As the popularity of buying an existing business continues to grow, it is important to avoid simple mistakes that are commonly made. There are benefits to purchasing a pre-existing business, as many of the tiresome, and tedious jobs are already completed.
An existing business will already have a location, and you will be able to benefit from their current brand awareness. However, there are still problems that you may come across when purchasing an existing business.
Mail Boxes Etc. (MBE) explains the four most common problems when purchasing a business:
Not playing to your strengths
It is essential to consider your strengths and weaknesses when purchasing a business and how they could help or hinder your potential new enterprise.
If you have very little experience in a particular industry and have very little skills in such an area, it is likely that you will struggle to run a successful business.
Instead, it is important to think about what you’re good at, and enjoy doing, and make your business purchasing decision around those. If you are determined on buying a particular type of business and know that your skillset is lacking, it could be a great opportunity to ask the old owner to provide some training. Many franchises, in particular, offer continues training and support.
Inadequate background research
When purchasing a new business, you want to know everything that you are signing up for.
Make sure you have checked off these questions:
Are there any economic predictions coming up that could affect the success of your new business?
Have you seen the financial books? And does everything add up? If the previous business owner is truthful and honest, they won’t be trying to hide anything from you
Do you know why the business is being sold?
Forgetting about marketing
Simply because the business may already have a well-known brand name, it doesn’t mean that you can neglect your business marketing strategy.
There can be an exception when purchasing a franchise, as the company as a whole may supply consistent marketing and advertising for all franchisees. However, it is important that you are aware of either situation when purchasing your business.
Not creating a proprietary liability company
Normally when you are signing a business contract, you are signing on behalf of the company – not yourself. If you end up signing in your own name, you’ll be taking on liabilities and other problems which you really don’t want. Instead, you will want to create a corporation or a proprietary liability company and use that name instead.
Again, this is a time when seeking some professional advice is a sound idea.
Because out of all the biggest mistakes you can make when buying a business, this one probably has the potential to cause you the most problems.
When you become a Mail Boxes Etc. (MBE) franchisee you will receive support in every aspect of purchasing a business. To find out more about their exclusive franchise opportunity click on the button below.