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Which is Ideal? Start a New Business or Buy an Existing One?

Buying a business is a lot easier, quicker, and even less risky than starting from the scratch. It is also much easier to borrow money in order to buy a business that has established supplier network, customer based and an overall healthy balance sheet.

Why Buy an Existing Business?

Actually, people have many different reasons when it comes to buying a business. There are some who want to entirely hands-on in their business’ day to day management, while other are simply happy to let other people run it for them as long as there are profits being generated, of course. In addition to that, there are some people who want to buy a stable and safe enterprise, while others like the challenge of saving the sinking ship.

For most investors, it is entirely about the money – its maximum ROI or return on investment as easily or quickly as possible. However, if you don’t have enough capital to purchase that type of business that you want, you will have to set your standards lower, be prepared to wait a little longer, and work even harder. On the other hand, if you are capable of buying a business, you must first consider whether the ownership will really satisfy your needs when it comes to lifestyle, personal, professional, and of course financial aspect. On top of all, it is very important that you fully understand the financial details especially when it comes to buying a business.

The following are the important financial details that you should focus into when buying a business:

Break-even point: Every business has its own flow of income and expenses. Because of that, it is very essential to know minimum level of your income should be reached in order to make sure that you can fully meet the expenses of your business.

Lease commitments: This represents more of a legal issue compared to accounting issue as it often talks about businesses rent premises. But it’s still important that you understand when the rent increases so that you will have more time to grow your income in order to fit with your growing expenses.

Net profit: It is the actual profit after the working expenses which are not included during the calculation of the gross profit. You should be mindful of these too.

Type of company: There are different types of companies and each are required to submit varying sets of accounts information. Partnerships and sole proprietorships are not basically required to have an accountant to prepare their accounts. Simply put, anyone can prepare their accounts in their behalf since they aren’t required to have any accounts qualification.

Generally, it is recommended that investors considering buying a company get a professional advice from experts like accounts professional. In that way, investors will be guided to reveal the insights that they might have missed. This advice also plays an important role as it can help you with regards to your purchase costs. To know more about it, contact a professional and reliable expert comptable Toulon.