Buying a business that is already in operation can seem like a complicated undertaking. However, you can find easy-to-follow step-by-step guidance on this process, below.
Research potential opportunities
Before you get anywhere near the exchange of money, you must do proper research. This means researching different industries and sectors to see where a profitable opportunity may lie. The good news is that completing this stage of research is relatively easy as you can begin by searching the top categories on a business brokerage site. Thereby coming up with a list of potential sectors to explore.
Once you have done that you begin examining specific businesses in each sector. To do this it can help to have a list of criteria that you apply to each business such as cost, overheads, location, and profits so you can coherently compare one against another, even across different sectors. Your overall goal here is to narrow down the options, to what you want, can afford, and where there is a viable market that will continue to be profitable in the future. Any business that meets these criteria should go on your shortlist. Continue to apply your criteria until you have just two or three potential businesses left.
View your shortlist
You should now have a shortlist of possible businesses to buy. Now, comes the time when you need to go visit them in person. Indeed, it is vital that you make the effort to see any investment you are considering in real life because it provides you with the opportunity to get a genuine feel for how things work, as well as what the opportunities and potential threats to the long term success of the business are. All of which will inform your decision on whether to buy.
Compare and decide
Once you have seen each business it’s now time to take that information, add it to your initial research and use it to make your final decision. It’s always best to keep this decision close to your chest for as long as possible too, only telling your business broker and those related to sourcing your finance. After all, if you see the potential in a business it is quite likely that others will too, and you won’t want to get embroiled in a bidding war that could cost you valuable money.
Secure finance
While we are on the topic of finance the penultimate stage is to secure the funding with which you will buy your investment. To achieve this you will need several things including a business plan, and financial projections.
There is a range of funding options open to you such as loans from banks or building society, as well as peer lenders. You may even find that you can secure an angel investor to cover at least some of the cost. Just remember to compare how much interest or ownership of the business anyone providing funding will require.
Negotiate the deal
Last, of all, it’s time to negotiate the best deal possible. Remember to get any property or additional assets independently valued before you begin negotiations too, as it pays to have an accurate estimate of the value of what you are paying for.
