If you’ve always wanted to be your own boss, starting-up might be the only option you’ve considered – but it needn’t be. Buying an already-established business can be a much safer alternative. See the below links for quick guides on specific parts of the buying process or, for an overview of how to buy a business, view our complete guide beneath.
Ready to buy a buisness? Take a look at our businesses for sale.
Here at Intelligent Business we’re seeing more and more people considering buying an existing business in favour of starting their own. This can be a much safer alternative as not only do you buy into the customer base the business has, but you’re taking over the cash flow and existing brand. These are things you’d have to start from scratch with a start-up.
Our aim is to help you understand the pros and cons of buying a business. We want to give you as much information as we can on the whole process – from arranging a viewing to having an offer accepted – to help you make an informed decision on whether it’s right for you.
There is no one reason why people buy a business. Some people choose to because they’ve worked in that industry for years and want to go it alone, whilst others are looking to invest their money and get a good return. One popular reason we hear though is that people have always wanted to run their own business, but not wanted the risk of going it alone.
Ultimately buying an existing business, whilst still offering you the chance to be your own boss, minimises the risk of failure by buying into a business with existing cash flow. The existing customers, brand and reputation can all be leveraged for further growth, or kept as is if you prefer. This existing custom will also make it much easier to secure finance than it would for a start-up.
This isn’t to say that it’s completely secure, though. This existing custom does mean it’s often far more expensive to buy in than if you were starting up. You have to consider not only the financial cost, but the emotional cost of building a business to the point of the one you’re considering buying. Perhaps the most difficult challenge would be how you’d handle existing staff and customers. We’d recommend slowly making changes, rather than doing anything drastic right away, to ensure you cause the minimum disruption to both parties.
As in everything, there are also no guarantees when you buy an existing business. Following the steps below, however, will help to ensure you can improve your chances of finding the right business, securing the best deal and making the business a success.
When you buy a house, you go to an estate agent. In the world of buying a business, you go to a business transfer agent. As agents we have a long list of businesses for sale and represent the most efficient way to start your business search.
The search for a business to buy should start with identifying and understanding what you want to gain by running a business. Most people look for a business that will fit their lifestyle, though others want entrepreneurial growth or investments. The size of the business and responsibilities will also be a key consideration. Are you willing to take on a large amount of employees and a long lease, or are you looking for something a bit smaller?
When it comes to business type, many people stay in an industry they already have experience in. This helps them feel more comfortable, and reduces the risk. Others are looking for a lifestyle business, like an events company or a gym. Skills you’ve learned in a different industry are often transferable, especially if you’d be taking over a management position. No matter what type of business you decide on, make sure you’ve fully considered your options and that it matches your experience.
Once you’ve made your decision, you’ll need to think about location. If it’s service or retail, you’ll want to visit the location and assess the level of competition in the area. Alternatively, you might want to stay local. You can use our region choice to choose the area that’s right for you, and sign up for area-specific email alerts.
At this stage it’s crucial you educate yourself on the buying process. You’ll have a team of:
Using the knowledge of these professionals ensures you perform the due diligence of the business.
There are a number of investigations you can make to personally assess the business. Talking to key stakeholders, customers and suppliers will help you see how other people view the company. Getting an idea of how external people see the business will help you understand the business’ reputation.
There are four key questions you should ask the seller when considering a business:
Asking these questions will help you understand why the business is for sale, and if there’s anything you should be wary of.
Once you’ve arranged a viewing, done your research, completed your due diligence and are happy enough to make an offer, you can do so through your transfer agent. If all is good, the buyer will accept and you’ll be a happy business owner. Congratulations!
For more information on buying a business, please consult our buying guides.