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Researching the Business Suppliers, Industry & Partnerships |
5k) Suppliers If the business has any suppliers, you will need to analyze them to find out if they are the best available to the business. This will cover looking at the prices they charge and their credit policy. Does the current policy offer a payback period that is useful to the business and what are the interest charges if any?
Secondly, are the suppliers reliable at making on-time deliveries and do they have a reputation for having materials available at all times? Check out the history of relationships with suppliers (past and present) to find out the kind of reputation that the business has with them.
It may be that the best suppliers won’t have anything to do with the business because of a poor payment history. The owner of the business may not quote this and so use your due diligence to research any potential issues. 5l) The Industry
The best advice that you will find for this area is from someone who is (or has been) in the industry. You may think that the type of industry you are hoping to go into is very profitable at the current time, but will it be in the future? Researching the industry will take a lot of time and you need to make sure that you have a full understanding of what it involves and any current issues. You may think that you know everything there is, but this is very unlikely: industries can rise and fall in the shortest of time so be confident of the future.
What is the level of current competition and is there an advance of new technology that could revolutionize the industry? Research the history and try to understand why the industry has grown or even fallen. This will give you future guidance of how to deal with issues if history should repeat itself.
5m) Partnerships
Some sole traders/partners may sell ownership of their business to form a new partnership. If this is the case, then you have to research the partner no matter how friendly your first impression makes of them. The partner may have unpaid debts and not own any assets that could cover the amount owed. In which case, if you join the partnership, you could be made liable to pay these debts. If this is the situation, it would seem that the person isn't suitable for a partner.
Your personality must be right so that it doesn't conflict with the potential partner. This is crucial to the success of the business when making decisions and also generally getting along. If you do decide to go into a partnership, use a solicitor to devise a written agreement stating the responsibility of each partner and how the business is run. Article Index |
