Anyone wanting to run their own business has a choice of two options.
Start your own business from scratch, or buy an existing business.
Owning your own business may be one of the most rewarding experiences when things are going well.
But it can also be one of the most stressful experiences when things are going wrong.
Buying a business is a big step in your life.
Most people interested in buying a business have never actually owned one before.
Is Business Ownership Right for You?
First, you will have to examine the reasons why you want to buy a business.
Maybe you have not had much luck working for others in your life.
Or you may want a better life for you and your family.
Owning a business is not a change of job, it is a change in your way of life.
At a typical job, once you leave to go home, you will not have to think about work until you return the next morning.
When you own a business, everything which happens within that business is your responsibility.
If something goes wrong, you have to do whatever it takes to find the solution.
When one of your employees is having a problem, you have to help them out, even to the point of doing their job for them.
Your own business will take a lot of your time and effort.
Until you have the business running well, it may take up all your free time.
You have to ask yourself if you are ready for such a change.
Which Business Should You Buy?
After you decide that you are up for the challenge of owning a business, then you have to start looking at what interests you.
Just because a business is successful for one person, does not mean that you will be successful as well.
You have to find a business that interests you.
A business to which you will to dedicate as much time as needed.
If you do not like your business, then you will not give it the time an attention it needs.
Due Diligence – Checking The Health of the Business.
Once you have decided which business is right for you, how do you know if it is a sound investment of your money and time?
The transaction is a bit like buying a house.
There are many factors you want to be sure of before committing to the investment.
It would be impossible to provide an exhaustive list in a short article.
But here are a few essential things you must look for:
1) Good documentation.
A good business owner keeps clean, information books, which will allow you to understand how the business works.
By studying the books you can track their success (profit & loss), inventory and trends.
If the business owner does not keep good books, there is a risk that their way of doing business is not great.
You do not want to inherit a mess for a business.
2) How long has the business been operating, and how long has it been in the current ownership?
It is important to find a business that has a long track record of success.
This ensures you that you are getting a business that is well established and has a good client base.
The time the current owner has had the business may give you some insight into stress levels involved in keeping the business.
If the current business owner has only owned the business for a couple of months, then you may want to start asking questions.
3) Take a look at how they are doing business currently.
Owners who are selling their business may have started to neglect their business.
Maybe they have stopped investing in new products.
Become less responsive to customer enquiries.
Have they reduced their hours of business?
Or allowed their inventory to diminish?.
Any of the above may be alienating customers and may hurt your business in the future.
Making an Offer
Once you find a business in which you are interested, you must then submit a written offer to the current owner.
If you have never owned a business before, this may be a daunting task.
You may want to get legal advice before submitting it your proposal.
Your proposal should not only contain the amount you are willing to pay and when, but also give any stipulations that you have for the sale.
The buyer will review it and get back to you about it.
Do not be surprised if the buyer returns to you with a counter offer.
You will have to haggle with the owner so that the terms work for both of you.
It may take several tries, but once it is all over, you will be the proud new owner of a small business.
This is where the adventure begins.