A business could easily be one of the most expensive purchases of your life – especially if you get it wrong. Much like buying a house, before you commit to anything you should get the foundation and structure thoroughly checked over. However, much unlike a house, a business comes with so many more complications that if not properly assessed could end in disaster. Some of the things that you should consider before making your business purchase include:
Who is selling the business and what is the reason behind the sale? It could be possible that the owner of the business is simply taking advantage of an exit opportunity to pursue another venture. However, you should thoroughly investigate their reasoning and make sure they know something you don’t. Take a very close look over their sales records to make sure no obvious patterns of loss are arising and see if any potential major competitors are moving into the marketplace over the coming months and years.
Costs and Liabilities
Do you know exactly what the ongoing cost of owning this business will be? Once you take over, how much will you need to pay staff, any building rental costs, bills and taxes? Do you know if the business is up to date with all of their existing suppliers bills – or are you going to have to settle a backlog when you take over? Without getting the full story on how much money you will need to pay out on top of the cost of the actual purchase, you could quickly be in for a nasty surprise.
Assets and Inventory
Is the current stock on hand included in the sale or will that be sold separately? Does the purchase include buildings and vehicles, and have these all been thoroughly checked over for any potential issues? Is there any Intellectual Property that will be included as part of the sale or does this belong to the former company owner? All of these things need to be drawn up as part of the sale or you could be surprised how little of the business you actually own after the sale has completed.
Your Business Partner
If you’re buying the business with a partner, do you have all of the necessary documents and contracts in place? While everything may seem perfectly amicable at the moment – things can change very quickly if bad decisions are made further down the line. You want to make sure that you properly protect both yourself and your partner from any potentially nasty situations in the short or long term future.
There’s an awful lot to consider when buying a business and these points just scratch the surface. Depending on the nature and structure of the business, the process could spiral out of control without a professional eye overseeing the whole purchase.
When you’re thinking of purchasing a business, speak to one of the friendly and helpful Business Law specialists at Antunes Lawyers today on 02 9964 0499.