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.
The entrepreneurial spirit
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:
- Passion and drive
- Strong self-belief
- Ability to make tough decisions
- Vision to see the big picture and plot a course in accordance with your long-term strategy
- Resilience to learn from failures, which often become key stepping stones to your ultimate success
- Fortitude to bear the burden of ultimate responsibility
- Willingness to delegate
- Humility to recognise when you’ve made a bad decision and flexibility to change course accordingly
Due diligence
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:
- Financial records
- Asset inventory and property lease contract
- Legal and regulatory compliance
- Relationship with stakeholders
- Reason for sale of business
- Comparison with the competition
- Industry and market forecasts
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.
Taking the final leap
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
