If you are in the market for purchasing a business in San Jose CA, it is important that you do due diligence. A small business listing may excite you, but it does not mean you should proceed without considering basic facts. Whenever you purchase a business of any sort, you are assuming a risk. While you cannot eliminate it totally, if you carefully and thoroughly do your research, you can reduce the risk to a manageable amount.
Reducing the Risk
Mitigating the potential for judgment errors in a business deal is essential if you want to obtain a successful business. As any smart businessperson realizes, you will need the help of a dedicated staff experienced in this area. In addition to your business broker, you need to have available an attorney in business law and other matters, as well as an accountant who specializes in both current and forensic auditing and other financial matters.
These individuals will be able to gather the information and other data on the company you require. The materials you need to look for and at should represent the past, present and future state of this San Jose CA business. Among the papers you need to explore are those providing data and documentation on
* Accounts receivable
* All accounts payable
* Tax returns and Statements
* Liabilities
* Debt disclosure
* Inventory
* Sales records
* Sales
* Customer base and patterns of sale
* Growth potential
* Reputation in the business community
* Standing in the marketplace – currently and future projections
* Current legal obligations – including existing contracts with suppliers, buyers, etc.
* Insurance – type and validity
Documentation of this type of data is easily accessible. However, you should also want to know more about the relationship between the small business you are considering and the community. What do the clients think of it? What are their opinions and those of the suppliers and other interacting groups of this business?
The information about both the tangible and intangible aspects will place the small business listing you are considering in a clear and specific context. By understanding more about the interactions and operations of the business, you can discover the size of the actual and potential risk involved in purchasing it.
Looking at a Small Business Listing
Sometimes, looking is better than purchasing. If, after you have gathered the right documents, the business represents too great a risk, you should reconsider your options. Perhaps, when all is gathered, information is sorted and data and figures compiled, it may prove to be the better course to move on to the next small business listing in San Jose CA that has caught your eye and mind.
