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.
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.
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.
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.
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.
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.
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