When Buying a Business, You SHOULD Sweat the Small Things

Purchasing an existing business can be a fantastic way to streamline the process of becoming a business owner. Rather than dealing with the labor intensive and sometimes risky prospect of building a new company from scratch, you can instead take control of a company for which the foundation has already been laid.

That’s not to say there aren’t risks involved in purchasing a business. You could make the mistake of purchasing a business that is failing, has no potential for growth, has organizational and administrative problems, or has unforeseen legal issues. There is a significant amount that can go wrong, and it is up to you as the buyer, to uncover these detrimental factors.

However, when you make the decision to seek out a business to buy, it can be easy to get caught up in the excitement. There are so many possibilities and potential opportunities out there, and you may feel like a kid in a candy store when you begin your search. Unfortunately, this excitement can quickly turn into a dangerous trap.

All too often prospective business owners are blinded by their excitement and their eagerness to move forward. They become so engrossed with the idea of buying a business that they become impatient and willing to jump on the first deal that presents itself.

This enthusiasm to make a deal leads them to make some major mistakes, primarily when it comes to due diligence. Firstly, in their rush to complete a deal and start operating their new business, prospective buyers may fail to conduct adequate due diligence. Sure, they may give the books a cursory glance or do some research, but not nearly as in-depth as their research should be.

The importance of conducting thorough due diligence prior to the purchase of a business cannot be overstated. Would you purchase a used car without first seeing if the car actually worked? Would you buy a house without performing some sort of home inspection? Then why would you act any differently when it comes to purchasing a business?

The other major mistake one’s overexcitement at buying a business can lead to is a propensity to ignore red flags. We have previously detailed some of the major red flags you should watch out for when purchasing a business, and you can read through those warning signs here. When you’re excited about buying a business, it can become easy to overlook seemingly small issues. These small issues, however, are oftentimes just a hint of a much bigger problem. You must always be extremely mindful of red flags when conducting due diligence, and if you notice any potential issues, it is vital that you investigate them in more detail.

There are some decisions in life where it can be a good thing to move forward without thinking too much about it. “Don’t sweat the small stuff,” they say. This saying alludes to the idea that it is better for your mental health to not get too overwhelmed or bogged down by details. In most cases, it is a useful philosophy—but NOT when it comes to buying a business.

If you are interested in purchasing an existing business, you should ALWAYS sweat the small stuff. Do not allow your eagerness and enthusiasm to finalize a purchase blind you to potential issues and red flags. Always conduct thorough due diligence, and always have a skilled business attorney assist you with the transaction to help ensure you are getting the best possible deal.

Contact APH Law today to discuss you business purchasing goals and learn how we can help.

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Written by APH Law PLLC

APH Law PLLC

When we founded APH Law PLLC in 2010, we did so out of a desire to connect business owners with more and better opportunities. No matter what industry you’re operating in, creating a strong foundation, preparing for the future, and protecting against challenges are key to long-term success. It is this kind of support that we take tremendous pride in helping businesses.