Buying an existing business can be a great alternative to starting your own, as some else has already done the hard work of getting is well established. It can also be an effective way to expand your existing business operations, especially if the business is similar or complementary to your own.
What You Will Need
- Find out why the business is for sale? – The sale could be strategic or emergency, or could just be part of the vendor’s retirement process. It is important to understand the motivation for the sale. There may also be hidden reasons for the sale which your research can uncover.
- Research – Find out as much as you can. Investigate the market, its industry, location, customers and suppliers, competitors, and the nature of the goods and services provided. This will help to ensure you don’t make a rash decision just because it looks like a good deal.
- Due diligence – Make sure you critically examine all financial records, including contracts, licenses, supplier agreements, lists of equipment, assets and inventory, lists of liabilities, loans and debts, and all employee records before making your decision.
- A good business plan – that covers the next one to five years as well. This will help you to evaluate the longer term prospects for the business and get a realistic picture of what you are committing to.
- Independent advice – make sure you seek independent advice from your business advisors including your accountant, lawyer, business broker, or an industry expert. A business may look like it has great potential, but objective observers will look at it differently, and may identify issues or queries that have escape your attention.
- Finance – Whether it’s your own funds, a business loan or short term finance options, you will need to work with your advisors and refer to the business plan to assess how much you will really need for the initial purchase, transition period, and future investment.
- Commitment to the work – Be prepared for responsibility required to run a business. Running a business requires certain skills, as well as time, energy and money. Be clear about your reasons for going into business and to be sure you are up for the challenge!
When considering buying a business, we can help you to analyse the financial data and reports, to give you an independent overview of the financial performance and potential of the business.
We can assist in understanding the financial performance and benchmarks of a business you are considering buying, so that you make the best decision possible!
