Buying a business can be the investment of a lifetime. With the work already done for you, you can focus on the aspects that really matter, instead of all the boring stuff.
This guide tells you everything about buying a business, from what to look for to why you should go along with it.
A good investment can easily make you one of the best entrepreneurs of the decade – just read on to find out how that can happen for you and your business.
Without further ado, let’s get into it.
The Benefits of Purchasing an Existing Business:
An existing business can satisfy all of your entrepreneurial desires. Just because you’re not creating a start-up, doesn’t mean that you are not someone looking for innovation and a good impact on the world with your product.
There are also a lot of advantages to buying a company. And by that, I mean a LOT.
Not only is it simpler to get investments, but you instantly get a consistent and reliable income, the brand is already known to customers and the whole process is a lot less stressful.
So: what exactly are these advantages?
It’s Simpler to Pick Up Funding When Buying a Business
Going into business means that it takes more work to persuade investors, including bankers, to fund you. Firms are a lot more likely to back a business which can turn in a profit rather than another start-up destined to fail.
Investors can draw conclusions based on the business’s past figures, as opposed to risking their firm’s money on a new brand.
When a pre-established business is already out there making an impact, it’s less of a hard decision to make when thinking about whether or not to fund it. There is considerably less risk involved in lending money to it.
There’s a Salary From the Very First Day
Now. Everyone wants to make sure their investments pay off.
By buying a business, a salary is provided immediately.
Not only can the owner be profiting from the first day of work, but there are likewise fewer ‘set-up’ costs than if someone was setting up a business from scratch.
This even includes small things like office furnishing and branding the company – all is already done for you. This makes managing costs a lot easier.
For businessmen searching for a constant income, purchasing a business is a better choice than beginning a start-up, as it takes a lot more time for them to profit with the latter.
The Brand is Known to Customers
No need to scratch your head for hours about whether or not to make the logo light or dark blue: everything is already done for you. Not only are crucial things like the company’s website already set up, but there is an existing pool of clients to call from.
In this way, there is a lot less need for spending all of your budget into advertising, as getting clients isn’t any issue – you have everything you need.
You Can Find Out More About Your Business Before You Make Changes
As the new owner, you have a fresh set of eyes. You know the business’s potential and exactly what to do with it so that it achieves your goals.
In that way, you can familiarize yourself with the business.
You don’t have to go all-in at once; instead, you can hold back and pinpoint exactly what your vision is for the business.
Before you start making improvements to the business, you can see what makes it tick the way it does. You can inspect its structure, the work ethic of the staff and more to make the business your own.
At that point, you can prepare a plan for what to do with the company in order to maximize its growth.
Purchasing an Existing Company is Less Stressful Than Beginning a Start-up
You will have a lot fewer task with an existing business than you would with a start-up. Not only are there a lot fewer things to worry about, but the risk of failure is considerably lower.
You take very few risks in buying a business as everything is already done for you, and so there is less stress.
But you ask… How is it that you buy a business?
Tips for Buying a Business:
Make Sure That the Business is Right for You
You want to be picking a niche which you enjoy. As an owner, you will have to promote your products often – and, believe me when I say, you can tell when someone doesn’t believe in what they are saying.
More importantly, running a business should not be an excruciatingly painful task, but something enjoyable.
Business sales Australia is an example of a website that you can use to buy a business.
Browse a few sites to see what niches are available. There are many of these around – knock yourself out!
Have a Cost for the Business You Want to Purchase in Your Mind
Consider it a property bargain. Similarly to when you’re thinking of buying a house, you have an estimate in your mind as to how much it really costs.
It’s a similar when purchasing a business. Try not to enter the process without a strong figure in your mind. Never think that what a seller is offering is the correct valuation for their business.
Do Your Proper Research
You should be able to know everything that the business offers. After all, if you’re trying to become the owner of it, you should know it like the back of your hand.
Make sure the company doesn’t have any legal issues. That can always be a problem.
You want to make sure that the business is right for you, otherwise, everything will be very boring. You need to know everything about its niche in order to sell your products/services well.
If there are no black flags, the negotiation phase begins.
Start Low But Back It Up With Reasons
Ensure you start dealings with a low offer. However, you need to legitimize the reasons as to why you’re offering this sum.
This is when research comes in; you have to tear apart the business and pull up its insights. You have to demonstrate that work needs to be done for the business to reach its potential. Otherwise, you might purchase it for a higher price.
Without backing your sum up with your reasons, you risk offending the seller and hindering any chance of doing business together.
Stay Extreme and Don’t Uncover Anything
You want the seller to think he is dominating the exchanges. That is why you need to start low and give them ground, as they will want to do business with you more if you show you are nice and reasonable.
Start on the extreme so that the seller doesn’t walk over you. Have a firm back foot.
Try to keep vague – do not, under any circumstances, reveal exactly what your budget is in order to keep the price low.
Use sentences like, “I might be happy to pay X sum, SHOULD these things be met.”
Do not give them anything they can hold back against you to ramp up the price.
If the other party asks you the amount you can pay for the business, ignore it. This is for later stages of the negotiation.
If you follow every one of those negotiations tips, you will likely be able to reduce the price you have to pay.
There you have it!
Once you have purchased your business, feel free to implement all of your ideas, visions etc. Make a good impact with the products/services you are offering, and, most importantly, good luck!