Buying an existing LLC is an excellent option if you need a well-established brand with existing customers. However, there are a few considerations to observe to enhance the buying and transition processes. Here are nine essential things to know before buying an existing LLC.
1. Understand the Basics of Buying a Business
Understand the general process of buying an existing LLC to avoid costly mistakes. Don’t hesitate to hire a lawyer for help if you are not knowledgeable about buying a business. Here is a general step-by-step process that you may follow to buy local businesses successfully.
Find an LLC Business to Buy
Identify the business you would like to buy. Many LLC businesses are in the market today, and choosing the right one can be hard. The ideal LLC to buy should have positive cash flow and should be in an industry you enjoy and are familiar with.
Value the LLC Business
Business valuation entails determining the revenue of the business and its general worth. As an interested buyer, you cannot simply believe what the business says, so you should conduct the valuation process. You can do it yourself or hire an experienced valuator for the work.
Once you are content with the value of the business, you can negotiate with the seller. The negotiation can either be verbal or written. If you don’t have excellent negotiation skills, hire a negotiator to help you in the process.
Submit an LOI
Letter of Intent (LOI) outlines all the issues you have negotiated and should be signed by you and the seller. It is a non-binding agreement, but it shows you are ready to commit to the buying process.
Do Your Due Diligence
The LOI gives you access to the business information, so you can do your due diligence to know the business better. A few things to check include the tax returns, revenue for the last three years, existing contracts, number of customers, legal records, and much more.
Close the Deal
Close the transaction only when satisfied with the findings. Sign the agreement in the presence of your lawyer. That is what to know about buying an existing LLC. So what do you do now?
2. You’ll Need to Clean Up
Clean-up is another vital tip for buying an existing LLC. Before you initially start your business operations, you will need a neat space that appeals to your customers and also creates a more productive environment for your employees.
If the business is huge and needs a thorough clean-up, hire reliable clean up services to help freshen up your new space as you concentrate on other equally important activities at work. Here are a few tips to help you win the clean-up process.
Disorganized paperwork not only makes the office look messy, but it also makes it hard to track vital business documents. Organize invoices, vendor contractors, client files, work files, and other vital documents.
Keep invoices, contracts, and each type of document separate for easy access and to avoid mix-up. If possible, create an online backup for the paperwork in case any of the documents get lost.
Disinfect restrooms, desks, and other surfaces commonly used in the business. Ensure your electronics and other work gadgets are well protected using the cleaning and disinfection processes. Don’t forget to place waste buckets in all offices in the business.
Plan the Office Setup
Lastly, plan how you will organize the business. You can retain the original setup and create a new one according to your wishes. For instance, you can maintain an existing open plan setup or introduce the closed one.
3. Move On In
Now that you have cleaned up your new LLC business, the next important step is to move in. You can choose to retain the old furniture or acquire new ones to improve the look and appeal of your business.
The moving process might be challenging if the business is huge and you will be making many changes in the rearrangement process. As such, you may need to seek the help of local movers to help you with the process.
Get quotes from multiple moving companies and choose the most reputable and affordable according to your budget. Give proper instructions on how you would like the work done to avoid mistakes. Also, you can hire an interior designer to suggest layout ideas that utilize the space if you make significant arrangement changes.
4. Check the Septic System
All draining waste in your business goes to the septic tank, so you should ensure the septic system is in excellent condition when buying an existing LLC.
Where is your business septic tank located? Start by finding out, and inspect and find out more details about it. For your safety, engage an experienced septic system contractor who will help with the inspection and explain a few things you may need to know about the septic system.
Before you open the tank, inspect the ground around it for any depressions or low areas with soil because they may imply subsidence.
Find out if there are signs of significant modifications or changes around the tank, and check if there are visible signs of septic tank damage. These signs could include an intense sewage smell and green lush around the septic tank.
With the help of the septic drainage expert, carefully open the septic tank to check for the sludge levels and scum thickness. Find out when the septic tank was constructed and the last time it was drained. Unusually low fluid levels imply leaks that need immediate repair.
Inspect for obvious septic tank baffles like broken concrete, flooding, and unusual smells. You can schedule service and maintenance work to avoid potential issues as you start operations in your new business.
5. Find Your Workers
You can decide to retain or find new workers when buying an existing LLC business. However, you may conduct a thorough employee review of the existing employees to know if you need to retain some of them.
You can also develop a workforce development program to help individuals develop the right skills you would like applied in our business. If you find new workers, these practical tips will help you get the right talent for the work.
Write a Detailed Job Description
Your job descriptions should tell people what you are looking for and what benefits they will get when they work for you. A great job description will help attract the right talent.
Use Social Media
Social media has become a great resource for people looking for great employees. Facebook, LinkedIn, and other platforms can all help you get the right talent. If you target employees in a specific location, indicate your location in your posting to get the right responses.
Use Job Websites
Craigslist and jobsOnTheMenu are great websites connecting employees to qualified ones. Post your job to attract the right employees. You can even partner with nonprofits to help with referrals on the ideal job candidates you need. Take your time in recruiting, and empower the candidates with the skills you need to apply in your business. Communicate your expectations as well to reduce employee performance inconveniences.
6. Seek IT Help
You can’t avoid having reliable IT services and support when buying an existing LLC business. Technology is rapidly changing, creating incredible opportunities to deliver work more efficiently.
However, IT risks are still there, and you will need IT support from an expert to help you overcome challenges and integrate the right systems into your new business. Here are some IT services you may need support in your business:
As a business owner, you must keep your client’s data safe. Reliable IT services can help you safely store your employee’s salary information, clients’ data, and even your sales information.
You need computers and other smart devices to accomplish your day-to-day business activities. However, these devices are prone to viruses which might cause a threat to information and files stored in them. Reliable IT services can help with antivirus installation and support.
Computers and other work devices are prone to damage. For instance, a problem with the motherboards can greatly affect the operation of your computers and can cause a hitch to your business profitably. You will easily get the necessary repairs when you have a reliable IT services professional.
The IT field is quite complex and can overwhelm you when you are not knowledgeable. A reliable IT services firm can offer advisory services on what to do and what to avoid, keeping up with its trends and reducing the vulnerability of your business to hacks.
Generally, IT services can save time and money because you can carry out other work without worrying about the company’s IT issues. Just ensure that you seek help from a reputable and well-experienced IT professional.
7. Check for Damage
Your business should provide a safe environment for you, your employees, and your customers. Besides safety, a well-maintained environment creates a great first impression, improving your credibility and helping you acquire more customers.
In business, you may not always control hazards from happening, but you can proactively avoid some. Here are some steps you can take to check for damage when you buy an existing LLC.
Inspect for Potential Hazards
Is the business located in a flood-prone area? If yes, partner with flood damage restoration companies for protection in case a flood hazard happens. Similarly, inspect for any other safety risks which may happen in your business to improve safety.
Inspect Work Tools and Equipment
Work machines and devices can easily break down in the line of duty and cause bodily injuries and other damages. Inspect all your business equipment and devices to ensure they are fit for work.
Post Warning Signs
Warning signs like ‘caution wet floor’ can help reduce workplace accidents. Fix warning signs in any risky place, including the staircases which you feel might be dangerous. Such signs can help people be more cautious and reduce damages to your business.
Insure Your Business
Insure your business for financial compensation in case accidents and other incidents happen to your business and cause damages. If fire is the main risk in your business, find a reputable fire damage restoration company you can run to when you experience fire damage.
Talk to the previous business owner or the old employees about any damages the business might have experienced. Restore it well and observe the right safety precautions to avoid the same incident from reoccurring.
8. Work with a Union
Now that you have streamlined most sectors in your business, you can consider working with a union in your state. Every state has work unions where interested businesses can join and help businesses work for better deals.
Unity is one main reason to consider enrolling your business in a union. When you are a trade union, you will closely work with other businesses in your industry, network with them, and get more exposure to arising business opportunities.
If you are in the construction industry, you may join industrial construction unions and network with industry experts. However, there are many unions today. So you may do your due diligence in choosing the best one for your business.
If you are not sure about joining a union, talk to your lawyer to help you make the right decision.
9. Clear the Pests
Pests are annoying and can damage your business reputation. They can also reduce your work productivity and make the entire environment messy. As such, it’s important to clear pests when buying an existing LLC, to make the environment more work conducive. Observe the following steps to clear pests in your business.
Prevent pet breeding in your business by thoroughly cleaning the office and removing the sources of water and food. Identify areas where pets could hide and declutter them. Find the pets which can likely invade your business and how you can control them.
Using pesticides can be an effective solution if the pests are stubborn. However, pesticides require careful handling; you can consult pest companies on the ideal pesticides. Carefully read all pesticide instructions before using, and use protective gear when spraying.
Drain Standing Water
Standing water can be a perfect breeding zone for mosquitoes, cockroaches, rats, and other pests. Drain standing water and check if there’s moisture trapped in the rooms. Improve sanitation, and educate everyone on the importance of maintaining hygiene in a business.
Choosing between starting a business from scratch or buying an existing LLC is tough. If you buy an LLC, observe the above-discussed tips, and seek the help of a professional whenever you encounter problems.