When you’re starting a small business you have a choice. To start from the complete beginning, developing your original ideas and organization, or to buy already existing business, with an established customer base, reputation and employees. Both of these opportunities have their advantages and risks.

When you start from scratch, you have a freedom to make of your business whatever you want it to be. However, you face a difficulty of building a customer base, marketing new company, hire appropriate employees. All these things, so normal and understood, can cost you a lot of time and money. But, since it is your own company, it’s worth of it.

On the other side, today many people decide to take over already existing business, as a good way to invest their money, with lower risks.

When you decide to buy already developed business, you should determine if you’re going to purchase the balance sheet including both assets and liabilities, or just the assets. The recommendable option is to choose only assets, that way the current business owner pay off the liabilities.

Also it’s easier to get financing to buy an existing business than to start the new one. Bankers and investors are more comfortable in dealing with businesses which already have a proven work results. And unless you have a lot of money in cash, you will probably need a loan or a bank credit for this kind of start.

Starting a new business requires investments in a period of first couple of months, while many entrepreneurs never get to the period of earning. They make mistake of a bad judgement, loosing all they have-owned and borrowed. So even though in each business movement you have to calculate smart, if you buy a business, you do invest that way, but you don’t have to wait till you start earning.

Another good reason to buy a business is the possibility to get a copyrights, patent or some other very valuable legal rights. It may worth a lot.

Still, buying someone else’s businesses can be very dangerous for your finances, especially if you don’t have experience with this kind of situation, or business in generally (if this is your first small business company).

There are certain things you must double check before you make a final decision.

In case you have never purchased an existing business before, it’s good idea to consult business broker (a real estate agent for businesses). Some attorneys and accountants are specialized in business brokerage and they are experts in the field-they can give you valuable advice about buying a business in generally, and they can help you find a right business to buy or estimate appropriately the offers you come across.

Keep in mind you’re not buying shoes-buying an existing business is as serious (even more) as buying a real estate. If you don’t hire a consultant, you must have your own lawyer to see the papers and control conditions before you sign anything.

Supposing you already have an idea what kind of small business you would like to buy, the next decision you make must be the result of careful investigation of the potential company. Require all documents, information, reports and listings. You must know what you are investing your money in. And always be objective-don’t make emotional decisions -it may seems all you ever wanted, but make sure it is all you need.

The most important part of a deal are finances. You must have good estimate of the companies value. The conventional wisdom says that prize to earning ratio should be thirty, so if the prize of the company is less than 30 times its annual earning this could be a good offer. Of course, after you have checked all the conditions of sources of incomes.