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If you’re worried about the difficulties involved in starting a business from the ground up, you might decide that buying an existing business is a better fit for you because going through the hassle isn’t a good idea. When you buy a business, you take over an operation that is already generating cash flow and profits.
In most cases, setting up a new business is likely to cost you more than investing in an existing business of the same type. Therefore, acquiring an existing business may be the most viable way to enter an industry. In addition, factors such as the geographical location, type of business, competitors in the industry etc. contribute to the decision to acquire a business.
Still can’t decide on whether to start a business or to acquire a business?
Moving on, let’s take a look at the Do’s and Don’ts associated when buying a business;
What about buying a Franchise license?
When it comes to franchising, there are certain things prospective franchisees must know about . A prospective franchisee means may be approached by a franchise seller to discuss the possible establishment of a franchise relationship. The following is a checklist of things to go through before taking up a franchise;
- Legal documents stating the financial status of the company
- Copies of profit/loss statements of the franchise locations that you choose
- Legal clearance
- Due diligence, which means reviewing and verifying all the relevant information about the business you’re considering is a must too. It is wisest to outsource this to a trusted professional services firm.
- Existing franchises are generally happy to share information about the success or shortcomings of their operations. Therefore, use this information to make your decision.
- Do not overly rely on “pro-forma” financial statements because they are estimates that are provided in advance in relation to future prospects.
Below are pros and cons of acquiring a franchise;
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