Buying an Established Business
So you’re thinking of buying and running your own business? And why not? A large majority of wealthy people in the UK have achieved their success through starting their own business. But if you’ve never been a business owner before you may be faced with the decision of whether to start your own business from scratch, or buy an established business that provides you with a good income from the start.
There are certain advantages to buying a business instead of starting a new one, for example…
1. The business will be sure to have established customers and suppliers
2. If funding is required, banks are more likely to provide finance to a well established business
3. Employees that remain after the business is transferred, will already have the skills to help keep the business running smoothly
4. The business may already have a sound reputation that can be further built upon
Before buying a business however, it’s important to do some background research to ensure it has a secure future and potential for further growth. So you need to find out if the business will require further capital investment in the near future. Also, do you see any foreseeable problems that you may have to face in order to maintain the strengths and efficiency of the business? Plus… is it the type of business that will keep you interested and enthusiastic in the first few years of ownership?
Another thing to consider is… if you can grow the business further, will it be a business that you can sell again for a good profit? For some entrepreneurs this is the primary reason they buy a business. However, it takes a lot of experience and a great mind for business to follow this through, if these are your intentions.
Having a solid business plan will be absolutely essential in the early stages of taking over the business. Without a clear idea of how you want to take the business forward, you may find the business becomes more of burden than a pleasure if things don’t go well.
Before buying a business consider any potential problems. There may be hidden problems that are not immediately obvious. Without diligent research, you may find you have to plough more money into the business in order to make it succeed and live up to your expectations. In fact, a certain amount of working capital may be required to assist with cashflow over the first few months of taking over the business. These are just a few of the things you need to consider
As you establish the valuation of the business and proceed to negotiate and go through the purchase process, the advice of a good financial business advisor will prove invaluable. If you’re borrowing money to buy the business, lenders will require details of the business you’re purchasing, plus information about your assets and liabilities. They will generally ask for details of the business accounts for the last three years, and may also want to see financial projections for the forthcoming year. Apart from the agreed purchase price, make sure you’re aware of all other fees that you need to take into consideration, including solicitors fees and accountancy fees etc.
Deciding on the right type of business for you
The business you buy should ideally suit your goals and aspirations. Start by making a list of what you want to achieve from buying a business. For example…You may want a business that gives you a better lifestyle and financial security. You may want a business that gives you an outlet for your creativity. Or you may want a business that helps other people in your community. Whatever the reasons, be clear about them, and choose a business that suits your needs.
Finding businesses up for sale is not too hard. Finding one that suits your needs may not be so easy. Of course, it depends on what you’re looking for. There are many places to look for businesses for sale. You could start with doing some online research. Some of the leading business magazines have their own websites. Daltons business, who specialise in catering for both sellers and buyers can be found here www.daltonsbusiness.com. On their site you will find businesses for sale that range from shops, restaurants, pubs, hotels and care homes for sale, to cleaning businesses, security businesses, and many other types of franchises, as well as internet businesses for sale. There are also a number of trade journals you can look in that cater for various business sectors. Many of them can be found online or through web based magazine sellers. Or do a search for ‘Businesses for sale’ websites.
To sum up, buying an established business is nearly always more expensive than starting your own. But if you can find one that suits your needs and expertise then it can also be the quickest and safest way to fulfil your ambition of owning your own business..