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What should you consider when buying a business?

Not every company is built from the ground up. An excellent method to take advantage of is purchasing an existing business that has already established its brand and operational infrastructure. This method creates less risk than starting from scratch and will help you profit straightaway. 

So, what should you consider when buying an existing business? Here are some tips to look out for when buying a business!

1. Perform due diligence. One of the principal activities in starting a business is doing research. It is the same with purchasing an existing company. You must perform your due diligence. Research everything about the company you want to acquire. See how they’re doing in the market and check if they have any existing issues to be resolved. You must always consider internal and external factors affecting the company you would want to purchase.

2. Analyze financials. One of the most crucial aspects of your research is learning about finances. An accountant can assist you in reviewing the seller’s company and assessing critical financial metrics like sales, profitability, debt, expenses, and cash flow. They can also highlight any potential irregularities and red flags.

3. Review legalities. Check where the company is registered, and see if it does business there or in any other state as a foreign entity. Review entity documents and any related records, such as bylaws, resolutions, and operating agreements, if the business you seek to buy is a corporation or limited liability company (LLC). Don’t forget to ensure that the business you want to purchase is in good standing and that the owner you’re speaking to has the legal rights to sell it.

4. Understand operations. Make sure you understand how the business operates. Know the what, where, and how of the business’s operations. You want to buy a company that is running smoothly. Look at and evaluate their operations, manufacturing, supply chain management, and distribution channels. 

5. Look ahead. Bear in mind the commercial aspects of the deal, such as the business’s competitive advantage, clients, market forecast, and trends. You don’t want to purchase a company whose product or services would become outdated in a year or two. Always consider things going in the long term.

Purchasing an existing company involves many steps. Get expert guidance from a lawyer, accountant, and business valuation specialist to help you assess the company and lower risk.

If you are looking to buy or start a business, check out Startup Boost Singapore! Startup Boost Singapore is a web development and business brokerage company that helps entrepreneurs and enterprises launch startup projects in less than 14 days.

If interested in our products, contact [email protected] for more details.

Want to know how to start your own business? Check out this startup entrepreneur’s guide!

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