If you’re here, there’s a good chance you either own a business already and are looking to purchase another, or you are looking to buy your first one. If you have decided to purchase an existing and established business rather than starting a completely new venture, it’s important to consider various factors. It is not a good idea to completely commit to a business without fully considering and planning various things. This article will talk you through the key factors to consider before purchasing a business.
Choose the Right Industry
It’s important you choose an industry that matches your goals and values. It’s a great idea to pick an industry you know a lot about and are passionate about. Another essential factor is to pick an industry you know is going to succeed. You should understand what is current in the market and what industries have potential. For instance, businesses that involve at home entertainment or leisure were very current and successful during the pandemic and lockdown, but which will remain that way?
Do Your Research
It’s imperative to thoroughly do your research first before investing in a company. Spend some time really understanding what is available in your chosen area or sector. A Google or social media search is a great place to start. You can begin to create a shortlist of potential businesses and research these in detail. A financial advisor or change manager will help you determine if a business is suitable for purchase. Ensure you take a look at customer reviews, their website, and what the business has chosen to put out there. Does the business wow you, or seem impressive based on these? This is a great place to start if it does.
Understand the Seller’s Motives
It’s a good idea for you as a buyer to have an understanding of the seller’s motives. This can include getting to know why they are choosing to sell the business and what drove them to set up the business in the first place. Questions such as why the seller is choosing to sell will help you understand if the reasons are genuine, such as retirement, and nothing to do with the success or lack of profit of the company.
Schedule an Initial Viewing
Similar to purchasing a house, it’s a good idea to schedule an initial viewing if you are interested in a business. This is your opportunity to get answers to your questions and really understand the day-to-day function of the business. Viewings are great, as they really help you to get a vibe of the business. It’s good to focus on your gut feeling during a viewing, as it’s usually right.
Consider Financial Milage
One of the best things to focus on when deciding if a business is a good one to invest in is their profits. A successful business will show increasing profits. An increase in profits year on year is usually an attribute you will want to see if you are looking to purchase. Ensure you fully explore past profit records. You need to be asking the questions, so why did a business struggle with profits over the years?
Get to Know the Staff
It’s a good idea to meet with employees first before buying a business. This will give you a good sense of current working relationships and help you to see if their work ethic and values match what you are looking for. It also means you can get a good sense of staff contracts and the business structure.
Negotiate
Ensure you have in mind the deal you are looking for and don’t be afraid to stand your ground and push the deal that works for you. It’s you who is in the strongest position as the buyer and so it is important you focus on getting the best possible deal. A solicitor and a change manager can support you with this. Depending on the circumstances of your seller, you could end up with an excellent bargain.
Get the Right Support
It’s a great idea to seek out professional help to support you through your purchase journey. It’s also a good idea to seek informal help from your contacts or loved ones to hear their subjective opinion. Ensure you involve your professional team to support with checking over things like the accounts, contracts, or figures. A good team of accountants and solicitors will go a long way. Specialists, such as change management consultants, are also great to support you through the process and ensure you have all of the essential things in place.
Yorkshire Change
Here at Yorkshire Change, we want to make the process of finding a business as easy as possible. Our team of consultants are all extremely knowledgeable and can support you through your unique individual change process. We can support you with finding a business along with many other exciting factors in your business adventure. To find out more about the services we offer, please visit our website.