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Questions to ask before buying an already existing business in Michigan – Tips for the buyers

Questions to ask before buying an already existing business in Michigan – Tips for the buyers

When you know the right questions that you should ask while buying a business, you can pay the best possible price for it. Knowing the answers to all the appropriate questions will help you run the business once you start owning it. Experts suggest that someone who dreams of becoming an entrepreneur without taking on too much risk should buy an existing business so that they don’t have to go through the hassles of employing people, working hard to build a reputation and earning a positive brand image.

When you look for a business for sale, you actually look to buy the business along with its assets, people, reputation and brand image. With that said, we can’t miss mentioning the fact that Michigan is yet again making a comeback. Due to the major overhaul brought about to the tax structure of the business climate of Michigan, their economy has seen a remarkable growth and improvement. There is also a sharp rise in their entrepreneurial growth. Michigan is the one of the best places to do business as it provides people with vibrant and urban lifestyle accompanied by adventurous outdoors.

Selling off an existing business in Michigan

Regardless of the reason you wish to sell off your business and start off with something new in Michigan, you should inform the Registration Section of the Michigan Department of Treasury by filling out Form 163. The seller of the business should have a tax clearance certificate to ensure all taxes have been paid in fill. In case there are unpaid taxes, make sure you pay off all your delinquent taxes to the Department of Treasury. The corporate officers are held liable for any Treasury tax debts which are incurred by the corporations.

Questions that the buyer should ask the seller

Regardless of the type of business you’re thinking of starting, there are few questions that you should generally ask the seller of the business.

  • What is the main purpose of the business?
  • What sort of history does the business have?
  • Why are you selling off the business?
  • How long have you been in business?
  • How long did the business operate under the present owner?

These are a few of the basic questions that you should start off with. Check whether or not the business is on sale because of any financial mishaps. If this is the case, you have to rethink and reconsider your choice before buying it. On the other hand, if you think you don’t have enough knowledge on the operations of the business, you should look for something that is more transparent.

Questions about the business organization’s monetary performance

Once you have been intrigued by the business that has been put up for sale in Michigan, the next thing to do is to get details on its financial performance. The 2 main questions to ask are:

  • What was the AGR (Annual Gross Revenue) earned by the business in the last two years?
  • What sort of annual net profits did the business make in the last two years?

Once you get the preliminary numbers and details of how the business has been performing financially, you can then later on check the financial documents to see if this is accurate.

Questions on how much the business will cost you

When looking for a business, you should know what a reasonable price to pay is. For example, if you are looking for businesses for sale in Michigan, the asking price will probably be less than that of a business in a more expensive area. You also need to evaluate the assets of the business and see if they are worth purchasing along with the business itself. You also need to know what you can afford versus what the asking price of the business. The following questions should be on the top of your mind when looking at the price of the business:

  • What is the business’ asking price?
  • What are the assets that are included within that price?
  • Do the profits of the business support the asking price?
  • Is it possible to get seller financing? If yes, what kind of an amount?

There will always be different types of negotiations and arbitrations later on but you should also get the estimate of price for the business. Don’t forget to ask about the liabilities and assets that are included within the purchase price.

To discover the correct information one must know to ask the right questions while buying a business. So, when you’re eager to become an entrepreneur in Michigan and you plan to buy an existing business, you should take into account the aforementioned points. Make sure you buy the best business within your range of affordability.

About Emma Gilbert

Working in the marketing industry since 2002. This blog is one of my hobbies.

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