If you’re considering buying a business in an effort to make a lot of money, there are a thousand different things you should think about before you part with the cash. If you want to know what other industry experts recommend, here are 12 tips you can use to get buying a business right!
Do A Thorough Investigation
The first thing you need to do is a thorough investigation on the business you’re thinking of buying. Make sure you research past activities, as well as things like the operation, current status, and any other relevant things. It’s important you look at the competition, industry, future potential, and anything else that could impact whether you should buy this business or not. You have lots to research when starting a business from scratch, but it’s a little easier to research these things when buying an existing business.
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Look At The Infrastructure
Make sure you look at the infrastructure of the business as it currently stands. Make sure you look at the customers, suppliers, and employees. This will benefit you and help you to put a focus on building the business and making it better, rather than starting from scratch.
When it comes to business buying, flexible negotiating is a benefit. Everything from purchase price to financing is open to negotiation, and you have a great number of options to consider.
Don’t agree on the first price you are quoted; make sure you practice your negotiation skills. Just be sure you don’t make an offensive offer or do anything insulting!
Using A Business Broker
If you’re wondering how to buy a business, a business broker can be a big help. A business broker is somebody who puts buyers and sellers together. However, business brokers can vary depending on their individual training and specialty. As their area of expertise can differ, some are independent and some can work in a company. Make sure you research, narrow the search and find a business that fits your criteria. Ensure you explain strengths, weaknesses, and objectives clearly to the broker so they can find a great fit for you.
Valuing A Business
You don’t want to overpay when buying a business; it’s probably one of the scariest parts of purchasing a business. That being said, you don’t need to be an appraisals expert to get the price right. The truth is, this is completely subjective to the person buying the business and how much they want it. Remember that a good business will justify the purchase price every time!
The Importance Of Insurance
Never underestimate the importance of insurance when buying a business. You must have insurance to comfortably grow and develop your business, so ensure you do your research on the different policies available, and don’t just go for the cheapest one.
Understand Any Tax Implications
Your system could be very different to the previous owner, so don’t assume that you’ll be using the same one as them. A great accountant can advise you, so make sure this is the first thing you look for when buying a business. Staying on top of taxes and other financial things is crucial to your success. Make sure you do a background check on any unpaid taxes before you put your money down too!
Creating A Great Business Plan
Just because you’re not starting from scratch doesn’t mean you shouldn’t create a business plan. Make sure you think about why you want the business and what you think you can do with it, and you should be able to put together an effective plan. It isn’t the most exciting part of starting a business, but it’s crucial.
Never Be Afraid To Withdraw Your Offer
This is a huge financial decision, so don’t be afraid to change your mind if things stop adding up. You can withdraw your offer any time before you sign on the dotted line!
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Don’t Rush To Transform The Business
It’s normal to want to start putting your own stamp on things straight away, but you really shouldn’t rush to ‘transform’ the business to quickly. Ideally, you should take a few months to observe the way things are working from the inside, making a note of any strengths and weaknesses. Then you can begin to make any changes you believe to be necessary. After all, the business has survived so far without you, and managed to attract you as a buyer!
Know Exactly What’s Included
It’s important that you make no assumptions when buying a business, and you know exactly what’s included in the asking price. Will you get office furniture? Fixtures and fittings? Make a full inventory, and then make a list of the things that should be included in the price. Ask the seller to sign off on these in your contract, so that there can be no disputes and no going back.
Expect The Unexpected
It’s important as an entrepreneur that you expect the unexpected. Something will likely go wrong somewhere along the line, so don’t worry and don’t panic if it does. Stash away cash to pay for emergencies right from the beginning, and make sure you attempt to pre-empt anything that could go wrong too so you have a little idea of what you can do to improve things. The only other things you can do is take some deep breaths and ensure you have the ability to move on from unexpected things. Success isn’t always linear, so remember that!
Hopefully, these 12 tips on buying a business from industry experts have opened your eyes a little. If you feel that you and another business are a good fit, and you’re excited and passionate about the prospect of running it in spite of the things that could go wrong and the risks you must take, it might just be a good step for you! The key is to avoid focusing too much on the things that could go wrong, and instead focus on the things that could go right!