Buying an established business has many advantages. The business is already equipped with experienced employees to operate it and an existing customer base. It saves efforts required to establish a business in the initial stages and you can focus on improvement of services after buying the business.
If you have decided to buy a business, the following 10 tips will surely help you in making the right decision:
1) Buying a business can also mean buying yourself a job. The business will have an effect on your lifestyle and you need to calculate the returns in comparison to man hours spent while operating and potentially expanding the business.
2) Where to find a business for sale – Businesses for sale advertisements can be found in trade magazines and newspapers or online. You can make inquiries with business advisors or accountants about any potential business for sale in the market. You also have the option of listing your requirement online and receiving notification or alerts whenever a business is listed for sale. An online research for business can also yield good results. You can also learn about pending business sales through business suppliers, competitors and customers.
3) While buying a business, a thorough research has to be done on every aspect of the business. You need to gather all information about the seller and business. The financial claims made by the seller about the business need to be verified. The due-diligence when buying a business should be done with a great attention to detail.
4) Always look at buying a business that interests you. They say ‘do what you love and you will never work a day in your life,’ the business must also offer a return on your investment.
5) Check if the seller will offer any vendor finance. Bank finance for buying a business can be limited.
6) Always seek professional advice from accountants and lawyers who have experience in business sale.
7) Do be mindful that the asking price of the business is not necessarily the valuation price or even close to the correct value.
8) If you happen to seek advice from a Business Broker, keep in mind that they are usually working for the seller (they work for the person that pays the commission)
9) Find out what is motivating the vendor terms and conditions can be just as important as price
10) Educate yourself on the buying process, learning how businesses are bought sold and valued its essential to make sure you achieve the very best outcome for you and your family
The Buying process is really quite straight forward. All you need is the right information and high quality tools.
It is very important to gain expert advise from people who have actually been in business and have experience buying, selling and valuing businesses. Some Business Brokers may be of assistance but essentially they are working for the Vendor and have limited understanding of Business Valuation. A professional Business Valuation Practitioner will be able to offer you an accurate business appraisal….at a pretty hefty cost.
The simple fact is, you can get a great deal without the ‘middle men’ and save thousands of dollars doing all the due diligence, analysis and appraisal yourself, as good as or even better than the professionals for the outcome you dream of.