A Halloween special on how to successfully buy a business
Buying a business can be a little daunting. Some might even say it’s downright scary. And that’s because, like anything that’s new, different, or features an element of risk, it’s the unknown that’s niggling at your nerves. But you really shouldn’t let any of that frighten you – and you certainly shouldn’t be put off buying the business of your dreams for the fear that it could turn into a nightmare. Thousands of businesses successfully change hands every year, and if you follow a few simple rules on how to buy a business, you won’t find any bloodcurdling skeletons in the closet.
There’s really nothing mystical or magical about choosing the right business. It all boils down to good planning, preparation and due diligence. What’s more, it’s about being honest with yourself and knowing exactly what you want to achieve. There’s the emotional side of buying a business – the lifestyle choices that you are making for you and your family. Then there’s the practical side of buying a business – the cold, hard facts. And it’s the second side that, arguably, you need to focus on more than anything else. It’s all about what the data tells you: how long has the business traded for; what are the margins; is there much competition; are the premises in good order; what is the staffing situation; and can you afford to buy it and live out of the proceeds?
Much of these practical assessments can be conducted without engaging third party services. But if this is the first time you’ve bought a business, you might want to call in the professionals sooner rather than later. Lawyers, accountants, business advisors and bank managers can all provide expert advice and support. Moreover, they’ll prevent you from making any mistakes that could come back to haunt you.
Have you considered all of the financial implications of buying a business? It’s not just the purchase itself, of course, but the working capital required to maintain trade. And what about your personal outgoings? Have you factored in your living costs for a few months while you settle into running your new business? There are few things more chilling than an empty bank account – so put together a solid business plan and keep some money tucked away to pay your bills.
Like anything in life, and particularly in business, be wary if something sounds too good to be true. Of course, thriving and legitimate businesses do come onto the market all the time. Owners retire, have a change in circumstances or, in some cases, simply fancy a change. The price will usually reflect how successful that business is, though. So, if the business you’re interested in buying seems a bargain, you need to do your homework to make sure you’re not starting the next chapter in a horror story.
As we celebrate Halloween, it’s as good a time as any to explore buying a new business. The clocks have changed, the nights are longer and we’re approaching the end of the year. So why not plan for a fresh start in the New Year right away? And remember, there’s nothing supernatural about successful business owners – they’re normal, ordinary people. And successfully buying a business doesn’t involve making a deal with the devil – it’s merely following those well-established rules.