Buying a business is not too dissimilar to buying a house. It requires research, funds, negotiating, professional advice and luck. Over 20 years in business at Bsale, we’ve connected thousands of buyers and sellers, it’s through this experience we’ve developed 7 steps on what to consider when buying a business. You can download the free eBook: The Ultimate Guide to Buying a Business here. Or for a taste of what’s included and learn how to buy a business, see below.
Do you have the relevant experience to buy this business? Experience counts for a lot in business - it’s the difference between flying blind and flying on autopilot. Sure, many business skills can be taught (particularly by the previous owners) but not all experience speaks to skills; it can also talk to enjoyment. Have you worked in this business or similar before? How will you know if you’ll enjoy it enough to dedicate your hard-earned cash and precious time to it? Our advice is to get behind the wheel first before you commit to purchasing a business.
Meet the owner
When you purchase a business, you’re purchasing more than what’s on paper. You’re also buying into a reputation, employees, supplier relationships - most of which have been developing over the years. Meeting the owners face to face will see if you have similar people and personalities. This is often very overlooked when buying a business, with people deeming it as irrelevant. But experience has taught us that when you buy a business, you’re buying everything associated with it. If your instincts play a role throughout this process, it will definitely occur when you meet the owner and get a feel for the way the current operation is running.
Don’t fall for the sales pitch
Someone selling a business is in a position of selling. It sounds obvious but at the end of the day, everyone has their own best interests at heart. When buying a business, it’s important to see through the smoke and mirrors and look at the facts. Don’t buy into the whimsical stories and emotion behind the purchase, but rather try to keep things factual and black and white. Make sure you try to look at things objectively and try to keep your emotions at bay, this will help you make the right judgment at the most crucial times.
Do your due diligence
If you are investing your hard-earned money into a business, you want to be as confident as you can be that the information you are being told is accurate. It is so easy for a business to go backward; mismanaged accounts, bad cash flow, poor marketing, new shop fit-out, and suddenly you could find yourself sinking money into your newly bought business that wasn’t in any of your budget or cash flow projections. Due diligence is possibly the most important aspect of the business buying process which is why we recommend seeking professional advice throughout the process.
Read all 7 steps on what to consider when buying a business. You can download the free eBook: The Ultimate Guide to Buying a Business here.