Things to Consider When Buying a Business
Why buy an existing business? Buying an existing business gives you:

• Access to an existing customer base;
• Accepted products and services – products and services which have already been developed and tested, and are accepted within the market;
• Experienced and skilled staff;
• Already established, and working, systems and processes;
• History – financial records, for example, so you can work out the trends to ensure continued growth and success prior to purchasing. These may all seem like excellent reasons to purchase a business, and you may think it’s a “no-brainer” and want to jump straight in.

But, there are a few things you need to do before you dive in and actually purchase a business. See our handy checklist below of things to consider before you buy a business.

1. Self-assessment
You need to be sure you are the right person to become a business owner. Are you independent, and able to recognise when things need doing and organise for them to be done? How’s your health, will you likely be around for the next 10-15 years’ to run the business? How’s your money management skills? Are you able to budget, and stick to a budget? Are you organised? Optimistic? Have good people skills? Committed? Decisive? All of these things, and more, must be considered of yourself before you can 100% say “Yes! I am ready to become a business owner”.

2. Determine your budget
You need to think about more than just the initial outlay. You need to consider the monthly cash flows, having sufficient working capital, having funds set aside just in case the business takes longer than planned to start turning the profit you require, and so on.

3. Select an Accountant and Solicitor
These professionals are essential when buying a business, in the planning and purchasing stages. They can answer any questions you may have about the process and, not only that, when you are evaluating a business you’re interested in, your Accountant and Solicitor can use their skills and knowledge to give a professional opinion on whether the business is a good investment or if it has just been made to look like that on paper to the untrained eye.

4. Searching for a business – selecting a Broker
You may choose to search the internet or business listings for a business, however, a business broker is your best-bet when considering purchasing a business as they can advise you every step of the way, rather than you trying to navigate the purchase process blindly.

5. Finding the Right Business to Buy
To ensure you’re looking for a business in the right area, you need to do a preliminary investigation first. Look at things like the market place and business image – where is the business positioned in the market place? How is it seen by customers and competitors? What’s the reason for selling? Its financial status? Look at customer satisfaction, and customer base, as well as employee satisfaction. Also, look at the location and condition of the business.

6. Due Diligence
Due diligence is more than just looking into the points mentioned above; it’s doing a thorough analysis of the business. Check the business’s financials for the past 3-5 years. Ensure you understand exactly what is for sale, e.g. is it being sold as a going concern, or at salvage value? Verify market demand, and do your financial projections – is it worth buying, or will you be flogging a dead horse? 

The above are just the basics of what to do when buying a business, and definitely not a full, nor an exhaustive, list.

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Did You Know?

Some businesses aren’t selling their whole business – they may be excluding some, or all, of their assets in the sale. So, make sure you do your due diligence and know what you’re buying!