Small Business Saturday Blog

4 Tips for buying your very own small business

Tuesday, March 10 at 09:28Finance | Inspiration

For many, it’s a long-held dream. Owning a business could give you the freedom to pursue your professional passion, to be your own boss and to grow a brand to be proud of. Whatever your motivation, starting your very own business is an exciting time.Building your business from scratch can be rewarding but it may make better sense to buy a business with an established customer base that’s already supplying cash flow and profits. It’s likely to be more costly – in the short term at least – but you’ll be generating a revenue from the get-go and you should find it easier to obtain finance, as your bank or backer will be investing in a business with a track record and orders in the pipeline.It all starts with youStart by taking time to think long and hard about the type of business you want. You may be considering basing your new career on a personal talent or hobby – landscape gardening or dressmaking, for instance. As long as you plan realistically and conduct due diligence, there’s no reason why you shouldn’t build a business around a passion, after all, countless others have.Do carefully weigh up your own skills and expertise, though. If you don’t know the first thing about early-years education, you might face a steep learning curve if you plan on running a pre-school nursery. Consider re-training if you’re aiming for a big career change and try to select a business that will make the most of your personal qualities – as well as one that dovetails with your lifestyle. If you’d rather stay indoors when wet weather descends, an outdoor activity centre may not be the right choice for you!Take your pickWhen you’ve narrowed down your search by business type, size and location, you’re ready to begin your search in earnest. Business transfer resources like Bizdaq help you get a head start but you should also keep your ear to the ground for local intelligence on businesses that may never make it to the open market. Talk to business owners and use your network of contacts to make sure you’re the first to know about new opportunities. Bear in mind the budget you have available.Do your researchBone up on your chosen market and try to get a feel for its economic outlook. No business is bomb-proof, but you want to feel the tide is with you rather than against you. Make sure you assemble an ‘acquisition team’ to help perform due diligence on your purchase – your solicitor, accountant and financer (if you have one). Start by digging into the business’s finances, reputation and trading history. See if you can discover why the owner is selling, what the potential for growth is and if it carries any liabilities.At the end of the process, you should know exactly what you’re buying, which, in turn, will help you to decide if the price is right.Closing the dealAgreeing a price is just part of the negotiating process. Decide what kind of deal structure would best suit your circumstances and look carefully at your options. If you need finance to go ahead with your purchase, consider the most cost-effective way of acquiring the necessary backing. A straight business loan may work well but you could discuss alternative funding options with the seller - such as deferred payments or seller financing. The right business is one that will grow because of your personal and professional strengths and blossom under your stewardship. So take the time to find it, heed the professional advice you’re given and keep the seller on side to ensure a smooth transition on D-Day. Be honest, play fair, work hard and you’ll soon be running your business like a pro. Good luck!
Jonathan Russell is Marketing Manager at Bizdaq, an online platform that helps people easily buy and sell small businesses in the UK


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