Owning your own small business can be a very rewarding experience, but it can also be a stressful time. Even if you handle everything properly, there are still mistakes that can be made if you aren’t prepared for what comes next. Before you make any investments, or sign any contracts, there are a few things that you should know when it comes to common mistakes that business buyers tend to make. Any company that you purchase is never going to be a risk-free opportunity, but the more that you know about these common mistakes, the more well insulated you could be from financial disaster.
Don’t Do It Alone
We’ve all heard stories about the self-made man, the woman who had a dream and achieved it against all odds, and other tales of flying solo into the financial wilderness. Those are fairy tales. The fact is that you need to have professional assistance to make sure that your business purchase is a success. Buying a business is usually best handled by a good broker, who can make sure that the terms are favorable and fair for all parties involved. If you plan to buy a company, never think that you’re in it by yourself. That’s exactly where mistakes can get made.
Never Buy Yourself into a Job
While running your own business comes with hard work, it should never be a position where you’ll have to work to earn less than you would while employed for someone else. If the business acquisition is both a pay cut and expensive, you’re probably making a mistake. Not only does that spell bad news for the return on your investment, but it means you could find yourself in debt sooner than you think.
Be Wary of Good News
Everyone loves to hear good news, and if you want to purchase a business, you’ll be initially attracted to the good news that they have to offer. That’s not what should interest you, however. What you should pay attention to is the bad news, and how the business has been able to manage it in the past. If you find that there’s a lot of talk about growth and expansion, but virtually no talk about any negative qualities of the business, ask yourself why the seller is even selling it to begin with. Nobody sells a goldmine, unless they’ve thoroughly mined it themselves or it’s on the verge of collapse unless, of course, there is a compelling reason to sell such as poor health or at an age to retire etc. Pay attention to the negative news, or the lack thereof.
Don’t Waste Your Time
If you find that a business you’re currently looking at simply isn’t up to par with what you want or need, don’t play games. Go and look for businesses that will match what you’re looking for. The more time that you spend on a business that you probably won’t end up buying in the end, the less time that you’ll have to find other businesses before other buyers potentially grab them up. Treat businesses you’re going to buy like conversations; don’t stay in those that don’t grab your interests.
A huge mistake that business buyers make, and one you’ll certainly need to avoid, is buying a business that you’re just not passionate about. If you’re looking at a business for dog care items, and you hate dogs, you’re not making a good call. You need to be mentally invested into the business, more so than financially invested, because this is something that you are going to own and operate. If you wouldn’t be interested in it as a business, buying aside, then you shouldn’t be interested in owning it.