Do you think you have what it takes to be an entrepreneur? Are you ready to take risks? Do you have the capital? Not many budding entrepreneurs want to start from scratch. It’s too much work for them. You can think of buying an existing business instead. It costs more upfront, but there are fewer risks, and there’s already a clear history of sales to depend your strategies on.
But before making an offer for a business for sale, you need to understand the risks involved in taking over an existing business. First, it’s not as glamorous as you think it is. Second, it’s not as risk-free as many believe it is. And lastly, it’s not a sideline job.
Thinking That Entrepreneurship Is as Glamorous as You See It on TV
It’s not. That should be clear, at least. It takes hard work to make a business successful. Managing a business is not like what you see on television or in movies. It’s not about power-dressing and attending board meetings. Small businesses are about getting your hands dirty. It’s about wiping the tables in your small café when there’s no one else to do it. It’s about serving the customers when you’re short on staff.
Failing to Understand the Risks Involved
Taking over an existing business is not free of risks. Most of the time, budding entrepreneurs don’t understand the motivation behind why a business owner wants to sell a business. It’s not always because the business is failing. If this is your preconceived notion, you are not going to understand the fundamentals of the business, as well as its profit engine.
The seller and broker will always try to make a business look amazing. If you don’t listen and study the proposal well, you risk buying a business that may not be failing but is on the brink of becoming obsolete. There are always risks involved in the business. If the seller isn’t being honest with you about it, you probably should be looking for another venture.
Assuming That the Business Is a Sideline Job
Studies show that before buying a business, you’ll have to look at at least 100 teasers and four letters of intent. The process is not going to take a few months. It’s going to take a year to two years. There are so many questions you need to ask yourself and so many factors you have to consider. What type of business do you want to get into? What are available in the market? Are these businesses profitable?
But even before you arrive at the process of making an offer, you have to remember that this is not a sideline job. It’s not something you do only when you have the time for it. You have to create the time and build a schedule around your business. Running a business, whether the one you have built from scratch or the one you have taken over, should be your focus.
So are you ready to buy a business? Do you think you have what it takes to choose, run, and build this business? Even the best entrepreneurs make silly mistakes when they don’t look at the options available to them. Be meticulous when you’re diving into something as fickle as entrepreneurship.