6 crucial considerations before buying a business (as a shortcut to starting from scratch)

The opinions expressed by entrepreneurs contributors are their own.

Have you ever wondered if there was a shortcut to starting a business without the most agonizing months of trial and error? What if you could become CEO overnight for a real thriving business? Believe it or not, with a little capital, you can. This strategy is what I like to call being an “acqui-entrepreneur” – in other words, you are an entrepreneur by acquisition. While acquiring an attractive yet affordable company might seem like the obvious shortcut to realizing your startup dreams, there are plenty of perilous pitfalls to watch out for before making your way to CEO. The last thing you want is to drain your savings by buying a problem you don't know how to fix. Here are six key considerations before saying "yes" to a startup for sale:

Related: 10 Questions to Ask Before Buying a Business

1. Where is the traffic coming from?

One of the biggest benefits of buying a live business is the existing customer base or source of new leads and traffic flowing to the store or website. However, having traffic or history is just a checkbox. A savvy potential buyer will want to know who, what, and where these traffic sources are coming from. Are they all word of mouth? If so, that's a major red flag. While this indicates that customers are happy, it also implies that the business doesn't know how to market and generate its own new leads and sales. Is all traffic coming from a social platform, partner or ad manager? If so, this lack of diversification could create vulnerability. What if that unique traffic source disappears overnight or slowly loses its effectiveness? You could end up starting from scratch with a ghost business that you don't know how to revive.

2. Are there any industry or marketing restrictions?

You don't have to sell a risky, black market or salacious product to face marketing restrictions. Even the healthiest products and industries can experience platform bans or advertising disruptions that severely limit the ability to bring those products to market. Do your research and determine how and where competitors are currently marketing this product to prepare yourself for any widely known hurdles. For example, innocent weight loss products can be criticized for offering dangerous medical or health advice, quickly banning ads, and restricting accounts if done wrong. Forewarned is forewarned.

3. What is the ROR (rate of return)?

One thing that too few entrepreneurs prepare for is the possibility that 100% of your customers will be unhappy with their purchases. Meeting your first product return or service refund request is one of the most shocking and devastating moments in most founders' careers. However, most businesses have more than one return in their lifetime; in fact, some industries are plagued with incredibly high return, refund, and dispute rates. Before buying a business, carefully consider its historical rate of return as well as the standard rate for the industry or selling platform. The last thing you want is to assume that your month of selling $100,000 is 80% profit before you realize you have to give 50% back to unhappy customers.

Related: 5 Reasons to Buy a Successful Business Instead of Starting a New One From Scratch

4. Is there seasonality? Can you explain the ups, downs and outliers?

If you sell chocolates, it may be obvious that February (Valentine's Day) and October (Halloween) should see sales peaks. But sometimes the apparent ups, downs, and outliers don't have such obvious explanations. Before you buy a business with volatile sales — or even just a temporary sales desert — be sure to research why. There may be a reasonable response, such as a simultaneous product launch by a new competitor or an industry-wide disruption. However, the answer could be something far more nefarious or worrisome, such as the seller's disabled advertising account or a banned industry from their core brand...