It can be more attractive to buy an already established business than it is to start one. There are some obvious key items to be aware- and one not-so-obvious- of as you attempt to find local businesses that interest you. Here are a few to get you started: -Is the product or service in demand? -If it's an offline business, is the local demographic strong enough to support the business? -What are the sales and service histories of the business? -What is the current reputation of the business? If poor, can you overcome it? If great, can you maintain it? -Can you do online business with the product? Consider these to start. But here is one often overlooked that really needs consideration: -How involved was the previous owner? You want a business that had an active owner but not too active. What I mean by that is if the owner has made the business so much about him (or her) and has been very successful, it may be a tough act to follow because it has been branded in the image of the owner. As a buyer trying to find local businesses to build upon, you're obviously looking for one that has a profitable money making system. What you want to stay away from is one that relies too heavily on the owner to achieve that profitability. This may sound somewhat odd, but if a business is all about the owner, and systems and employees haven't been developed to become less dependent on that owner, it may be destined to fail once the owner is no longer involved. The main reason for that? Often times the customers become more attached to the owner than to the product. When ownership changes hands that allegiance is now gone and customers feel free to take their business elsewhere. Those sales that once looked so good can dry up rather quickly. Ideally you will find a business that has lots of involvement from managers and employees. If there is obvious positive interaction between customers and many of the current staff- not just the owner- and customer service is strong, than you probably don't have any big concerns in this area. If everything looks great about a business except this one issue it probably is worth considering buying. You'll just have to be cognizant of the reality of the situation, and will have to work extra hard to convince existing customers that you can carry on as well or better than the previous owner. Summary: As you try to find local businesses to purchase, examining their history is very important. An element often overlooked is how much the overall success of a business was dependent upon the owner. Once the previous owner is gone, you may not be able to sustain a business if the brand he established is too dominant.
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