If you want to be your own boss, there are a number of routes you can take. From starting your own company to buying an established small business. In fact, buying a business can be a great choice for a lot of people who want to be up and running quickly.

But before you spend your hard saved money on a business, there are a number of factors you need to take into account first.

Be Thorough in Tour Due Diligence

Performing due diligence is probably the most important thing you can do before buying a business. By doing a deep dive into the company’s accounts, global cash flow analysis, and business processes. It is during this phase that you’ll uncover any issues that have been overlooked, or in some cases deliberately hidden.

Financial Analysis

Use a qualified accountant to go through the accounts with a fine-tooth comb. You’ll want to know the status of profit, loss, cash flow, expenses, and debtors. It should also uncover any illegal accounting practices.

It will also give an indication of how stable the small business is financially in terms of revenue. Is the company dependent on one of two clients for most of its sales.

Outstanding Liabilities

If you buy a company that is currently involved in legal proceedings, you could become involved in that lawsuit and potentially liable for the outcome if the judgment goes against you.

You or your business representative should look to see what court cases, liens, or debts are against the company or anyone on the payroll.

Do a Sector Analysis

Just because a business is doing well at the moment, there’s no guarantee that this will continue. That’s where a thorough sector analysis comes in. You’ll need to research the current and future trends of the market and the target market. Look at competitors too. Sometimes, people try to exit their businesses quickly when they can see potential trouble on the horizon. What can seem like a great deal for you, could soon be worthless.

As well as desk-based research, conduct interviews with other companies and suppliers in the sector.

Asset Analysis

What exactly will you be getting for your money. You’ll need a detailed list of each asset and its estimated value. This can be property, equipment, and stock. Also, be sure to find out where any intellectual properties lie for products and services.

Assess the Operational Processes

You will need to know how the business operates on a day-to-day basis. This can include evaluating the supply chain, capital expenditures, and internal HR practices.

Final Thoughts

Buying an established, profitable company can be a great way to start your own business empire. But in order to ensure you’re getting a good deal, the onus is on you to ensure that you do the right investigations. Even though it comes at a cost, ensure you use legal, financial and business professionals to help you along the way. A little expense at the outset can save you from huge financial mistakes later on. Then you can be confident you’re getting the best deal you can.