You’re welcome to this new set of articles titled Business Basics. I plan to use it to educate us on the nitty gritty of the business world, which we may have forgeten. I’m certain you will find it impactful.
In this first article we would be looking at how to purchase an asset. And to those who doesn’t know the meaning of an asset, it’s simply anything that puts money into your pocket, and good examples are:
- Land (Appreciates in value)
- Writing a book (You get paid royalties)
- House (If you rent it out, you get paid monthly or yearly)
- Gold (Appreciate in value)
- Online Business (reoccurring income)
- And many more.
So how do you buy an asset, that’s exactly what I will teach you next.
Criteria for buying an asset
The first thing when you want to buy an asset is passion. If you don’t like something, do not buy it. I see a lot of people saying let me just manage this for now etc. That’s very wrong. If you’re not passionate about whatever you want to buy, just forget about it.
Offcourse, if you’re not yet a billionaire you need to make profitability your watch word when purchasing an asset.
You need to ask yourself the following questions:
- How much would I make monthly/yearly if I buy?
- How much would I make as profit if I buy at the sellers price?
- I’m I buying at a discount (cheap) or at a premium (expensive)?
- Its the proposed price the cheapest I can get it?
3. Original Documents
After making sure you’re getting a good deal on the asset you’re buying, the next thing to ensure is that the seller has all the original documents of the asset.
If it’s a real estate deal, you’re looking at siting the Certificate of Occupancy(C of O), Government Approval, Deed of Assignment etc. And if it’s a digital device, you’re looking at siting the receipt etc.
4. Payment Option
There are numerous options to pay for an asset, especially in countries abroad where we have ESCROW (middle man) payment services like PayPal etc.
If you’re based in Nigeria where there are little to no ESCROW service, the best way to make payment is through bank transfer or cheque. Always avoid cash payment but if you must do, make sure you have witnesses, and you’re dealing with a good seller.
5. Written Contact
This is very important. You need your lawyer to issue you a document which you and the seller will both sign prior to making payment for the asset.
It’s usually titled “An Asset Purchase Agreement” and it would serve as prove incase any issue arises in the deal.
If you don’t have a lawyer, you can use an online application/template to create the agreement, and make sure there’s a portion for witnesses to sign.
Buying an asset is never as hard as my people think. You just need; to be passionate about it, ensure it’s a profitable deal, the sellers got all the original documents, you paid through the bank or an ESCROW, and finally both buyer and seller signed the Asset Purchase Agreement.
I hope you’ve learnt something new.
Feel free to ask any questions or make suggestions using the comments below.
Thank you, and until next time keep learning.
Always to your financial success,
+234 810 185 0909