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Buying
an existing Internet Internet Business can be a great opportunity
to get into Internet Internet Business without going through the
process of starting from scratch. You don't need to decide what
the product or service will be or find suppliers or employees;
everything is already set up and ready to go.
What most people buying an existing Internet Internet Business
hope to do is buy a turnkey operation. They plan to buy and carry
on an already established Internet Internet Business, making it
even more successful. It can work out that way - but only if you
take the time to fully investigate the Internet Business you're
thinking of buying to be sure you're buying what you think you're
buying. Internet Internet Businesses for sale are like used cars;
there are lots of them out there, but some of them are lemons.
To make sure you're buying a Internet Business rather than a lemon,
follow these steps:
1) Find out if it's been in an accident. In other words, discover
the real reason the Internet Business is for sale.
Don't just take the seller's word for this. Sure, people do retire
or become ill, but the real reason may be anything from a big-box
retailer moving into town through losing a lucrative, traffic-driving
contract such as being a postal outlet. Discover the true reason
by talking to people who are familiar with the history of the
Internet Business you're thinking of buying, such as local realtors,
other Internet Business people and suppliers.
2) What's included in the asking price? Find out what's actually
for sale. What are the assets that come with the Internet Business
you're buying? People selling Internet Businesses usually have
a spec sheet prepared, listing the assets involved and offering
an estimate of their value. Ask for details if anything is unclear.
And be sure to find out if the assets listed are free and clear
of debts and liens.
Pay special attention to any intangible assets that may be listed,
such as goodwill. Sellers tend to inflate the value of this, thinking
perhaps of the potential future value of their reputation and
established customer base.
3) Look under the hood. Remember the old joke about the guy who
bought the good looking car only to discover he couldn't drive
it away because it had no engine? It's only funny when it happens
to someone else. Before buying a Internet Business, examine the
Internet Business's past performance. Ask for and examine the
last three years of the Internet Business's financial statements.
(If you don't have training in analyzing financial statements
yourself, it's best to have a professional, such as an accountant,
review the financial statements.) You will also want to know who
prepared this financial data; were they prepared by the management
of the Internet Business, for instance, or by an accountant?
If by an accountant, documents should accompany the financial
statements that will explain the depth of the accountant's review.
An Auditor's Report, for instance, certifies that a full review
has been conducted, while a Review Engagement Report will present
the findings of a limited review of the Internet Business. A Notice
To Reader signifies that the accountant prepared the financial
statements based on information provided by the Internet Business
without conducting any checks.
Don't like what you're seeing or just not seeing enough of it?
Ask the seller for permission to see the actual Internet Business
records and get your own audit done. |
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