Have you ever heard the saying, “Caveat emptor, let the buyer beware”? I've heard that saying all my life, usually regarding the claims of products which might not produce the result I was looking for. This is why you need to be cautious if you're buying a house and its being sold “as is.” On a smaller scale, the same with buying a used car. You don't want to buy a lemon, and there are ways of preventing that. So, why should the buyer beware? There are a lot of reasons, but in today's Freedom Friday blog and email newsletter, I want to talk about something a lot of business owners face, and that is why should the buyer beware when you're considering purchasing a business.
Many prospective small business owners and entrepreneurs are interested in expanding their business and look for opportunities to do so by buying other people's businesses. It may be that they are interested in buying a franchise of an existing business, or just buying a business that the existing owner wants to sell. Either way, there are several reasons that the buyer should beware, and in today's Freedom Friday blog and email newsletter, I'm going to talk about five (5) reasons why the buyer should beware when you're buying someone else's business.
1. Why is the Business Being Sold?
The first reason why the buyer should beware when you're buying someone else's business is why the business is being sold. As a potential business buyer, you need to know why the seller is selling his or her business. Are they doing so because of certain challenges? You might not be able to handle those challenges either. On the other hand, you might be the perfect fit to handle those challenges, but you won't know one way or the other until you ask this question.
2. What Would the Seller Do Differently?
The second reason why the buyer should beware when you're buying someone else's business is what the seller would do differently if they had the opportunity. Asking this question in the process might reveal missed opportunities, lack of capital, or a problem with the business model itself. The answer to this question will also show you as a potential buyer the potential for growth in this business, or possible pitfalls.
3. What Benefit Does the Business Provide for its Customers?
The third reason why the buyer should beware when you're buying someone else's business is what benefit does the business provide for its customers. A good seller should be able to describe the benefit the business provides for its customers. This can either be a problem the business solves for its customers, or the value of the products and/or services delivered to the customers, especially if that value can't be found somewhere else. The seller needs to be able to explain why customers buy from them and not the competition.
4. Is There a Future for the Market?
The fourth reason why the buyer should beware when you're buying someone else's business is whether there is a future for the market. This is an important question because you need to consider the potential of the business to grow in the future. Are there going to be opportunities within the market in the years to come? The seller should have an idea whether demand is going to grow or diminish over time.
5. How Does the Seller Deal with the Problems Unique to this Business?
The fifth reason why the buyer should beware when you're buying someone else's business is how has the seller dealt with the problems unique to the business. Every business has its own set of benefits and challenges. You need to ask the seller about the difficulties that have come up with his or her business, and how he or she has handled these problems. You will need to have certain skills to run this business efficiently, and by asking this question you will understand if the business will be a good fit for your skill set.
If you are interested in starting a small business anywhere in Oklahoma, or you need legal help building, protecting, or defending your small business or other assets, please contact me at [email protected] to schedule a FREE strategy session.
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