by calling 630-756-1160 to schedule a confidential consultation.