After working for others, many people get so frustrated that they decide they want to be in charge of their own businesses. Buying a business can be a big decision, but purchasing an existing small business can be easier than starting from scratch. But, before being your boss, it’s essential to look at the pros and cons of being self-employed.

Decide on a Type of Business

Entrepreneurs considering buying a business are encouraged to consider their interests, skills, and experience. They should buy a business that works with things they already enjoy and with which they have experience. Even though it may seem like buying a company is just a business decision, the owner must align with the business’s goals. The more knowledgeable someone is about their company, the more innovative and successful they can be.

Look for Businesses Currently For Sale

Once someone has narrowed their options, it's time to search online business marketplaces to get a general market picture. Ask friends and family members if they know any small business owners looking to sell. Working with a business broker or attending industry conferences can also provide connections for buying a business.

Because business brokers represent sellers, be careful about giving them too much information. Brokers can help entrepreneurs prescreen businesses, keep negotiations civil, and help with paperwork. They earn a commission when a sale goes through, usually paid by the seller.

Know Why a Business is for Sale

Sometimes, a business owner wants to retire, so the reason for selling the company is simple. Other times, the business itself needs to be fixed. Be sure to find out why someone is selling a business. Ask the current owners what challenges they’ve had and how they have resolved those problems. As subject matter experts, we've created a better resource to help business owners get to the gist.

Be cautious when a business has competitors who are far ahead, existing debts, location problems, faulty equipment, or inventory difficulties. Potential business owners need to learn as much as possible about a business’s successes and failures. Consider speaking to current and past employees to get their opinions on the company when possible.

Choose a Business that Fits the Budget

Once a potential business owner has considered several options, it’s time to choose the best one. The best option is one that fits within the budget and goals of the buyer. Calculate the best size, location, and staff for a prospective business. Understand what needs to be changed and the funding for those improvements. Business owners should consider not just money but also the time and energy that will go into making the business their own.

Do Due Diligence

Gather all of the information on a business before purchasing it. Work with an accountant and lawyer to ensure all information is accurate. Ensure the company has all of the licenses and permits that it needs. Some industries, like food services and childcare, are highly regulated and need permits to remain open.

Examine the last few years of financial information on the business. Tax returns, balance sheets, accounts payable, debt disclosures, and cash flow statements can help analyze the income stream. The company may still need to be profitable, but there should be a path to achieving that.

Being your own boss can be exciting and challenging at the same time. Be sure to do plenty of homework and seek the help of those with more experience when making this monumental decision.