In Focus: Buy into business with eyes open, expert advises


Buying into a small business can be a complex process and "should not be taken lightly", but according to one expert there are some tips that can smooth the process.

Writing on MarketWatch, former Fortune, Money and Columbia Journalism Review editor Marshall Loeb said keeping some "basic guidelines" in mind can help buyers negotiate the "room for error" presented by investing in firm.

He pointed to Ed Pendarvis on Entrepreneur.com, who recommended first and foremost that buyers get into a business they know they will like and that fits their skills. No matter how strong a company may be, a buyer will find it difficult to run if they hate the work, he said.

Prospective owners should also "probe the seller" for crucial background on an organization, such as its recent performance and the reason they are selling.

Next, they should weigh up the "value drivers" of the business, such as its location, inventory, staff skills, customer base and standing among its competitors.

Finally, Mr Loeb said, business owners must be realistic about financing their purchase, as the current market could make it difficult to raise capital for investment.

Analysts have warned that the current turbulence on Wall Street could make it difficult for entrepreneurs to secure lending from banks