It is only natural for people to consider buying a business. Buying a Long Island audiology practice is the easiest way of having a company of your own. It is not as difficult to push through as when you are starting from scratch. As long as you have enough money for that, you should be able to go ahead with the business start up.
However, you should not really view this option as extremely easy. The said option is not always a bed full of roses. You have to be meticulous and come prepared for any negotiations when you are making this particular purchase. Otherwise, you might get swept up in the flow of the intimidating sales process.
If you are actually buying, pay attention to the things that you have to inspect before you say the final choice. Be sure to determine the real value of what you are buying. Do not just listen to the words of the seller, you got to poke around first before you finalize your choice. There are important factors that will affect your decision, after all.
You will also have to pay attention to the warning signs that are evident in bad businesses. These warning signs, when present, will tell you that a certain business is not the best option for you. Here are some warning signs which will tell you whether the business is your best choice or if you better search for another option.
First, you got to make certain that the financial statements offered to you by the seller of the business are actually consistent. If the balance sheets, income statements, or tax returns do not align with each other, then you better look for another alternative. The said financial documents must cover a three-year period leading to this sale.
You also have to watch out when there is an abnormal or inexplicable fluctuations in its sales. While it is true that the sales will definitely fluctuate on a yearly basis because of the changes in the economy, third party payers, or any other events, there should always be an explanation for that. If it is random, then back out of the negotiations.
Hyper-growth is as worrisome as when there is a declining sales. A rapid spike in its sales is actually not a good thing, especially when it has something to do with heavy discounting without any corresponding increase in profitability as well as acquisitions. You can view this as the future growth not coming from organic means.
When the company always rely on a third party to generate sales, then back out of your negotiations. If the said company heavily relies on a third party just to get profit, then you can just wonder what would happen if that third party crashes. The sales should not have a high concentration of clients from third-party sources.
Poor key performance indicators or KPIs is certainly a red flag. Every company has a key performance indicator. You can include in the list the binaural rate, hearing aid return rate, cost of goods sold as a percentage of sales, and average selling price. These should not show any poor performance if you do not want to lose out in the deal.
However, you should not really view this option as extremely easy. The said option is not always a bed full of roses. You have to be meticulous and come prepared for any negotiations when you are making this particular purchase. Otherwise, you might get swept up in the flow of the intimidating sales process.
If you are actually buying, pay attention to the things that you have to inspect before you say the final choice. Be sure to determine the real value of what you are buying. Do not just listen to the words of the seller, you got to poke around first before you finalize your choice. There are important factors that will affect your decision, after all.
You will also have to pay attention to the warning signs that are evident in bad businesses. These warning signs, when present, will tell you that a certain business is not the best option for you. Here are some warning signs which will tell you whether the business is your best choice or if you better search for another option.
First, you got to make certain that the financial statements offered to you by the seller of the business are actually consistent. If the balance sheets, income statements, or tax returns do not align with each other, then you better look for another alternative. The said financial documents must cover a three-year period leading to this sale.
You also have to watch out when there is an abnormal or inexplicable fluctuations in its sales. While it is true that the sales will definitely fluctuate on a yearly basis because of the changes in the economy, third party payers, or any other events, there should always be an explanation for that. If it is random, then back out of the negotiations.
Hyper-growth is as worrisome as when there is a declining sales. A rapid spike in its sales is actually not a good thing, especially when it has something to do with heavy discounting without any corresponding increase in profitability as well as acquisitions. You can view this as the future growth not coming from organic means.
When the company always rely on a third party to generate sales, then back out of your negotiations. If the said company heavily relies on a third party just to get profit, then you can just wonder what would happen if that third party crashes. The sales should not have a high concentration of clients from third-party sources.
Poor key performance indicators or KPIs is certainly a red flag. Every company has a key performance indicator. You can include in the list the binaural rate, hearing aid return rate, cost of goods sold as a percentage of sales, and average selling price. These should not show any poor performance if you do not want to lose out in the deal.