Whenever you purchase a business, new or old, you are assuming a risk. Whether you are looking at a business for sale in Washington State or in California, you are never sure it will be a success. In order to cut down the potential for failure, it is important to place the business under a microscope. You need to prepare a complete evaluation of it. The following includes a brief of items you, your lawyer, accountant and banker, to name a few, should closely examine.
Financial
One crucial aspect of any business for sale is its financial picture. How healthy is it? You have to look at:
Tax returns: Be sure to look at those for the past five years
Financial statements: Again, the period under consideration is the past five years
Sales records
Liabilities: This is what you pay a lawyer and accountant to examine. It is one way to find out about such things as liens, lawsuits and even unrecorded liabilities.
Accounts receivable: No matter what type of business for sale you are considering, make sure you understand the credit worthiness of the clients and customers.
All accounts payable
Debt disclosure: Is the company in debt? If so, how much does it owe in outstanding loans or any other form of debt?
Knowing how the business stands in these areas will give you some idea whether or not it is worth the gamble.
The Business for Sale
If you are buying an existing business for sale, it is important you know what comes with the business. To obtain this information, you need to look at such things as the inventory and the contents. This latter refers to such things as the furniture, fixtures, equipment and actual building. You also have to look at other components that have made this business in Seattle what it is. You need to look at:
- Exact location and the potential to grow
- Reputation in the area
- How this business for sale fits into the marketplace in Seattle and its industry
- Customer base and patterns
- If it has products, how much is returned
- What type of marketing strategy the business has adopted and how much it costs in the past, now and in the future
- How clientele, customers and employees view the business
These are only the basics. You will also have to look at existing contracts and legal documents as well as the issue of incorporation, insurance, product liability, salaries and overall business valuation before you decide whether this business for sale in Seattle is worth the money, effort and energy you will need to expend to make it a profitable one for you and your family.
