Three Tips for Buying a Business

You want to change career paths or take on a new level of responsibility, so you decide you are going to buy a business. It should not be an easy decision since there is an immense amount of work that goes into the process. It is hard to narrow down tips for buying a business since there is much that goes into an agreement. These three tips are some of the essentials when you consider buying a business.

 

Research

Buying a business is a tremendous endeavor. Not only is the purchase of the business itself a huge commitment but so is the process beforehand. You do not want to make this decision without doing your due diligence. Take the time to figure out what you are interested in, determine if the business model has the chance of being successful, determine any risks, discuss why the business is for sale, and make sure it aligns with your budgets. There is a lot of research to be done to make sure that purchasing a business is the right move to make.

 

Buy Assets

It sounds strange to say buy the assets and not the business. You will receive a better tax treatment since your taxes will be based on what you paid for them and not what the seller paid for. Another advantage is you do not assume any liabilities of the previous owner. There will, however, be liabilities included in the acquisition agreement. These liabilities include product liability, environmental liability, liability under bulk sales, and employee benefits. Every contractual agreement is different and should be negotiated with the help of counsel.

 

Hire a Professional

Hiring a business lawyer and an accountant will help you with the numbers and the paperwork. Accounts help to determine the assets, liabilities, and what possible earnings could be. A lawyer will help draft, proofread, and negotiate contracts during the purchase of a business. Having successful professionals can make purchasing a business a smoother process. Creating a successful beginning may create an easier life of your business. You will have a clearer picture before closing the deal.

 

**This article is for informational purposes only and is not intended to be legal advice. In relation to your individual situation, always seek advice specific to your circumstances from a lawyer.

 

What is Succession?

Succession isn’t just the creating and signing of a will. Succession law redistributes the property of a deceased estate upon the death of its owner to the beneficiaries entitled, either in the will or by the law. Succession is concerned with the deceased person’s property whether there was a will or not. Lawyers who are involved in estate planning will guide their clients through the estate planning process. Lawyers will discuss the details of your succession plan before drafting the will. This creates an easier process of drafting the will and getting it right the first time.

 

Every situation is different. Some people have homes, cars, businesses, or other assets that some may not have. Along with all the assets are different whether it large or small business or a used or brand new car. Some people may want to exclude family members from their estate while others may want all family members to have an equal share.

 

In terms of succession in businesses, succession planning is in the case of the owner or key member of management ends up leaving the company, is terminated, retires, or dies. This ensures that the business does not have to stop its day to day activities. It will outline the change in leadership that may occur provided that the before mention were to happen. Creating a succession plan could benefit the company by retaining key employees, reducing the tax burned, and maintaining the value of its stocks and assets during the transition of ownership. This also provides the owner with a sense of comfort since leaving won’t burden the company.

 

Although there are many benefits to having a succession plan in place, many do not. An owner may not develop one because they do not want to choose a successor, they don’t have many interests beyond the company, or they do not want to confront their mortality. Succession planning entails details that compares to planning one’s own death which may cause a discomfort.

 

Succession can take many years to plan and the implementation can take longer. Taking the time to create this plan will assure them a way out of the company with enough assets for retirement. The business owner could sell the company to an outsider, family members, retain the ownership and hire new management, or sell to the employees. Owners need to initiate the idea of a succession plan, select details that will be included, educating the successor, and the final transition of the plan.

 

**This article is for informational purposes only and is not intended to be legal advice. In relation to your individual situation, always seek advice specific to your circumstances from a lawyer.

 

Why Do Franchises Fail

Before you decide to either join and start a franchise, know the chance of failure is present. Just like any other business, if the right steps are not taken, the concept could fail. Testing and doing your due diligence during the early phases could protect you from the number of factors that lead to failure.

 

The Business Model

The concept of the business has to be approved by the consumers. If the idea is not received well by the consumers, the franchise will then fail. Also if your business model is complicated and not easily replicated, your company will struggle. The operations have to be taught at a standard for any businessperson that wishes to replicate it. Also if your business model is too similar to others already established, the business model is not successful, it is not likely to be a successful franchise.

 

Location

Like many responses to real estate and business, the most important thing is location. You could have a great business model and a service or product that all consumers will want but they can’t find you. You are in an area where their not looking for your product or service. Since there is no opportunity in the location, the franchise will not flourish and the possibility of being successful deteriorates.

 

Marketing

This goes hand and hand with the location, as you could have the best product or service but no one knows about it. If your franchise doesn’t have an established reputation, your consumers will not know to give your business a chance. You have to be knowledgeable about where to spend your advertising efforts. Advertise on a more localized level and niche to reach the right consumer that will bring your company profits. If you do not establish a marketing or advertising plan, your company may fail without anyone knowing it existed.

 

Competition

A major reason franchises fail is competition. With around 79,000 franchises in Australia, it is hard to find an idea that is popular but not tapped out. There are certain sectors of franchising that are rising due to the growth in healthier lifestyles. Following along in what is already successful could lead to your downfall.

 

Expectations

You need to set realistic expectations for yourself and the business. It can take years to see profits and if you are not prepared your franchise could crumble around you. The hard work and effort put into being successful may be a deterring factor when deciding to start a franchise. If the expectations are unrealistic it can lead to failure.

 

**This article is for informational purposes only and is not intended to be legal advice. In relation to your individual situation, always seek advice specific to your circumstances from a lawyer.