Entrepreneurs in Maryland may benefit from reviewing all the criteria necessary for buying an existing business. According to the U.S. Small Business Administration, some entrepreneurs absorb less risk by purchasing an existing business, as opposed to starting one from the ground up. Regardless of how seasoned a target company is, prospective purchasers are advised to conduct the necessary due diligence before going forward.
One of the first steps for entrepreneurs looking for a new investment is to consider what type of business or which industry to get involved in. They are often aided in this process by considering their own interests, evaluating their talents and assessing the existing business's current condition. Buyers may also benefit from discovering more about why the business is being sold by the previous owner. Some of the clear advantages of taking over an existing business include lower startup costs and immediate cash flow from existing receivables and inventory.
One of the most common deterrents from buying an existing business is the higher purchaseprice, which may be caused by an existing customer base, business concept and other constructs of the enterprise that have matured. Conducting an appropriate degree of due diligence is one of the most effective strategies for business owners attempting to avoid unexpected hardships. Entrepreneurs are advised to undergo a discovery phase and spend time gathering the local permits and records concerning the business, as well as all tax and financial documents for performing an accurate valuation.
People who need help with starting a new company may benefit from contacting a corporate attorney with experience in Business formation. These lawyers may be effective in helping business owners implement the organization and structure needed to sustain current operations and grow in the future as well.
Source: SBA.gov, "Buying Existing Businesses", September 21, 2014