Many individuals aspire to become successful entrepreneurs. It enables them to become their own boss. However, they may not have the ideas to introduce a groundbreaking product in the market. In such a situation, they may think of taking over an existing commercial establishment. Industry experts say it is a less risky venture than establishing a new concern from scratch. However, potential proprietors need to dig very deep into their pockets to acquire the establishments. In the process, they have access to its equipment, property copyrights, and patents. It gives them the chance to showcase their talents, in turn, the fortunes of a loss-making business.
What do entrepreneurs need to consider when taking over an existing business?
Hardly any financial consultants in America can boast of achieving the status of Larry Polhill. He specializes in fields as diverse as business finance, acquisitions, and corporate mergers. His career spans 25 years. During this period, he has been responsible for turning many loss-making concerns into successful organizations. These include Photocircuits Corporation, American Pacific Financial Corp., Capital Foods, LLC and Cafe Valley, Inc. In each of these organizations, he held the positions of Director, Chief Executive Officer, Chairman, and President.
This financial expert says owners generally sell their businesses for many different reasons. However, the individuals purchasing such establishments need to do their homework. Only then can they make the right decision. Otherwise, they can end up wasting both their time and money. This is the last thing these aspiring entrepreneurs want to do. Above all, they should look into the following 3 important factors:
- Determine what type of business to acquire
Acquiring an existing business is an important decision an aspiring entrepreneur makes during his/her lifetime. This individual has to seriously consider what type of establishment he/she is capable of operating. Only then can he/she make the right choice. When selecting such a concern, he/she need to at its location, size, and financial state.
- Conduct thorough research
An aspiring entrepreneur may come across a business worth buying. However, he/she should conduct thorough research on the concern. This proprietor should have a clear idea of concern present financial condition, production facilities, market, and customers. Moreover, this buyer should be aware of any outstanding liabilities of the previous owner. This includes pending taxes and other legal obligations with regulatory authorities. Only then can this potential proprietor negotiate for a suitable purchase price for the establishment.
- Obtain the necessary funds
After arriving at a suitable purchase price for the establishment, the entrepreneur has another obstacle to overcome. He/she has the arrange for necessary funds to finalize the sale agreement. There is no hard and fast rule this individual has the sum of money at his/her disposal. In such a case, he/she can choose to take a bank loan or approach a venture capitalist. The proprietor can also enter into a financing settlement with the seller. In this arrangement, he/she pay equal installment to the previous owner over a certain period.
In the opinion of Larry Polhill, taking an existing business can work wonders for aspiring entrepreneurs. It allows them to showcase their talents in converting a loss-making concern into a lucrative organization. However, it is a very expensive venture. They have got to keep in mind the above 3 important factors when choosing the right establishment.