We all encounter restaurants, convenience stores, guest houses, small manufacturing units, hair dressers and so on. They are the most prominent and simple examples of a small business. These businesses are basically characterized by less sales volume, fewer number of employees and they are normally not very dominant in their field of operation.
The best part about these businesses is that you get a lot of independence, and there are quite a few concessions and benefits given by governments as well. That's one of the major reasons, why people sometimes quit their high flying jobs and set up their own business, and indulge in buying a small one. So, if you are contemplating buying a small business, here are a few handy tips.
Things You Need to Know about Buying a Small Business
- Identifying the kind, size and location of the business you want to purchase, is the first step. Jot down the search criteria and be clear in your mind about the credentials of the business you want to own.
- Analyze your finances. Just take stock of how much you can spend and invest. Give it an extremely serious thought.
- In addition to that, analyze and clarify your expectations from the business. A business option chosen with discretion and a proper thought can prove to be very rewarding, but plunging in the dark waters of a wrong business, can make life hell for you. So what you need will be strategic planning for a small business.
- Check out the financial status while buying into a small business, especially the liabilities and glitches. Also find out the reason as to why the business has been put on sale.
- Another very important thing to look out for, is the growth potential. If there is hardly any, that gives you the answer to the earlier point.
- Anticipate, if the owner is going to make a dash for it once he or she sells you the business. Ideally you would be an amateur, so you would need some business training and support which should be given by the original owners. So make it a point to add that clause about training and support while you write a business contract.
- Negotiation is the keyword. Communicate and negotiate and get things started.
- Always keep tabs on the business till the time you fix upon it, and till you seal the deal. See if you get to know some wishy-washy stories from those who have been in the business for some time.
This was a rough idea about buying small businesses. The following text will give you a checklist to help you out.
Checklist for Buying a Small Business
- First and most important is opting and registering the name of your business.
- Then, fix and set up the legal form for your business.
- Writing a business plan would help you further in properly establishing the business.
- Develop relationships with bankers and other professionals and most importantly an attorney.
- Complete the legalities and fulfill all the legal requirements for making the business operation smoother.
- Another crucial thing is to get all the licenses and permits needed for your business.
- Setting a price of your product or service is a major aspect of buying a small business, or rather any business.
- The financing process and allied issues should be sorted and clarified.
- Plan for risks, losses and consequently arrange for insurance and get the office space, equipment and material suppliers.
- Decide and fix the record keeping systems and financial management system.
- You would also need to chalk out a marketing plan, then hire employees and finally develop a daily managerial plan.
Buying a small business is no mean feat. There are innumerable things on the anvil, and you have to always be on your toes. But if you get in the right business, then no one can stop you from earning the bucks. The only catch is getting the right business and business terms.
That's all about buying small businesses! Good luck!