7 mistakes buyers make when buying a business

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7 mistakes buyers make when buying a business

Brad OConnor

May 26, 2021

Buying a business is a lengthy complicated process that involves a lot of moving parts and paperwork. Mistakes do happen, but arming yourself with knowledge can help you understand these business buying mistakes, and will also help you to avoid making them. Here are 7 of the most common mistakes buyers make when buying a business.

1. Trying to do it alone

There are a lot of small details that need attention when buying a business, and if you try to do everything by yourself, there is a much higher chance that you will miss something. Hiring an experienced business broker to work with you through the process will ensure that everything is taken care of and no details get missed.

2. Not doing enough due diligence

Before you buy a business, it is important to undertake extensive research into its records. The purchase of a company is a big investment; you want to know exactly what you will be paying for, and what kind of value and return you can expect to gain from your purchase.

3. Buying for the wrong reasons

Why do you want to buy this business? This is a large investment that you will carry for many years. It is imperative to reflect on your intentions before you sign the papers, to ensure that you are moving forward for the right reasons.

4. Waiting too long to involve your bank

Some entrepreneurs will not approach their bank for financing until they have found a business to buy. This can put the deal in jeopardy, because you will not know how much financial backing that you qualify for until you talk to your financial advisor. Once you have made the decision to buy a business, reach out to your financial advisor to determine how much you can afford to spend BEFORE you start negotiating a deal.

5. Signing documents in your own name

This is a common mistake, especially with smaller businesses that tend to be registered as sole proprietorships or partnerships. When you buy a business, or sign a business contract or document in your own name, you are likely assuming personal liability. By incorporating your business, you can avoid personal liability, protect your personal assets, and realize certain tax advantages.

6. Not understanding why the business is for sale

It is important to know why the business that you are looking to purchase is for sale. The owner could be looking to sell a business due to hidden, underlying issues, and if you do not do your proper research, you could get stuck with significant unexpected expenses or headaches down the road.

7. Making changes too quickly

Once you have made your purchase, it might be tempting to start making changes and improvements right away! Don’t! Give your new team time to get used to you as an owner or manager, and learn as much as you can about the current systems BEFORE you decide to change it up.

Are you ready to get started? Give us a call today!

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EVALUATION/CONSULTATION

If you are a business owner considering selling a business, and would like to learn more about OConnor Business Brokers and Consultants and the services we offer, please contact us to arrange a confidential business evaluation.

You will meet one of the Directors of OConnor Business Brokers, and your requirements will be discussed. During the meeting you will have the opportunity to find out more about selling a business, and how our business brokers and M&A Advisors can assist you with the business sale process.

Unlike many other approaches, OConnor Business Brokers start without any preconceived ideas about what is right for you and for your business. By understanding the business and your motivation we can help steer you in the right direction. This often challenges conventional thinking and comes as a refreshing change to the norm.

The Directors of OConnor Business Brokers have experience as business brokers, business consultants, M&A advisors, and business owners. We understand the challenges and pressures that face a business at any one point. We therefore use our time together not to try and sell you our services but to help you understand your options and how we can help.

An initial meeting lasts approximately one hour, and can take place virtually or in person at our office.

Evaluation and Consultation Request

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