At some point in their lifetime, every employee dreams of owning their own business. Deciding to buy a business is a life-changing decision and can seem overwhelming. Before buying a business in Charlotte, NC, ask these questions to ensure a successful transaction.
5 QUESTIONS TO ASK BEFORE BUYING A CHARLOTTE, NC BUSINESS
Be able to answer these five questions before you make an offer on a business in the Queen City to set yourself up for success.
1. WHY IS THE CURRENT OWNER SELLING?
Knowing why the current owner is selling can give you a key insight as to what the current state of the business is. The top three reasons owners sell include retirement, burnout, and other opportunities. If the owner is leaving for any of these three reasons, the business may be worth looking into, but if he or she hints that they are leaving due to financial reasons, you can assume the business is not doing well. While new ownership could turn things around, do your due diligence before committing.
2. WHAT ARE THE OPERATIONAL COSTS?
Once you know why the owner is selling and what the revenue looks like, you should know what the operational costs are of running the business. Additionally, you should ask the current owner what their expenses are. These expenses could include rent, utilities, maintenance, employee compensation, and more. Knowing this information can further help you calculate the average operating costs of the business.
3. WHAT ARE THE WEAKNESSES?
While looking at a business to buy, it may be easy to get caught up in the excitement, but be sure to look at every aspect of the business to determine what the weaknesses are and if you can realistically turn them around. The most common areas that need improvement in a struggling business are marketing, operations, real estate, and human resources. Always do your research on the company to set yourself up for success.
4. WHAT IS INCLUDED IN THE SALE?
Before buying a business in Charlotte, NC, determine what’s included in the sale. If the current owner rents the property, examine the lease to see what will need to be done in order to transfer it. If the current owner owns the property, be sure to inquire if the property is included in the sale.
In addition to space, you may also need equipment to run the business. Ask the current owner if he or she plans on including any existing equipment in the sale. Having both property and equipment included in the transaction could ultimately save you money upfront if you choose to acquire the business.
5. WHAT IS THE VALUE OF THE BUSINESS?
Now that you know what is included in the sale, the operating costs, the revenue, and other details, it’s time to determine the value of the business. Keep in mind, the current owner may have gotten a professional valuation done. If so, there may be little room for negotiations. If a professional valuation hasn’t been done, consider enlisting the help of a business broker to determine a fair asking price.
If you need assistance determining the value of a business or need help in any other step of the process while buying a business in Charlotte, NC, be sure to contact the VR Charlotte office to consult with a business broker.