Don’t get more than you pay for if you decide to buy an existing company

Buying a business could mean you inherit their Debt

business plan The Saafenet strategy suggests you start your own business. And, provides you with a means to get money to get started. It was not designed to provide you with enough money to buy any existing company. But it  is designed to raise $20,000 to $50,000, which would only allow you to start many business that can be expanded to earn millions of dollars.

This does not mean you can’t or even shouldn’t buy a business if everything is consistent with your business plan. Two issues you must keep in mind when buying an existing business is the method you choose to get started. First, if you plan to buy a business you may have to finance part of that purchase. Next, you have to decide if buying the business will be the best move for you. When you buy a business you buy the liabilities along with its assets.

The goal of an entrepreneur is to learn how to grow a small business, not to pay someone else’s debts

If you raise around $35,000 using the Saafenet fundraising strategy, it may not be enough to buy an existing company.  Under those circumstances, you would have to borrow any remaining balance on the purchase price of the business.  In addition, that would make the fifth round of fundraising difficult, because it occurs after you are opened.  If you read the training manual you would know the fifth round of fundraising is designed to provide you with money during the first few months of your operation.  That is when most new businesses make very little, if any profit. With a new start-up, business is usually slow, leaving the new business owner time to monitor a crowd funding campaign. You would likely be assuming responsibility for a going concern, leaving little time for anything else.  Like managing your second or successive round of crowdfunding.

Borrowing requires that you have good credit and usually collateral.  If you don’t have one or both a purchase may not be available to you.  You must be honest with yourself to be certain it doesn’t require you get more than you can come to the table with for a business purchase.

Purchasing the company vs its assets:

Going into your first business is a challenge.  If everything works out exactly as you planned, it may still be overwhelming.  That being so, The last thing you need is to find that you just purchased a business that owed out $100,000 to creditors and a similar amount to the IRS that they were able to hide from you before the sale.

At times even your accountant, tax attorney and a business broker may miss the existence of undisclosed liabilities in the period leading to the sale.  But to try to determine if undisclosed liabilities exist without them may be near impossible. For this reason, it is sometimes better to purchase the assets of the business rather than the business itself.  Even without undisclosed liabilities. the original owner may not have chosen the right form of business to give him the greatest tax benefits.  After the sale is the wrong time to find that out.

No matter how you get started, your goal after you open must be to make your business profitable as soon as possible. Not add to the the overwhelming burden of paying off debts you didn’t accrue. The goal of any new business person is to look for ways to increase sales. But, the assumption of undisclosed debts could make you one of the nine out of 10 business failure statistics.

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