Planning: Is 2014 Your Year to Buy a Business?
Get the Ins and Outs of Small Business Buying and Selling
If you’re planning to make 2014 the year you start your own business, one way to break into entrepreneurship is by buying an existing business. And if you’re already in business, acquiring a related or complementary business can be a great way to expand.
What kinds of businesses are most popular to buy right now? BizBuySell, a national website of small to mid-sized companies for sale, recently surveyed business brokers to see what industries were hot.
The big winners were the mainstream service businesses, named as most popular by nearly 50 percent of the brokers. In spite of an uncertain economy, buyers perceive these as solid opportunities, and brokers noted that service businesses such as car washes or medical-related businesses enjoy steady cash flow.
Moving higher on the popularity list are manufacturing firms, cited as popular by 25 percent of the brokers. (The only type of manufacturer that’s not growing in popularity: construction companies.)
Least popular: restaurants and retail businesses. Brokers note that buyers are still wary of these businesses’ ability to recover from the recession. However, recent strong holiday retail sales could turn that around.
Now could be a great time to buy a business. But, as in any economy, you need to be careful and do your due diligence before buying a business.
- Enlist the help of a good broker who understands your needs.
- Research the industry and know what projections and trends will affect it in the coming year.
- If you’re already in business, assess how the business and its staff can fit into your current operations.
- Know the business’s reputation and any hurdles that need to be overcome. Is the business in need of turnaround?
- Why is the business for sale? Don’t be afraid to ask tough questions that may uncover problems.
- Get all the financial facts and have your accountant go over the numbers with you in detail.
- Ask about any legal issues that may hamper your ability to do business.
While due diligence is important, you also need to strike a balance. BizBuySell brokers say that many buyers are letting indecisiveness and lack of confidence hamper them from signing on the dotted line. Research as much as you can, but know when it’s time to trust your gut. Need advice or just a listening ear? Contact a SCORE Mentor and you can get help with all aspects of the decision, offline or online 24/7.