Sometimes it’s easier to buy an existing business than to start a new one. But what should you look out for when looking to spend your money?

The saying goes: a fool and his money are soon departed.
And this is especially true when it comes to buying an existing business. Any person with the money can walk out, scan the For Sale section and find a company or business to buy. It takes a real business person to find an enterprise that is value for money. But how do you find an enterprise that is worthy of spending your hard-earned money on?

Do research. Ask questions about the business’s performance, get your hands on the financials, find out why the owner wants to sell the business, and ask people in the industry about the company you have your eye on. If you ignore these important steps, you could find yourself throwing money down the drain by buying a company that is heavily in debt, isn’t turning a profit or even has a bad reputation in the industry.

When people see “under new management” signs, they immediately think about finding an alternative because of the negative connotations attached to the company being sold. Make sure that you’re buying a company that shows signs of positivity and has potential for the future.

Don’t rely on your own understanding of businesses or your previous experiences. Speak to your financial advisor or accountant and get them to assess the business you have your eye on. If anyone will be able to find a problem, it will be them. They will also do calculations on return on investment, look at the company’s financial position and see whether it presents good value for what you will be spending, as well as other money-related matters.

Also, you need to have a passion for the business industry you’re planning on entering. There is no point in buying a company that provides a service or product that you have no interest in. This will come through in your discussions with clients as well as staff. The last thing you want to do is come across as a boss who doesn’t care. You must also want to be in the business and make sure that you will have time to spend working on it. No one wants to hear “the owner or manager isn’t here right now”.

Buying a business can be a quick way to enter the business world. It can also be an express route to financial ruins. When you decide to buy an existing business over starting from scratch, don’t be a fool. Do your research and invest in a business that has a solid future and that you will be able to grow.

By Craig Falck for Africa Report