Buying a small business can be a big decision. There are a lot of factors to consider before you take the plunge. Here are 5 important factors to keep in mind as you evaluate whether or not purchasing a small business is the right move for you.
- The state of the industry. Do some research on the industry the business is in. Is it growing, shrinking, or staying about the same? Knowing this will help you gauge how successful the business is likely to be in the future and will give you some insight into whether or not now is a good time to purchase.
- The financial situation of the business. Take a look at the business's financial statements. Are they in good shape? Are they bringing in enough revenue to cover their expenses? Are they profitable? If not, you may want to think twice about purchasing the business.
- The strength of the brand. How well-known is the business? Do they have a strong presence in their industry? Do customers know and trust their products or services? If not, it may be difficult to grow the business and make it successful long-term.
- The quality of the employees. One of the most important assets of any business are its employees. Ask yourself if the current employees are skilled and knowledgeable in their roles. Do they get along well with each other? Do they share your vision for the company? If not, it may be difficult to keep them on board after you purchase the business.
- The condition of the physical plant and equipment. Take a look at the condition of the buildings and equipment associated with the business. Are they well-maintained? Are they up-to-date? If not, it could be costly to replace or repair them down the road.
Purchasing a small business can be a big decision but if you do your homework and consider all of these factors, you'll be on your way to making a smart investment.
Bottom Line
If you're considering purchasing a small business, be sure to do your research and consider all of the factors involved. NLCG can help you secure the funding you need to make your purchase. Contact us today to learn more about our small business lending products.
