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What to think about when taking over an existing business?

Buying a business can be risky. Always question why it's for sale. Check the numbers and observe the business for a long time. Consider the effort the current owner puts in and what happens when they leave. If it all adds up, it could be a good opportunity.

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  • blobby green style avatar for user Angel Felipe
    A lot of work will have to be done and make sure that the books from previous owner is correct
    (3 votes)
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  • blobby green style avatar for user JADELYND
    Sal answers the question "What to think about when taking over an existing business?" as part of its partnership with Bank of America on career and personal finance education (Better Money Habits).
    (2 votes)
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  • blobby green style avatar for user JADELYND
    - Every now and then I get a friend or a family member saying that they're interested in buying some type of a business. So this wouldn't be about starting a business, but there might be an existing business. Maybe it's a convenience store or maybe it's some type of health care practice or whatever it might be, and they say, hey, I'm going to buy this from the existing owner and I think it's going to be a great business. And they'll often say it generates this much money and I only have to put this much in and it feels risk free. And what I tend to tell them, and I don't wanna be one of these naysayer people, I say, possibly. But what you always have to think about is why are they selling it? And sometimes there's a good reason why they're selling it. Maybe they're retiring and they don't have someone to pass the business onto and they see in you kind of the person that they would love to see running that business going forward. That could be a very legitimate thing. But oftentimes, there might be situations where they might be pumping up some of the numbers, they might be showing you business in the busy season or on the busy day. And so I wouldn't take, especially if it's a small business that doesn't have auditing, that doesn't have really strict accounting practices. I would observe the business for a very long period of time and I would take your own data as to whether the numbers you're hearing about are real. And I also wouldn't discount how much effort and work the existing owner is putting into it and what happens to the business if they're no longer there. If all of that works out and if it really does make sense, then, yeah, you might be onto something.
    (2 votes)
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  • blobby green style avatar for user Dre'VionW
    what my color
    (2 votes)
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  • blobby green style avatar for user carl.arey10
    Every now and then I get a friend or a family member saying that they're interested in buying some type of a business. So this wouldn't be about starting a business, but there might be an existing business. Maybe it's a convenience store or maybe it's some type of health care practice or whatever it might be, and they say, hey, I'm going to buy this from the existing owner and I think it's going to be a great business. And they'll often say it generates this much money and I only have to put this much in and it feels risk free. And what I tend to tell them, and I don't wanna be one of these naysayer people, I say, possibly. But what you always have to think about is why are they selling it? And sometimes there's a good reason why they're selling it. Maybe they're retiring and they don't have someone to pass the business onto and they see in you kind of the person that they would love to see running that business going forward. That could be a very legitimate thing. But oftentimes, there might be situations where they might be pumping up some of the numbers, they might be showing you business in the busy season or on the busy day. And so I wouldn't take, especially if it's a small business that doesn't have auditing, that doesn't have really strict accounting practices. I would observe the business for a very long period of time and I would take your own data as to whether the numbers you're hearing about are real. And I also wouldn't discount how much effort and work the existing owner is putting into it and what happens to the business if they're no longer there. If all of that works out and if it really does make sense, then, yeah, you might be onto something.
    (1 vote)
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  • blobby green style avatar for user RAYLYNNP
    he is go to bye or slaing
    (1 vote)
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  • blobby green style avatar for user arelis.perezhernan
    what courses to take for free spirit person to use for job?
    (1 vote)
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  • blobby green style avatar for user arelis.perezhernan
    marketing strategies and advertising costs.
    (1 vote)
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  • blobby green style avatar for user 22kameronamezquita
    i Think about when taking over an existing business because the partnership with a bank of America on the career and personal.
    (1 vote)
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  • blobby green style avatar for user christopher.gaither
    What if it's owners dead !
    (1 vote)
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Video transcript

- Every now and then I get a friend or a family member saying that they're interested in buying some type of a business. So this wouldn't be about starting a business, but there might be an existing business. Maybe it's a convenience store or maybe it's some type of health care practice or whatever it might be, and they say, hey, I'm going to buy this from the existing owner and I think it's going to be a great business. And they'll often say it generates this much money and I only have to put this much in and it feels risk free. And what I tend to tell them, and I don't wanna be one of these naysayer people, I say, possibly. But what you always have to think about is why are they selling it? And sometimes there's a good reason why they're selling it. Maybe they're retiring and they don't have someone to pass the business onto and they see in you kind of the person that they would love to see running that business going forward. That could be a very legitimate thing. But oftentimes, there might be situations where they might be pumping up some of the numbers, they might be showing you business in the busy season or on the busy day. And so I wouldn't take, especially if it's a small business that doesn't have auditing, that doesn't have really strict accounting practices. I would observe the business for a very long period of time and I would take your own data as to whether the numbers you're hearing about are real. And I also wouldn't discount how much effort and work the existing owner is putting into it and what happens to the business if they're no longer there. If all of that works out and if it really does make sense, then, yeah, you might be onto something.