That dream business just became available, and it is time to make a deal. However, due diligence remains the responsibility of the buyer. After all, the seller put the company on the market for a reason. In many cases, the underlying motive proves harmless; perhaps the present owner just wants to retire. On the other hand, it is also possible that the seller has something to hide. They may push to close the deal quickly so they can walk away from any issues. Entrepreneurs who plan to purchase an existing company should beware of the following red flags before making a business deal.

High Crime Rate

Business owners may attempt to sell their enterprises when crime becomes rampant. The neighborhood may show few outward signs of decay, so it is necessary for a potential buyer to check crime statistics before making a final decision.

Zoning Ordinance Changes

New zoning laws could make it impossible to do business in a certain neighborhood. However, the current owner might try to conceal this information from potential buyers. It is always best to speak with representatives of the local planning office about zoning regulations.

Road Blocks and Construction

Business survival depends on the ability of customers and employees to get to the location. The area transportation board can provide information on changes to bus routes and road construction that could affect business in the near future.

Bad Press or Negative Online Reviews

The Internet makes business reviews virtually instantaneous. Anyone with a computer can harm a business’s reputation overnight. Despite new ownership efforts, negative press or customer reviews can have irrevocable consequences. Potential investors should research major review websites for negative comments and have the website check the veracity of any such reviews. Those deemed untrue or inflammatory should come down.

Nearby Franchises

WowMany business owners decide to sell after they learn a competing franchise or “big box” store plans to open a location nearby. Before signing anything, find out which national brands have an eye for expansion. If they plan on opening a store close to the business you intend to buy, you might want to reconsider.

Contact the Khonsari Law Group Before Purchasing a Company

An experienced lawyer should read through any contract of sale before the parties sign. Fortunately, in Florida, those who want to protect their investment can rely on the Khonsari Law Group, which has served clients in business litigation cases since 2011. Contact us today to get started.