Purchasing a business can be a great way to enjoy self-employment without having to grow a start up from scratch.
Nevertheless, not all businesses for sale are as good as they appear. Some might struggle to survive while others may simply not suit your needs. You will be looking for ways of reducing the risk of the purchase.
This article shares a few tips you could find useful for helping you purchase the right business and ensuring you get it right.
- Before closing the deal, hire an accountant to check the figures. This is the fastest way to spot any problems with their books.
- Check how long their trading hours are. If a business needs to keep open seven days a week, they should make enough money to afford to pay enough employees. It would be a shame to buy a business only to discover that you have to have to work longer hours than you used to.
- If the business works with stock, make sure that it isn’t damaged or outdated.
- If the business owns equipment and buildings, make sure that everything is in good standing and that all machines are fully operational and properly maintained. Also, check that the technology is still viable.
- Make sure you like running that kind of business. Buying it only because you think it’s a good deal is a big mistake. You’ll have to work in it, so you’d better like it. Otherwise, you might get stuck doing something you hate.
- If the business involves dealing with a large number of customers, you should have great people skills. If you’re rather an introvert, you should probably avoid buying a business that involves massive customer contact.
- If the business is in a busy holiday location, don’t buy it only because you’ve seen it doing great at peak operation. It might be too quiet the rest of the year to make you a nice profit.
- Hire a solicitor to look at the lease. Some of their clauses can be too tricky for you to fully understand their implications.
- Ensure that the lease can be transferred and that you’ll have enough time to run the business before the renewal date. Also, make sure that you’ll actually have the option to renew by the end of the current lease If you can’t renew your lease, you may find yourself out of business within a few months.
- Check with local authorities whether there’s any development planned for the site or anywhere nearby. The last thing you want to see is a competitor launching their business close to yours.
- Reach out to other business owners and managers in the area. Find out how happy they are with local trade and what they think about the business you’re about to buy.
- Refrain from purchasing a business that’s in a too competitive market. Price wars aren’t anything you want to deal with.
- Find out whether the business has been on sale for a long time. If they failed to find a buyer for such a long time, there may be something wrong with it.
- Make sure you don’t overpay for your business. Your accountant can give you some clues on what a business like that should cost. Also, if you consider the price is too low, be very careful.
- Check to see whether the seller has other businesses as well. Sometimes, the figures could include more than one business, so the one you want to buy may not be as good as it seems.
- Be cautious about partnerships. Even your closest friend can become a sworn enemy.