A Few Things to Consider When Finding the Right Enterprise to Acquire

woman working in her office

Buying an existing business has a few key advantages of building one from scratch. These key considerations in selecting an enterprise to acquire are pivotal to maximizing the returns and minimizing the financial risks associated with the acquisition.

The startup phase is the make-or-break moment for many fledgling businesses. New business owners are exposed to the biggest sets of risks almost immediately, with several uphill challenges awaiting them in the first few months of operation alone. However, entrepreneurs can dive right in and skip on all these risks by acquiring an already-extant business.

One unique advantage presented by acquiring a pre-existing business is stability. Because existing businesses are more established, they do not have the weather through the challenges faced by many fledgling businesses today. An existing business not only has everything all set up and ready to go but also has behind it an already-built brand, a captive audience of regular customers, and an established process that needs only slight modifications at best.

There are a few things to remember before you buy a business in Utah. Although the booming local economies present many opportunities for the budding entrepreneur, selecting the right business to acquire is far from an easy undertaking. Finding the right business to acquire demands selecting an enterprise poised for growth while being a good fit for your management style and skill set.

Lifestyle Considerations

Besides due diligence, lifestyle considerations are a key component in determining whether a business is worth acquiring. Is the new venture close to where you live?  Does its main business fit your interests and passions? Does it belong to an industry that plays to your strengths? These questions all play a pivotal role in whether you would be skilled and motivated enough to build up this venture with the same zeal its original owners had.

Likewise, another consideration is how well the nature of the business suits your work preferences and habits. Do you prefer odd hours or do you like the regularity that comes with a 9-to-5 job? A business that requires its leaders to be on-call 24-7 may not be for some people.

Switching Hands

It is a common myth that most business is being sold must have something wrong with them. Although there is some truth to the matter, these are few and far in between and can be avoided by most would-be entrepreneurs. Many businesses are sold because the previous owners wish to move on from the venture without wanting to close the enterprise itself. Others, meanwhile, are robust but cannot be run by either the original owners or their heirs for various understandable reasons.

Indeed, there are entrepreneurs and investors that look toward acquiring businesses in a rough patch that are otherwise robust enough to flourish with the right capital investments and better management. However, this technique can come with a high probability of failing and can only be adequately undertaken by experienced entrepreneurs with a high tolerance for risk.

Due Diligence

business partners looking into new venture

Selecting the right pre-existing business to acquire is the first major challenge. While established businesses don’t have startup challenges to weather through, they often have to deal with their own sets of risks and drawbacks that go hand in hand with their higher costs. Knowing how the business has been functioning prior to acquisition is a key component

Due diligence is a key component of the business buying process. You can illuminate much of the guesswork involved in selecting the right enterprise by narrowing it down to businesses that are willing to share their pertinent financial documents to learn where they stand financially. This will not only help you avoid businesses that are in dire straits but also help you understand where to begin making just go and operational changes to improve the bottom line and turn the enterprise around.