How to find a business to buy
If you think buying a business is the best way forward for you,
you need to start thinking about which type will be best for you
and where to find one. This guide will provide you with an
introduction to the first steps you need to take towards
buying a business.
- What you can afford
- What to consider
- Where to look
- What to check
- What to do next
What you can afford
This is an absolutely crucial step to take before starting your
search. It's worth getting a financial adviser to help you out, and
speak to your bank or investors if you're looking to get external
investment too. Remember you'll almost certainly need to invest in
the business after buying it. You also need to budget for legal and
other professional fees which will be incurred during the
buying process.
- Get professional help with finances
- Speak to your bank or investors
- Remember to account for investment after the purchase and
professional fees
What else to consider
Think very carefully about what kind of business you want to run
- play to your strengths, avoid your weaknesses and aim for a
sector which excites you. Think about the commitments you'll
need to make in terms of time spent running the business, and what
size business you want. Turnover is also a crucial factor. Pick
your location carefully - remember it will need to be easily
accessible to both you and your customers.
- Play to your strengths and interests
- Consider commitments, size, turnover and location
Where to look
The internet has made searching for businesses up for sale
very easy - try sites like businessesforsale.com.
Trade magazines and sites are particularly useful for specific
types of business, and sales magazines and sites such as Loot,
Daltons Business and Exchange and Mart often list businesses for
sale. You may also want to place an advert describing what you're
looking for. A business transfer agent may be worthwhile, although
they can be costly - speak to one if you're struggling, and make
sure they're members of the National Association of Estate Agents
(NAEA). Finally, networking is always a good way to hear about new
business opportunities.
- Try trade magazines, sales magazine and websites
- Consider using a transfer agent with NAEA membership
- Network to discover opportunities
What to check
Be thorough when you're looking at buying a business. Find out
turnover, profits, hidden financial pitfalls, what return on
investment you can expect, customer base and market. Look at past
records as well as recent ones to establish whether the business is
shrinking or growing and how well the current owner has been
running it. Make sure you know why they're selling. Also get a feel
for the employees, what their morale is like, whether you would
want to work with them, what their salaries are and if they would
stay on.
- Be thorough when checking accounts and market position
- Know why it's being sold, what state it's in and what the staff
are like
What to do next
Once you think you've found a business to suit you - and don't
expect it to happen overnight - arrange a viewing with the owner.
It's advisable to do this with two or three different
businesses - think of the process as similar to buying a
house. Then seek advice from a solicitor and accountant, value the
business, and speak to your bank or investors about finance.
Finally, negotiate the price and make a formal offer. After that,
you have a period of time in which to have a handover and conduct
the all-important due diligence, which checks whether everything is
ok with the business.
- View several businesses and seek professional advice
- Value the business and sort out financing
- Negotiate and make a formal offer
- Carry out due diligence and handover
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