Even if you’ve always dreamed of owning your own business, and even if you’re certain you have the skills and experience to succeed in business, you may still wonder whether it makes sense to own a business in the current economic climate.
Here are some tips to help you decide if business ownership is for you.
Determine the type of business you want:
- Do you prefer a franchise or not? Do you want a service-based company, retail business or manufacturing company? Home-based, storefront or online?
- In what type of industry do you want to work?
- What are your goals in owning a business?
- Will you be a passive owner or hands-on?
- Will you have partners?
- Do you want employees or contractors?
- How large a business do you want?
- How much do you have to invest? How will you finance the remainder?
- Will the business be your primary means of income, or will you run it on the side while you’re employed elsewhere?
- How many hours a week do you want to spend on your business?
- How much travel do you want to do?
- Where will the business be located? Can you relocate?
Hire professionals. You’ll want at minimum a business real estate broker to help you search for a business that meets your criteria, an accountant to help you evaluate the financials, an attorney to review contracts, a lender to finance your loan and an escrow company.
Select a business, and do your due diligence. In addition to financial statements and tax records, make sure documentation includes any significant contracts the company has signed and any employee or contractor agreements. It should also include legal documents, such as articles of incorporation and past or pending lawsuits.
Get a nondisclosure/confidentiality agreement. This agreement not only protects the current owner, it protects you from leaks that could devalue the company after a price has been agreed upon.
Make an offer. Even if you’re still not finished with your due diligence, if the business looks like a winner, don’t be afraid to make an offer contingent on a review period. This will help tie up the property so other buyers can’t purchase it during the review period. Use that time to verify financials, perform additional market research and nail down financing.