One of the biggest draws to moving from an employee to a business owner is the ability to have control over your own income earning potential and autonomy in making decisions. When it comes to buying businesses, people in Minnesota have to not only have the financial means, but they have to have a good understanding of the business and the industry they are buying into.
While some MN businesses are more generic and generalized, such as a convenience store or a retail outlet, others are very specific and market towards a niche target group. A current owner will often have years in the business and the industry, allowing a strong network and an excellent understanding of the nuts and bolts of the company.
Unfortunately, when buying businesses if this type of “insider” knowledge and expertise isn’t in place for the new owner, the transition can result in a loss in revenue and sales over the first months of years after the purchase.
To avoid this, here are some serious mistakes to avoid when shopping for a business if you are currently not a business owner.
Not Discussing the Day to Day Management and Operation
There are some very strong companies out there for sale that are built on the hard work, expertise and reputation of the company owner. These companies may look great on paper, but when the current owner leaves the expertise, reputation and experience also leaves.
It should always be a priority when buying businesses to carefully review the management team and employee group in place, and to ensure they will commit to stay with the business during the transition in owners and for a set period of time after the sale is complete. This will allow you to work to get your own team in place and also to provide training between the current employees and any replacement employees required.
Looking at Potential and Not Actual Revenue
It is always tempting to look at the “what ifs” in a new business venture, particularly if it is in an area where you have interest and experience. With an experienced broker who can talk you through the potential for a business, you can avoid emotional types of purchase that may result in buying an MN business that doesn’t have the real-world potential you may assume.
When buying businesses, there are many different factors to keep in mind besides just the price. Having a professional that is experienced in business acquisitions by your side can prevent some of the most costly mistakes that first-time buyers are likely to make.
