Thinking about purchasing an existing business? Here are some things you should know before you take the plunge.

For some people, buying an existing business is a better option than starting from scratch. Why? Because someone else has done much of the legwork for you, such as establishing a customer base, hiring employees, and negotiating a lease. But if you want to buy a business, you'll need to do some thorough research to make sure that what you see is what you're going to get.

What Type of Business Should You Buy?

The kind of business you should buy depends on the types of work you've done in your life, classes you've taken, or perhaps special skills you've developed through a hobby. It's almost always a mistake to buy a business you know little about, no matter how good it looks. Not only will you have to struggle up a big learning curve after you buy it, but you might not know enough about the industry to determine whether a particular company is a good value in the first place.

In addition to buying a business in an industry that you know, try to choose one that you love. It's less difficult -- and a lot more fun -- to succeed in business when you enjoy the work you're doing.

Finding a Business to Buy

After you've decided what type of business you want to buy, you're ready to begin your hunt for the perfect company. Consider starting your search close to home. For instance, if you're currently employed by a small business you like, find out about the present owner's circumstances and whether she would consider selling the company. Or, ask business associates and friends for leads on similar businesses that may be on the market. Many of the best business opportunities surface by word of mouth -- and are snapped up before their owners ever list them for sale.

Other avenues to explore include newspaper ads, trade associations, real estate brokers, and business suppliers. Finally, there are business brokers -- people who earn a commission from business owners who need help finding buyers. It's fine to use a broker to help locate a business opportunity, but it's foolish to rely on a broker -- who doesn't make a commission unless he makes a sale -- for advice about the quality of a business or the fairness of its selling price.