Buying into business failure
By Cathy Moran, California Bankruptcy Lawyer on Jun 14, 2007 in General Bankruptcy Information
An overwhelming percentage of small businesses fail early in their life. That’s neither new nor news. What is less well known is the number of people who buy an established business and fail.
Many business buyers paid far too much for the dream of business ownership. They borrowed money, from the SBA or the seller, to buy a business that may have been viable with no debt, but soon flounders under the debt service. Worse yet are the situations where the seller couldn’t make a go of it but wants to sell the business to a newcomer at a profit.
The lure of self employment is strong. It promises freedom, room for innovation, and financial reward. It is easy to assume that an established business is immune from the risks of failure that plague new businesses. However, those promises are hard to collect on under any circumstances and virtually impossible if the purchase price was too high.
If your business is struggling, take a look at the debt service on the purchase price, and see if the difficulty lies there. More on bankruptcy options for small business.
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