What to Know about Buying a Business

Many people decide to buy a business because they think it will be less work than a 9-5 job, or they think that at least they can’t be sacked. The first is simply not true and while the second may be true, a business can easily fail and so in that way they will lose their job – and often much more. So before you purchase a business, consult with commercial lawyers and an accountant to make sure it is a good deal.

Meanwhile, here is a checklist of things to see about before you buy.

  • Make sure the sellers are not due for pending litigation. This can point to problems with the business.
  • Do your financial due diligence by having an accountant crunch the numbers you’ve been given. They will soon seen if the profit has been artificially inflated just prior to selling.
  • Find out what the lease is on the business. If it is due soon and the landlord only gives short leases, this could be a red flag for a poor business choice.
  • Set goals for your business and ensure that there is nothing to prevent them from happening. Make sure the lease is fair and renewable and that there are no hidden costs.
  • Before choosing business to buy, make sure there is a good market for the things it sells.

10 Points to Consider with Franchise Contracts

Many people join a franchise as a cheap way of going into business for themselves. Sometimes it works out well and sometimes it doesn’t, for various reasons. It is important to understand franchise contracts before you sign up. These have been drafted by experienced commercial lawyers and are quite comprehensive.

Here are 10 points to consider when it comes to franchise contracts.

  • The contract for a franchise is non-negotiable. If something does not suit you, there is no way to change it. This is because companies that run franchises find it easier and fairer if all their franchisees are on the same page.
  • If there is something in the contract that you don’t understand you can ask for a letter of clarification. This will usually be given because it helps to establish trust between the two parties.
  • If the franchise you have decided to buy agrees to negotiate certain terms, it should be considered a red flag, since typically these contracts are non-negotiable. It could mean that they don’t have many franchisees because the product is simply not selling well.

10 Tips to Make Good Business Contracts and Agreements

Every business owner needs to know about contracts and agreements; they are all part of running a business. Unless you are highly trained in the matter, choosing commercial lawyers to draft them or at least read them through will ensure that the contracts are legal and fair and keep you out of trouble.  Here are some tips to make good business contracts.

  • Very often, an oral agreement is made when the situation is a simple one. However, even though in some cases an oral agreement is legal, it is rarely enforceable in a court of law. And in some cases such an agreement is not legal. It is far better to get the agreement in writing so both parties know where they stand.
  • Keeping it simple is the best way forward. Agreements don’t need to contain a lot of legal jargon that makes them difficult to read. However, they do need to cover everything. Make sure the paragraphs have numbered headings to help people understand what they are about.
  • Deal with management when getting an agreement. A person with a vested interest in the business will be more likely to ensure the agreement is not only fair, but adhered to by his employees.
  • Use the correct legal names of the parties to the agreement as well as the correct legal names of the businesses, including the Inc or Ltd suffix on the end. If this is not correct, you will have no legal recourse if things go wrong.

Checklist for Starting Your Own New Business

Some people have a dream to start their own business from scratch, rather than building on someone else’s business. It is a good idea to consult with commercial lawyers if you decide to go this route because there is a great deal involved that you may not know about. In fact, starting your own business can be hard work, so here is a checklist that will help you.

  • You need to know if your business idea is likely to be successful. Do some research and see if there are other similar businesses in the area that you would be in competition with. Find out if there is a market for your business. For instance, there would not be much need for wagon wheels these days, but coffee shops often thrive, especially if you can have a unique selling point. For instance, you could offer homemade blueberry pies.
  • Do you have the skills needed to run a business? You may be able to cook great blueberry pies, but if you don’t know anything about cash flow you could be in trouble. Taking the time to learn business skills could mean the difference between success and failure.
  • Are you a person with a vision, the initiative to put it into practice and the motivation to keep on even when you are tired and the going gets hard? If not, running your own business may not be for you.

Why Insurance is Important in Business

Many business owners try to save money by not having any insurance or by not having enough. One is just as bad as the other if something disastrous like a flood or a fire wipes out your premises. You stand to lose everything and will have no way to recoup your loss. You will never be able to start up business again and may not be able to pay your debts. Commercial lawyers will tell you insurance is one of the most important aspects of a business.

Not having enough insurance is almost as bad as having none. There will not be enough to cover your loss and start up again if there is not enough insurance. The only good thing is that it may just cover your debts. But that is small comfort if you want to start your business up again.

There are different types of insurance you need for business.

  • Workers compensation if you employ staff.
  • Motor vehicle third party personal insurance.
  • Key person insurance, especially if you are the main one to run the business. Who will do the work if you are injured or ill?
  • Insurance to cover loss of equipment and stock due to environmental disasters, vandals or theft.
  • Public indemnity if you are a professional.

Lease Assignment and Sub-letting Issues

No one knows for sure what their future holds and there could be some circumstances where you cannot continue to operate your business and need to sell it. When you get sound legal advice a commercial lawyer will be sure this eventuality is provided for in the lease. There should be a clause stating that the landlord cannot reasonably stop you from assigning your lease to someone else.

You will need to do this if you sell the business before the lease is up, or sub-let it to another person. However, if this happens it is essential to ensure that in the original lease there is a clause to say that you will not be held responsible if the person to whom you assign the lease defaults on the  payments. Otherwise you can be held responsible for the cost of the lease when you are no longer running the business.

Grounds for refusing assignment

Reasonable grounds for refusing the assignment of your lease would be if the tenant had a poor credit history or if they intend to use the business for another purpose. Another reason could be if the potential tenant was not likely to be able to run the business properly. If the business failed, the tenants would not be able to pay the rent so the landlord would either lose the money owed to him or have to go to court to get it – a costly and time consuming process.