before buying business
before buying business
Here are the 4 questions to ask before buying business trade:
1. Do I comprehend and love the trade?
You need to go INTO and BEYOND the financial statements … sure trades are all about money. Sure you need to understand EXACTLY how they make and spend their money. But, you also need to understand how SUSTAINABLE that money is in the future. Is the business changing? Is the industry altering? And, you are going to be heavily trapped in (both time and money) so you had better LOVE what you are going to be doing and really UNDERSTAND it!
2. Am I relaxed with administration?
Unless you plan on firing everybody and starting again (you had better NOT purchase the trade if you’re setting up on doing that!) then you are going to have to have 100% faith and hold up in the existing running business team. The outgoing owners MAY be kept on in a consulting capacity in the short term, but they should not be required to run the business, moving forward – the occasions are you will make changes, and they will not be glad with those buying business modifications (after all, they would have made those modifications already, right?).
3. What is my EXIT plan?
Before you go into a trade, you must know how you are going to get out of it. Maybe, you won’t know accurately who you will get to, but you will know what kind of trade will want to purchase your trade, and when (maybe not in terms of years, but at least in terms of stage of business development).
And an associated before buying business question,
4. How ‘repeatable’ or ‘expandable’ is the business trade before buying it ?
… in other words, how much can I make it GROW?
Nobody will buy your dealing unless they have faith in that they can:
(a) manage it without you, and
(b) resume to mount it.
You can only goal these if you:
(i) regulate your trade, and
(ii) craft your first dealing as though you were going to create 500 more just like it (whether you actually do or not doesn’t matter).
Don’t believe me? Check out this little snippet …
Ray Kroc paid the McDonald brothers $1 Mill. to buy them out, about FOUR TIMES what he estimated their share of the dealing was really worth …
… who do you think had the last laugh in that little transaction?
As you go on your journey in paying for a license, there are a number of aspects you will need to know before buying business . Of the several, one that rises to the top comprehends the order for your aimed franchises good or service. Knowing this one element, will help you shun common pitfalls
From the jump, you should be able to allege the phase of command for the franchisor’s invention or service within your specific and wide-ranging place of procedure. The demand should be ample, that is, the number of people willing and able to purchase must be there enough quantities. Sound clear? Most beginning trade hunters not succeed to comprehend this basic belief.
besides sensing the plane of stipulate, you should also think about its nature. Is it seasonal, returning or unwavering? trades with seasonal command will lead to forecasting troubles and maybe cash flow issues, in particular during the off-peak season. Therefore, if you want a trustworthy forecast, then go after a license with a constant order.
in conclusion you should bear in mind whether the require for the franchisor’s outcome is short-term (i.e. a fad) or whether it is sustainable over the long term. enduring command is preferable since it makes the trade well of continuity. There have been far too many stories in the news about the most modern “fad” franchises closing it’s doors. Be wise, and select a license with long term command.
comprehending the command for a product or business service is vital. Bearing this fact in mind while looking for a license will aid ease your hazards before buying business , and ultimately add to your trade accomplishment.
