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Four Things to Consider When Looking to Acquire a Business

Four Things to Consider When Looking to Acquire a Business

Acquiring a business gives you the freedom to advance, but there are many considerations to make before making a final decision.

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While many entrepreneurs dream about the idea of starting their own business, sometimes it is instead a better option to buy a business that has already been established. Starting a business from scratch tends to come with many risk factors, and has the potential to fall through if not vested accordingly. Acquiring a business can be less of a liability, and can certainly be a better option for those looking for a clear history of sales and profit. Acquiring a business gives you the freedom to advance and make things your own, but there are many considerations to make before making a final decision. We have outlined a few crucial factors to analyze and consider before acquiring a business.

Industry

The first consideration to make is what kind of business you are looking to acquire. It is usually the best idea to take over a business that specializes in your areas of interest and expertise. Think about your hobbies and topics that you are passionate about. Acquiring a business means fully investing yourself as an owner amongst your employees and peers. The more you know about an industry, the easier it will be to run the business itself. Look to acquire businesses that you have had past field experience. This will make it easier for you to relate to your future employees and clients.

Size

Determining the size of the business you plan to acquire is an essential consideration to make. Are you looking to own a smaller family-owned business, or are you interested in taking on a larger company that results in higher profits? There are many crucial differences between small, middle-market and large companies, so it is important to weigh out the options. Acquiring a larger business means a higher purchase price, therefore making the deal more complex. Acquiring a large business also means overseeing more employees and catering to a variety of clientele.

Location

Ask yourself- are you willing to make the move from your current residence for the business? Where is your ideal location for you and your family? If you’re not prepared for the change in location, moving could make the transaction stressful. The location of your future business can determine many factors such as taxes and labor costs, as well as other financials that could affect the closing of the deal. If you do decide to acquire a business in a distant location, be sure to become familiar with the area and the logistics associated with the business.

Personal Circumstances

Acquiring a business could entail major lifestyle changes. If this is your first time acquiring or owning a business, it is necessary to prepare yourself for a hands-on experience. Are you ready to spend ample amount of time getting to know the business and your new associates? Do you want to own a business that requires traveling frequently, or do you want to stay in one place? Think about how involved you want to be with your future company and decide what kind of business you would like to acquire based on these factors.

Once you have chosen an industry, size, and location, it’s time to make other important considerations. Here are a few questions to ask yourself once you have decided on a business that you would like to acquire:

  1. Can you see yourself running this business?
  2. How can you improve the business once acquired? (sales, margins, efficiency, technology, etc.)
  3. Does it make financial sense to acquire this business? Can you pay yourself a living wage, service the debt, and have a return on your cash injection?

Work with a Professional Intermediary

There are a variety of factors to consider when looking to acquire a business, these being only a handful of many. Buying a business is a serious decision, and it certainly takes plenty of research and planning before moving forward. Once you have weighed out your options, consider working with a professional business broker to help you through the entire process. A professional intermediary can help you acquire your ideal business. View businesses for sale and contact Viking for more information about buying a business.

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