For the budding entrepreneur, buying an existing company may be a better call than starting a new company from scratch. Here we look at the advantages of acquiring a business, the financial statements you need to check to exercise due diligence before making a final decision, and whether you are in a financial position to take on this responsibility. These aspects will prepare you for looking at different firms and becoming a business owner.
There are numerous advantages to taking over an existing business rather than building a new business from the ground up.
If the company you choose to buy is doing well, it is already generating an income to pay employees, suppliers, and any loans that have been taken. There will also be existing lines of credit. While doing your due diligence, you will pick up on areas you want to improve. Provided the firm is not on the brink of bankruptcy, this can be an exciting challenge.
You benefit from an established market and products or services. Instead of looking for customers, they already exist and know the business. This means that you are not marketing a brand new product and have already achieved some level of brand awareness. You will need to create your own marketing strategy going forward.
There are numerous aspects to due diligence. We will take a look at a few of the financial statements you need to check. For more information and a checklist …