It’s no secret that buying a struggling business can be a huge risk. But with the right strategy, you can turn that risk into a reward. Here’s a look at some of the challenges and benefits of buying a struggling business in an effort to make it a success, courtesy of Working Class Wow.
Why Buy Something Established
One of the biggest benefits of buying an existing business is that you’re buying something that already has a proven track record. That track record can give you a lot of insight into what works and what doesn’t for that particular business. It can also give you a starting point for making changes and improvements.
Another benefit of buying an existing business is that you’re often buying the goodwill that comes with that business. Goodwill is the intangible value that comes from the reputation and name recognition that the business has built up over time.
Get Some Background
Of course, before you buy any business, it’s important to do your homework. That means looking at the financials to make sure the business is actually profitable. It also means talking to the current owner to get an idea of what they think is working well and what needs to be improved. You should also talk to customers and employees to get their perspectives on the business. And finally, it’s always a good idea to have a lawyer look over any contracts or agreements.
Securing a Loan to Buy an Existing Business
If you’re thinking about buying an existing business, you’ll more than likely need to secure financing. The good news is that there are plenty of lenders out there who are willing to finance the purchase of an existing business. The key is to shop around and compare rates and terms so that you can find the best deal possible. Lenders will view your credit report to determine your creditworthiness, so take steps to improve your credit score if necessary. When you’re negotiating with lenders, be sure to keep in mind your overall financial goals for the purchase.
Negotiate the Purchase
When you’re buying an existing business, it’s important to remember that the asking price is usually just a starting point for negotiations. There are a number of factors that can affect the final price, such as the state of the economy, the condition of the business, and the seller’s personal circumstances. However, there are also a number of strategies you can use to try to get the best possible price.
For instance, you could offer to pay in installments or ask for a discount if you agree to assume any outstanding debts. You could also try to negotiate a lower price in exchange for a shorter period of exclusive use of the business name and premises. Ultimately, the key is to be prepared to negotiate and to have a clear idea of what you’re willing to pay.
Write a Business Plan
Any savvy businessperson knows that a well-crafted business plan is essential when starting a new business. But what about when you’re buying an existing business? Is a business plan still necessary? The short answer is yes. Even if the business you’re interested in is already up and running, a business plan can be a helpful tool for evaluating the company’s potential and making sure that it aligns with your own goals and objectives.
When writing a business plan for a new business, you’ll need to include information on the company’s ownership structure, its history, the products or services it offers, its target market, and its competitive advantage. A business plan for an existing business should include all of this information as well as an overview of the current financial situation, and details on any expansion plans that are in the works. You’ll also need to design a marketing strategy, which can be bolstered by having your website designed by the experts at Minimo Studio.
Choose a Business Structure
Many individuals choose to form a limited liability company (LLC) when they start their own business, since an LLC provides you with certain legal protections and tax benefits, as well as reduced paperwork. You can get started yourself, but since regulations can vary by state, it might be better to work with an online formation service that’s already well-acquainted with Washington LLC regulations.
Acclimate It to the Current Market
The marketplace is constantly changing, and those who are able to change with it are the ones who tend to thrive. However, it can be difficult to know how to retool a business that is already faltering. The first step is to take a close look at the current market and identify any areas where your business might be falling behind. Once you have a better understanding of the problems, you can start to formulate a plan for how to address them. It might mean changing your product line or adopting new marketing strategies.
Buying a struggling business can be a challenge, but it can also be very rewarding. With careful planning and execution, you can turn a struggling business into a thriving one. Just be sure to do your homework before you buy, secure financing, and negotiate a reasonable purchase price. With these tips in mind and some strategic marketing, you’ll be well on your way to success!
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