One of the many impacts of COVID on the business community has been that more business owners are looking to sell businesses at this time, which creates opportunities for people who are looking to buy. Many businesses in the north country and Adirondack region are run by baby boomers who are ready to retire, so there have been many solid business prospects coming on the market. If you are looking to buy a business, or are considering selling yours, the following questions may highlight areas to consider.
One of the first things you will want to look at when buying a business are the business’s financial records. If you are seeking a loan for the purchase, the bank will require at least three years of the business’s tax returns to see how profitable the business has been and if the business can sustain a loan in the amount requested to purchase it. Even if you are not seeking a loan to purchase a business, you will want to carefully review the business’s financial records to see how profitable the business is.
Another thing you will want to ask when buying a business is what systems are in place to keep it functioning: what has worked and what hasn’t. You won’t want to make too many changes right away; if the business has been successful, there’s a reason. However, there might be areas you will want to update on the business that wouldn’t affect the core profitability and might lead to increased customer traffic. For instance, a fresh coat of paint, or finally implementing a POS system to transition away from paper records are two items I see frequently when I work with potential purchasers.
When buying a business, you will want to ask about the staff. Is there a key employee who is essential to the business functioning? Is that person planning to stay on after the business has transitioned to new ownership? The employees may or may not know about the potential sale of the business. Assessing whether they will stay or go might be tricky, but this is a good conversation to have with the current owner.
Get a list of what the business owns, such as property, equipment, supplies, etc. Are there any renovations you’re going to need to do or equipment that might need updating? Sometimes sellers hold off on capital purchases and improvements if they know the business is going on the market.
You will want to find out exactly who owns the business, how it is structured, and make sure all owners are in agreement on selling. You don’t want anyone coming out of the woodwork with a prior claim. You should also be aware if the business has any tax debts. If you take over a business, you may be liable for those. You’ll want a full listing of any money owed and make sure everything is taken care of before the change in ownership.
There are several resources in the area for sellers and buyers of businesses. If you are buying or selling a business, or just have business-related questions, you can contact your local Small Business Development Center to talk with a business advisor confidentially and free of charge. You can reach the SUNY Canton SBDC at (315) 386-7312, SUNY Canton SBDC at Clinton Community College at (518) 324-7232, or the Watertown SBDC at JCC (315) 782-9262. Check out our website at www.nyssbdc.org.
Another great resource for buyers and sellers, the ANCA Center for Businesses in Transition, provides training as well as other resources for sellers, including online business listings for businesses on the market. You can contact Danielle Delaini, Business Transition Program Coordinator by email at firstname.lastname@example.org or by phone at 518-891-6200. Their website is www.adirondack.org/businesses-in-transition.