Looking to invest in an existing local business? Look at two things: their social media presence and their bank statements. One shows their real accounting and the other represents their real goodwill in the community.
Prepared P&L statements are rarely ever accurate, especially when they are prepared for a sale of their company, by doing your own thorough due diligence of actual bank statements, you will have a much better idea of where their profits are.
Social media numbers never lie, you can plug their accounts into websites that analyze if their followers are real. If they aren’t, that says everything about the owner’s integrity. If they have low views and likes, their klout score is not valuable, and why pay extra for a brand that’s not influential? Take a look at their Google reviews, you’ll be inheriting all those one star reviews.
Sure, you can turn around an existing business, but you’ll be taking on a lot of headaches. If you see potential, such as a great location and great lease rates, definitely create a new brand and drive a fair bargain for the lease and equipment.
You only make money when you're buying a business, so make sure you factor in all the extra costs for comprehensive start-up marketing when making your offer.
A good name is worth its weight in gold, if you’re seeing brass, offer the going rate on cheap metals. See our next post for what a start up marketing plan entails!