15 Dec Around the Web: A Week in Summary
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A recent article from Allbusiness.com entitled “Should I Start a New Business or Buy an Existing One?” dives into the pros and cons of starting a new business and buying an existing business.
There are good reasons to consider both options, as well as possible drawbacks that can come along with them. Everyone who is considering pursuing business ownership needs to think carefully about their reasons for getting into business as well as the level of risk that they are comfortable with.
Starting a new business can be an exciting venture, but it can be easy for entrepreneurs to fall into some common mistakes. For example, it can be easy to think with your heart instead of your head when you’re so personally attached to your business idea. Starting a business from scratch can also take longer to turn a profit.
Buying an existing business can be a risk, too. Buyers need to consider why the business is being sold and determine which contracts they might be locked into. It can take some time to find the right existing business to purchase, but with the right deal, a buyer might be able to enjoy a quicker turnaround time when it comes to seeing profits.
A recent article from MarketWatch entitled “5 -Step Guide to Buying an LLC” discusses the benefits of purchasing an LLC and how to go about it.
Buying an LLC presents a unique opportunity. You can either purchase the existing LLC as a whole, or purchase the existing LLC’s assets and form your own. Purchasing an LLC can come with several benefits, included existing vendor relationships and customer bases. LLCs respond to ownership changes differently than corporations do, but if you do your due diligence, purchasing an LLC can be a good business move.
The steps to buying an LLC include:
- Research LLCs to buy through courses such as trade publications and business journals.
- Establish a rough framework for the purchase, including the agreed upon purchase price and the timeline of the process.
- Complete your due diligence by reviewing the LLC’s bank accounts, financial statements, business permits, customer contracts, and other vital paperwork.
- Finalize the purchase agreement with an attorney.
- Close on the purchase and file necessary documents with the applicable financial institutions.
A recent article from Forbes entitled “5 Important Factors to Consider Before You Sell Your Business” discusses some of the lesser-known factors you should consider before putting your business up for sale.
There are several factors that go into selling a business. Not only do you have to consider getting your books in order to make a profitable sale, but you also need to consider your own personal finances. To maximize your value and prepare yourself for life after the sale, consider these factors:
- Pay for a certified valuation or conduct your own valuation of your business compared to similar businesses that have sold recently.
- Take a fine-tooth comb to your books and make sure you’re removed personal expenses.
- Make plans for how you’ll spend your time after you no longer own the business.
- Identify your ideal buyer…and some back up options that you’re comfortable with if your ideal buyer isn’t interested.
- Speak with your tax advisor and consider gifting a portion of the business before signing any selling agreements.