Buying a Small Business – 10 Expert Tips for Buying a Small Business
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Home Page > Business > Small Business > Buying a Small Business – 10 Expert Tips for Buying a Small Business
Buying a Small Business – 10 Expert Tips for Buying a Small Business
Posted: Jun 15, 2010 |Comments: 0
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It is always heartbreaking to see well intentioned, hard working people buy a small business they thought was perfect for them only to discover they had over or under estimated life as a business owner. The good news is this can be avoided quite easily given the right information.
When buying an established small business there are many advantages such as:
The business is already equipped with experienced employees to operate it
There is an existing customer base
It saves the effort required to establish a business in the initial stages
You can focus on improvement of services after buying the business
…to name a few.
If you have decided to buy a business here are 10 useful techniques to help you in making the right decision and avoid common mistakes:
1) For some, buying a small business can also mean buying a job. Working in the business will have an effect on your lifestyle, so you need to calculate the returns compared to the man hours spent while operating and growing the business.
2) Where to find a small business for sale – Businesses for sale advertisements can be found in trade magazines and newspapers or online. You can make enquiries with business advisors or accountants about any potential opportunities. You also have the option of listing your requirements via the internet to receive notification or alerts whenever a business is listed for sale. An online search for businesses can also yield good results. In addition, you can discover what pending business sales might be coming up through business suppliers, competitors and customers.
3) During your search for a good small business it is incredibly important to conduct thorough research on every aspect of the business – including an accurate business valuation. You need to gather all the information about the owner and their business. The financial claims made by the seller should always be verified. The due diligence when buying a business should be done with great attention to detail and independent advice from professionals like an accountant should always be sought, particularly if you are inexperienced in reading financial statements.
4) Many would say to look at buying a small business that interests you. They also say “do what you love and you will never work a day in your life.” This is true however, the business must also offer a return on your investment.
5) Check if the seller is open to offering any vendor finance. Bank finance for buying a business can be limited and this may provide what you need to get going quickly.
6) Always seek professional advice from accountants and lawyers who have experience in business sales.
7) Keep in mind that the asking price of the business is not necessarily the valuation price or even close to the correct value of the business.
If you happen to get advice or information from a Business Broker be aware that they are usually working for the seller (they work for the person that pays the commission).
9) Find out what is motivating the vendor terms and conditions can be just as important as price.
10) Educate yourself on the business buying process, learning how businesses are bought, sold and valued. It really is essential to make sure you achieve the very best outcome for you and your family.
The process of buying a small business is really quite straight forward. It is very important to gain expert advice from people who have had many years experience buying, selling and valuing all types of businesses.
The simple fact is, if you have all the information, you can get a great business without the ‘middle men’ and save thousands of dollars doing all the due diligence, analysis and appraisal yourself, as good as or even better than the professionals.
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Lee Artis -
About the Author:
Has 12 years experience on both sides of the fence selling businesses of all types and sizes for her clients as well as acquiring corporate businesses as a buyer’s agent.
Prior to her successful business sales career she had an entrepreneurial background and built several successful small businesses. Her last business was the manufacture and distribution of a range of clothing for women and children Lee had manufactured in Fiji for distribution throughout Australia.
Her passion is small business and developing innovative, internet centered commercial businesses of the future.
Lee is a visionary and has the ability to see new and creative ways to transform old fashioned, traditional businesses.
Lee’s industry experience gives her insight into a new way of buying and selling businesses without the expensive involvement of business brokers. Her belief is so strong that she joined Terry McDonald to write this series of books and published articles to equip people with the skills they need to buy or sell a business themselves.
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