A lot of people dream of being their own boss, but starting a business from scratch can seem daunting and risky. Here’s why buying an existing business could be the perfect solution.
The idea of running your own business can be liberating and signal a sense of freedom you’ve been craving. But setting up a business and turning it into a profit-making endeavor can be a step too far for some people. Running a business is for people who are entrepreneurially-minded, but not necessarily start-up entrepreneurs. Thus, buying an existing business can be a good in-between option for people who want a different kind of working life to the one they currently have.
Buying an existing business will change your life in many ways. You’ll be in charge and you’ll be accountable for the prosperity of the business. This is a great feeling for people who have suffered at the whim of mediocre managers and have been subjected to tiring office politics. Being in charge and accountable comes with great responsibility too, and you’ll have to educate yourself about all the relevant business operations and do everything you can to generate a good enough income. People who buy an existing business are usually ready to rise to such challenges, and the feelings of being successful, earning an income you’re proud of, and contributing to the business community are all incredibly motivating.
So how do you actually go about buying an existing business?
1. Consider Your Strengths
If you’re thinking of buying an existing business, it is important to think a little bit about what kind of business you are interested in. To do this, you’ll need to think about what strengths and attributes you would bring to different types of businesses. If you want the greatest chance of success, you’ll want to buy a business that you have a certain level of confidence in running.
Since buying a business is a total lifestyle change, you should also consider the ways in which you would be happy spending your life. After all, being a business owner means it’s your responsibility 24/7, so you’ll want to do something you’re interested in and at least a little passionate about. You don’t need to know everything before you buy a particular business, but do also think about what you would be willing and able to learn to make a certain business successful.
2. Look At Available Businesses
If you’re ready to take the step to buy a business, what you end up doing depends on what is available at a particular moment in time. Start researching all the businesses out there that are for sale, and getting the help of a business broker is a good idea at this stage. Not only will they have listings of businesses that are available to buy, they also have extensive networks and contacts, which may bring up possible opportunities that are not public knowledge yet. Business brokers can help to screen possible businesses, and help with the negotiations for the purchase when you get to that stage.
Sometimes buying a business takes a little time, either because there isn’t anything relevant out there for you at the moment, or because you need to weigh up all the different options while you are hunting around for businesses. Sometimes biding your time is a good idea, so don’t rush into something just because nothing better is out there at the moment. And if you have your heart set on a particular business, but it isn’t for sale, try approaching the current owners. You never know if someone might be willing to sell until you talk to them.
3. Do Your Homework
If you have found a business you are seriously interested in buying, it’s important to take a steady approach towards buying it. Get experts on board to interrogate the financial situation of the business and check if there are any issues with it. Hiring a lawyer and a business consultant can be wise, as they can look at a business from all angles and ensure it would be a good buy for you. Once you are certain the business doesn’t carry any unnecessary risks, you’ll need to secure funding. This could be a business loan, venture capital funds or another trusted source of finance. Remember to consider the sale price plus any investment you will need to make in the business once you acquire it.
The final piece of paperwork is to have a watertight sales agreement drafted. This means including all the details of the sale and what is included. Most people work with a business broker and a lawyer at this stage. Both parties should have had ample opportunities to feed into this agreement as the sale date approaches, so that signing it is straightforward when the date of the sale comes up.