Because there are many advantages in buying an existing business over building one from scratch, many investors take this route when they want to invest in a business. Doing so offers access to employees, customers, goals, brands, legal rights, and brand recognition that could otherwise take years to achieve.
However, not all businesses are a good investment and many are in the market because they are no longer profitable. Because of this, learning to identify the important signs of a bad business to buy becomes a valuable investment technique for entrepreneurs looking to buy instead of investing or founding a company. Here are some of the most common precautions to help you see bad business before it's too late: A changing market You can't just see a business. Even if it is successful, the market and the neighborhood you are in may direct you to another direction. In this case, a smart owner may see the opportunity to sell their business before it is hurt by bigger economic or market reasons than the business itself. This is true not only in a physical sense, but in the market sense as well. Going back to 1995, video rental locations were very large in almost any neighborhood in America, but visionary business owners could see physical rents going down with internet services. Is the business you are seeing similar in a market that may be heading for disaster? Unfulfilled Tax Obligations This is very large for a couple of reasons:
For these reasons, you should determine the tax obligations of any business you are considering buying to avoid costly mistakes. Secrets in the closet Take some time to see things that are not so obvious. Every business, neighborhood, and even building has some skeletons or secrets in the closet. It may sound like a script for a bad movie, but has there ever been a crime on the premises? Has the company been embroiled in scandals? Clients have long memories of this kind of thing. Additionally, is the location close to a waste hazard or other sites? There are no things a homeowner will always know, but a little research on neighborhood and local area businesses should provide you with information on issues that you might not otherwise see that would have a major impact on your profitability. Low owner discretionary income What the owner can take home after making business payments is known as the Owner's Discretionary Income. Examine the IDP of any business you are considering investing for two specific reasons:
Still have questions? Please call us for a free appointment with Miami Business Lawyer Yoel Molina in our Miami office at 305-548-5020.
0 Comments
Leave a Reply. |
AuthorYoel “Mo” Molina and I am a lifelong resident of Miami, Fl. I am a graduate of Miami Senior High, Class of 1992, Georgia Institute of Technology, B.S. 1997 and University of Maine School of Law, J.D. 2001. I have been practicing law in Miami Since 2001. I am a former training prosecutor in the Miami-Dade State Attorney’s Office. I have experience in jury trials, appeals, and administrative hearings. I have appeared before judges across the State. My experience ranges from civil litigation matters, collection matters, foreclosure, business and corporate, contracts, real estate, leases and employment matters.. Archives
December 2020
Categories |
|
"Mr. Molina has always been there for us with timely, reliable and competent advice. He is an important and valuable part of our team." Corporate Client Eric Delgado, President of American International Export, Inc., a worldwide importer and exporter of brand name appliance parts. |
"Yoel has been responsive and attentive to our company’s best interests and needs. He has been a valuable resource to our company. Any company that enlists his services would be in good hands-- including our own clients.” Corporate Client Gibran Flynn - Co-Owner and Founder of Eleva Solutions, Inc., the South Florida leader of outsourced HR, Staffing, Training, and Loss Prevention. |
"My name is Anastasia Yecke Gude and I am the owner of Healing Hands Therapeutic Massage LLC. In the process of my company’s growth and expansion, I suddenly found myself a few weeks ago in need of a 1099 contractor agreement, and I needed it ASAP. As in, the very next day! I contacted the Law Office of Yoel Molina and his assistant put me in touch with Mo. I sent him what I had drafted up and he replied within a few hours with suggested revisions and clarifications, as well as a few insights I had not even considered. I was thoroughly impressed by the quality of work he provided, especially considering the time crunch I put him in (sorry, Mo!). I definitely recommend his services to anyone in need of a good contract attorney, and I will be calling him again for future work…hopefully in less of a rush next time!"
|