VBR is featuring a series of Q&A articles from SCORE, a nonprofit organization that fosters vibrant small business communities through mentoring and educational workshops. It features a large network of volunteer business mentors who help small businesses plan, launch, manage and grow their projects and ideas. In this Q&A, insights are offered on buying a business.

Q: What do I need to know when buying a business?

A: The most important is why is the owner looking to sell? If the owner is retiring, or selling for a life change that they’re completely transparent about, that’s fine. Anything else, beware! 

The second most important factor is the financial reports of the business. Is it profitable? If not, why not? Dig deep into the cash flow, investment, payment terms, assets and liabilities. Does the purchase include everything you will need to seamlessly run the business? Check leases, contracts, customer lists, trademarks, etc. 

Will the employees stay? Are their employee contracts in place? What is the reputation of the business? Repairing a company’s brand takes capital and a long-term commitment to turning things around. Another problem could be that the owner’s brand is too closely tied to the business. 

Contact SCORE Rio Grande Valley for more information or assistance, or email pamela.kaur@scorevolunteer.org.