Naperville Business Lawyer Discusses Costly Mistakes When Buying a Business
As you probably realize, buying a business offers an opportunity to be your own boss and build the entrepreneurial career of your dreams. However, buying a business also comes with significant risks. In my many years as a business law attorney, I have seen nearly every type of mistake a business owner can make. I have also witnessed first-hand the personal and financial fallout of these mistakes. If you are thinking about buying a business, make sure you thoroughly research your options and avoid making business-buying mistakes that will limit your future success.
Neglecting Due Diligence
If you are considering buying a business, you probably feel a good deal of eagerness and excitement about the potential purchase. While enthusiasm is a valuable trait in an entrepreneur, it is important to balance enthusiasm with caution. When you see a business for sale and the offer seems too good to be true, it probably is. Proper due diligence is essential to avoiding a business purchase you end up regretting. Research the business’s customer lists, balance sheets, accounts receivable, accounts payable, and future projections. Spend some time at the business and speak with executives, managers, and employees. Verify that the information you are receiving from the current business owner matches the information you are collecting on your own.
Underestimating the Commitment of Owning a Business
Buying a business is not like other types of investments. You cannot expect the business to run itself. One of the biggest mistakes new business owners make is assuming that being a business owner is a part-time job. It is very likely that your business will consume a great deal of your time. If you are the type of person who likes to put in a 40 hour work week and go home, business ownership may not be right for you. Even if you purchase a franchise, you will still be responsible for a considerable amount of decision-making and management.
Not Having Adequate Financing
Proper financing is essential to meeting your business goals. Some of the most common ways people finance a business purchase is through funding from family and friends, debt financing, equity financing, and using mezzanine capital. There is no perfect way to finance a business, but you must ensure that your financing plans are reasonable and achievable. Do not overestimate what you can afford. In addition to a business lawyer, a business advisor can be a valuable resource to make sure you do not get in over your head financially.
Contact a Naperville Business Lawyer
Buying a business can be one of the best decisions you ever make. Ensure you avoid common mistakes that threaten the success of your business by getting legal guidance from an experienced DuPage County business law attorney. Call the Gierach Law Firm at 630-756-1160 to schedule a confidential consultation.