What makes a business worth buying? Here are 10 signs of a fundamentally strong small business, including cash flow, customers, employees and systems.
1. Consistent Cash Flow
Consistency reduces risk.
2. Repeat Customers
Customers who return are valuable.
3. Strong Employees
Good employees make the transition easier.
4. Low Owner Dependence
The business shouldn’t collapse when the owner leaves.
5. Good Reputation
A strong reputation is an asset.
6. Diversified Customers
No single customer should control your destiny.
7. Good Suppliers
Stable suppliers protect margins and operations.
8. Reasonable Capital Requirements
You don’t want every year’s profits going into new equipment.
9. Documented Processes
Systems make businesses transferable.
10. Opportunities for Improvement
A good business with fixable weaknesses can be a great acquisition.