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Did you know that you can start a business today…right now? While building a business from scratch has its own advantages, buying a business is one of the fastest ways to start working from home. There are many advantages to buying a business including brand recognition, working systems, existing customers, available inventory, and support and training. Nevertheless, buying a business also comes with potential problems and issues such as costs, risks, and sometimes limited control such as when buying a franchise.
There are four different ways to buy a business:
1) Buy an existing business that was started from scratch by someone else.
2) Buy a franchise.
3) Buy business opportunity
4) Buy into a direct sales company
All offer a host of advantages and disadvantages, so before signing a contract and paying your money, do your research and get answers to the following questions.
Buying a Business Checklist
Below are a set of questions you should answer before buying a business whether its an existing business, franchise, biz op or direct sales. This is a generic checklist. You can get business type specific check lists such as Franchise Buying Checklist in The Work-At-Home Success Bible.
- Who is the seller/company? Did he/she start the business and if not, who did?
- How long has the business been in existence? How long has the seller owned it?
- Why is it for sale?
- What is the price? How was the price determined?
- What does the price include?
- Is there inventory? What is its value?
- Are there any equipment or materials included in the sale?
- Does the purchase include ownership or use of logos and the brand?
- Is a customer database included? What is the size and purchase history?
- Does intellectual property rights convey with the sale (trademarkes, patents, copyrights)?
- Will the seller provide training and support?
- What is the current financial state of the business? Debs? Assets? Accounts receivable?
- Does the business/seller have contracts with specific ventors/contractors and will those relationships transfer to you?
- Is the business required to operate under any laws, franchise or license rules, or other agreements?
- What is the history and track record? What are the last two years of sales and returns?
- What current marketing campaigns are running?
- What is the reputation of the business?
- What is the quality of customer service?
What is crucial to know is what EXACTLY are you getting for your money. If you buy a business but the sale doesn’t include the brand or customer database, you actually aren’t buying very much. You also want to make sure you’re not buying a business that is on the verge of bankruptcy. Finally you want to know what laws or legal obligations the business is required to work under or uphold.