Category Archives: Buying a Business

Another type of business expansion, other than competing in the frontiers of a new market and venturing out into a new business enterprise with a different line of service or product line, is buying a business itself.

The advantage of such a move is that you do not need to exert much effort in the initial stages because the business will be very well established at the time of your purchase. The problem here is that the subsequent operations should be supervised and attuned to your own working standard. Close supervision of the initial operations should be given to the newly purchased firm.

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Buying A Business – 6 Big Mistakes

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Purchasing a pre-existing business can be pretty risky.  If you are considering the possibility of buying a business, there’s a possibility that you might commit one of the most common mistakes people make.  But do not worry, you can take necessary measures to prevent encountering problems.

Purchasing a business can be your ticket to financial success or it can be your biggest investment downfall. What most do not know is that, the odds of it being a failure or success are actually determined by whether you have researched a lot about your prospect business purchase or you just jumped out unprepared.

Listed below are the common mistakes committed when purchasing a business:

  1. Not enough research made.  Most businesses on sale try to look as promising as they can be. It’s the same case when you buy a house from realtors. They stage the home they want to put on the market so that it will look very appealing to the potential buyers. You need to do further research and investigate if what they claim is true. Never take it based on face value, since most business owners will try their best to make that business look great.
  2. Culture is not a problem.  When you buy a family owned business and turn it into a corporation, chances are it may not be able to work. You need to take your company culture much into consideration and evaluate if it will still be the same once your team runs it.
  3. Fast merger pace. In most cases, slow and steady change during a merger provides better results than a fast one. When the merging is too fast, many problems arise and could spell trouble for the business. Taking over another business is a critical and an important decision, it definitely does not need to be rushed. A slow and steady yet smooth transition will yield better results as in most business merger cases.
  4. Frontrunners need not actively participate. When acquiring another business, it is imperative that the leader of the acquiring company needs to have his presence felt. Even after the deal is finished. It is still the leader’s responsibility to participate and perform his leadership duties.
  5. Know the community behind.  Acquiring a business needs more knowledge and familiarity of the organizational chart, you also need to know the social chart. For example, Mrs. Fields, the clerk, who passes in home-made delicacies and is well appreciated by the employees, can essentially be more significant than the VP. The new acquirer needs to recognize this.
  6. No proper negotiations. Not all people have negotiation skills. Bear in mind that if someone sells their business, you have the advantage. You need to be aware of this and use it to negotiate terms that benefits you more. If you do not have this skill, hire someone who will do the negotiations for you. Sparing you from bad business situations over time.