The Dos and Don’ts of Purchasing a Business in Dallas TX
So you have finally decided to venture into the world of entrepreneurship. You have decided to purchase a business in Dallas, TX. Well there is something you must know. In order to successfully purchase a business in Dallas, TX you must have some guidelines that you need to follow so that the whole process of purchasing the business doesn’t become too stressful or time consuming than it already is. Here are some dos and don’ts that you need to keep in mind when you are starting to purchase a business.
The Do’s
1. Do have a maximum benchmark for the price you are willing to pay for the business
When you start your journey to purchase a business in Dallas, TX, the first thing you should focus on is create a budget. Set a ceiling, a maximum amount that you are willing to invest in a business. If you are excited over the purchase and the idea of running the business, then you need to reevaluate your decision. You need to set aside the maximum figure in your head and walk away from a deal that is exceeding that amount without a hint of shyness, remorse or regret. There are plenty of other opportunities that will come up. Don’t keep justifying extra investments that will eventually yield no results and might end up costing more.
2. Do ask for a advice
If you are new to the business game, be sure to get advice from experienced entrepreneurs or experts. It will prove useful to you in running the business. For instance, when you purchase a business in Dallas, TX, get to know about your office location and the lease agreements that come along with it.
You have to realize that these lease agreements often times place many restrictions on your business like having to sign a restrictive use clause in a commercial lease which restricts you from selling what a competing shop nearby is selling if you’re looking to buy a retail store in a mall. Hiring an attorney or solicitor to help guide you through these complications can pay you off in the long run.
3. Do look at some of the financing alternatives you have
You can borrow from the seller himself in order to get his interest piquing to transfer knowledge about his business. When you purchase a business in Dallas, TX and you convince the seller to finance part of your purchase, they will want their part of the money from you. They can get you better terms of financing when you ask the seller to finance your purchase, based on his reasons to divest the business.
The seller may also have a clause in the Non-Compete agreement that should there be any inconsistency in the loan agreement from your end, the seller’s non-compete agreement will be null and void and that he will be able to compete against you. So, again, you need to be careful when you purchase a business in Dallas, TX.
4. Do ensure post-sale support from the seller
In case of a seasonal business, there should be some sort of support of at least an year from the seller’s side, in order for you to learn about the ebb and flow of the seasonal business, and what to expect and when.
5. Do understand the seller’s intentions for the sale
As a buyer, when you purchase a business in Dallas, TX you should know if the seller is looking to make another competing business and is selling this one to make funds for a new business. If yes, then you should be wary.
The Don’ts
1. Don’t purchase a business that you don’t understand
Don’t purchase a business in Dallas, TX that you have no or little idea about. You may receive some training regarding the management and operations of the business from the previous owner, but that does not mean that you’re ready to lead a business in an industry you do not understand.
For example, if the business you are trying to buy is a taxi service, then the owner might give you some knowhow about it, like the taxi and premises insurance, rent, driver wages and other overheads should be covered by the fares your drivers get and anything that is over and above that will be your profit.
But if the company is a law firm, there might be some things that one needs to understand fully in order to run the business, like some laws and how they affect the business. It may have been easy for the seller but that is only because he has been in the business for years while you are just starting out. So you have to be careful when you purchase a business in Dallas, TX.
2. Don’t buy 50% shares of the company straight away as it means you will take on all the debts, liabilities and tax responsibilities of the company.
All future and current liabilities, taxes and debt fall upon your hands as you are now the owner (>50% shareholding). The shares and assets can be purchased in different ways and the liabilities can fall on the seller, but any lawsuits that may arise which date back to before you took on the company will fall on your shoulders as you are the owner of the company.
Avoid falling prey to harmless clauses by the seller. They may sound appealing but if the seller loses all of their money in stock market crashes or anything happens to them, all of the lawsuits and claims, that they took the responsibility for, will ultimately be directed to you. All claims, lawsuits, debts and tax matters need to be resolved before you purchase a business in Dallas, TX and the deal reaches a close.
3. Don’t forget that the primary assets of a service based business are people
If you opt to purchase a business in Dallas, TX that is service based, the people (employees) you have working for you are your biggest asset. For example, a bank may have some relationship managers that have a certain customer base that they have accumulated over their tenure with the bank, so you have to retain such employees in your bank or risk losing customers.
For more advice on purchasing a business in Dallas, TX visit Kirksey Business Brokers.