Has the thought of buying an existing business ever crossed your mind? Maybe the quaint coffee shop on the corner or the bustling pub on the main street? You may be ready to branch out on your own, be your own boss, and be the one in control of your destiny. The idea of taking over an established business instead of starting one from scratch has a definite appeal. However, there are a few things to take into account before diving in and making the purchase.
First, the idea of buying and running your own business is quite different from the reality of it. So it’s important to be brutally honest with yourself about whether or not you possess some of the necessary traits for business ownership. Some of these include:
Once you are confident in your ability to take on the exciting role of business owner, it’s time for due diligence. This is not the time to throw caution to the wind and figure things out as you go along. Conducting a comprehensive due diligence process is critical to evaluate both the risks and the opportunities of making the purchase.
Due diligence aims to reveal the company’s overall financial performance, potentials, position compared to the competition, and market projections. It’s an integral step between the informal deal agreement and signing off on a legally binding contract. The following is a checklist of information and documents you should review:
The exercise of due diligence shows you exactly what you are getting into and highlights all the legal, financial, and business obligations that the acquisition entails. Obviously, it is a labour intensive process, so it would be wise to enlist the professional services of an accountant or a business valuer, as well as a lawyer (who specialises in acquisition) to review and analyse all of the information about the business you are buying.
Once you have decided that business ownership is right for you, set your sights on your purchase, and thoroughly completed the due diligence process, it’s time to dive in and sign on the dotted line. Although it can be an overwhelming leap to make, have faith in yourself and enjoy the journey of this exciting new venture.
Faye Ferris, APAC Sales and Marketing Director, BusinessesForSale.com