If you have been interested in a local business that is for sale, but you aren't sure if the business is really as profitable as the owner is trying to sell it as, there are some things you can do to buy it to see if it's worth the investment. You don't want to get stuck with a business that isn't going to bring in money, and you don't want to take on debt without knowing what you're getting into. Here are a few things you'll want to do before making an offer.
Have an Accountant Go Through Finances
The business owner has to be willing to let an accountant that you hire go through the finances, to make sure that all the books were done correctly, and that the business was really as profitable as the business owners are advertising. The account will create their own report to show you what the average business expenses are for different running costs, and what the potential profit may be.
Have the Business Appraised
The bank is going to probably require it before they give you a loan, but you also want to have the business to be appraised to make sure all the property or assets that are included are really as valuable as advertised. You want to make sure you are getting what you are paying for, and that you don't take on too much debt without it being secured.
Find the Best Loan Option
You'll want to compare the interest rates and terms of different business loans in the area, to find the best loan option to buy the business. The amount that you'll want to put down, your credit requirements, or the need for other investors can vary from bank to bank, so let the banks make proposals to you before you pick the lender for your business loan. If the business is already using a bank, that bank may want to keep the business as a customer, and may be willing to give you a good rate.
When you are going through the process of finding out if the business is a success, it will show the business owner that you are serious buyer, and that you are making moves to make an offer. Go through the process of making sure that the business doesn't have faulty books or and to ensure that the owner isn't making claims that aren't true, and then make an offer that you feel will be a good price for the business after all the assessments come back. Contact a business, such as the American National Bank Of MN, for more information.