Buying an existing business is often less risky and involved than starting a new venture yourself. However, nothing in business should be undertaken without well-informed decision making. There are basic concerns and issues that should be checked when buying any business.
Due diligence should be performed to initially assess the business that you are considering buying. You should ask why the business is for sale in the first place, examine the position of the business within the industry, and determine the public perception of the business and the industry as a whole. It's also important to consider the track record of the business.
The fair market price of the business should be determined from research, including a determination of the state of financial health the business is currently in. This can be done by examining balance sheets, income statements, sales records and tax returns for at least the past three to five years. Projected financial statements are also key indicators that should be analyzed.
Inventory and Equipment
The status, condition and appraised value of all inventory on hand are all important things to find out and consider. A list of all the equipment, office furniture and assets of the business should be created, and the present condition and market value of all items should be assessed.