Red Signs When Buying a Business

Buying a business isn’t always easy. There is a lot you want to look out for before signing a contract and making your purchase official. Keep an eye out for red flags when buying a business, as they can cause you stress, frustration, and even financial loss.

The first red flag is if a for-profit business is not earning profits. If you are finding that the business you’re interested in purchasing doesn’t have mirroring financial statements and income tax returns, then this is a problem. Make sure to look through a business’s financial records before making a purchase.

During your research you may also find that a business does not keep track of their expenses. If you find this during your search, this is another red flag. Sometimes a business’s bookkeeper is just irresponsible, but other times this lack of information can show that a business is losing money, or that you could inherit expenses after you purchase the business for yourself.

Another red flag you might come across is a company that has only been in business for a short amount of time. While some of these businesses are just fine, others are being sold because the business owner was in over their head. Some of these short period companies come with a lot of debts or problems you might have to sort out.

To avoid stumbling across these red flags, consider looking at companies who hired a certified public accountant. Another way to avoid red flags is by seeking our services here at Hallmark Business Brokers. We work with individuals who are buying and selling businesses, so we have experience with all ends of the business industry. To learn more about us, read more at our website or reach out to us by phone at 941-445-4726. We look forward to assisting you on your business-buying journey!

Florida Business Broker | Buying a Business Red Flags