Whether it's a large company or a small mom-and-pop shop, buying a business offers you the opportunity to take over a successful establishment or revitalize a flagging operation. Either way, the chance to make money while providing a valuable service can be too promising to miss out on. But you should always proceed carefully with the purchasing process and work with a business consulting professional to ensure your rights and interests are protected.

What Mistakes Do People Make When Buying a Business?

1. Not Understanding Why the Business Is Being Sold

Before rushing into the sale, take the time to find out why the business is being sold. The reason could be something perfectly straightforward, like an owner wishing to retire.

Or, there could be something more complex going on, like a reduction in revenue, financial or legal issues, or a competing business opening up in the vicinity.

Knowing why the business is being sold can also help you negotiate the selling price; if an owner is anxious to get out of the business, they may be willing to accept a lower offer.

2. Trying to Change a Successful Image or Brand

Successful formulas have kept countless businesses in operation for decades and even centuries. With that said, you can always find ways to enhance an image or brand and make the business more visible, such as increasing advertising, expanding one's web presence, and offering frequent buyer programs and discounts.

Hire a business consulting professional to design a specific game plan. Ultimately, you don't want to mess with a successful formula, and any image improvements should be implemented gradually.

3. Neglecting to Set Up the Proper Business Structure

Never sign business documents in your own name, as this makes you personally liable for any legal or financial fallout should the contract be breached.

One of the first steps business consultants advise when buying a new company is to set up the proper business structure, such as a limited liability company, corporation, or partnership. This limits your personal liability and affects the way the business is taxed. All paperwork and contracts should be in the name of the business, not your own.

When you need guidance during the purchase of a business, trust the professionals at Gillette & Associates, LLC. For more than 20 years, they have been serving the Coulee Region of Wisconsin. They offer business consulting services, as well as tax return preparation, bookkeeping, and retirement planning. Call (608) 784-8355 or visit them online to schedule a consultation.