One way of getting into business and becoming your own boss is to buy an existing business. They are already up and running and established, so it can be a way in without the hassle of building it up from scratch.
However, there are things that you need to think about to make sure it is not an expensive flop. Here, we take a look at the steps involved in finding, valuing, and buying a small business.
Thanks to the internet, finding a business that is up for sale is relatively straightforward now. However, finding the right business for you can be a lot more complicated.
First of all, you need to know what sort of business you want to take over. Take into consideration factors such as the budget that you have available, the location you wish to operate in, the industry you want to work within, the sort of turnover you hope to achieve, and whether you have experience and interest in that area. Once you have narrowed this down, it is much easier to start your search.
You can search in trade journals and newspapers, or alternatively, place an advertisement specifying what you are looking for in the relevant trade publications and journals. You could also contact business brokers and agents to see if they have something suitable on their books.
Once you have found something that you think may be suitable, it is time to figure out whether the business is worth buying. The only way that you can do this properly is by taking the time to research everything and look at all of the data and information available to you. One of the best ways to do this is by talking to people. Speak with customers and suppliers as well as the vendor. They may give you information about the business, or even the market as a whole, that you would not have considered checking.
You need to know how financially healthy the business is. Find out about its history and current performance, including its turnover and profit, it’s expenses, assets, and the cash flow.
You also need to find out why it is being sold. If it is because there has been a dramatic fall in profit, this will bring the business price down.
Doing your research into the characteristics of diligence in both financial matters and cyber matters, if appropriate, is essential before you make any form of commitment.
Once you know whether the business is going to viable, then you can make your move and put an offer in. Remember, while there are many positives to buying a business that is already up and running, there can be some downsides as well. You may want to put your own stamp on it, but if they have lots of loyal customers, you may risk driving them away if you implement too many changes too quickly. Do one thing at a time to retain the existing customer base, but attract new ones too.
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