Buying an established small business

Buying an Established Small Business

When buying a business, it is important that you are buying into the industry for the right reasons. If you are a pluggers and boardies kinda guy, buying a suit store isn’t going to be the best fit for you. Businesses thrive when the owner is well invested and passionate about what they are doing/selling (combined with good financial decisions, a strong business plan and lots and lots of research).

Risk
In most cases, buying an existing business has less risks associated with it than starting a business from scratch. Buying an already established small business comes with many benefits, from knowledgeable staff to customer relationships. If you can find the right fit, you can walk into an already established reputable business with a recognized customer base.

This being said – nothing in life is free. Buying an existing business can end up being more costly than starting a business from the ground up. All the assets that come with an established business come at a cost. This cost versus value for money should form a big part of your decision process. To minimise risk further, do your research on the associated assets. Who is the customer base? What are the staff like? Why are the owners selling? How old is any equipment?

Finding the right business
There are many factors to consider when a business becomes available on the market. The industry needs to make sense to you, if you are looking into a business for the simple fact that it is on the market and available, the success of the business is not likely to prosper.

You need to be passionate about the industry and have the patience to wait until the right fit is available. Buying a business two sizes too big or too small is never going to be comfortable.

It is important to be patient when you are buying a business, allowing yourself time to conduct that extra bit of research can be the difference between a flourishing business and a money sucking nightmare.

Funding your new business
Unfortunately only a small percentage of business owners can afford to purchase their building with their own personal savings. But on a positive note, buying an already established business is easier to get financing for. When applying for loans, banks usually feel more confident lending to a business that already has a proven track record.

If 2019 is your year for taking the plunge and buying your own business, then click here to get started today. On top of helping people make researched, good financial decisions when buying a business; Power2 also offer the following business advisory services (and more!)

  • The appropriate structure when starting or expanding your business (both onshore and offshore);
  • Strategic/Business Planning for the operation of your business;
  • Assistance with the recruitment of key personal in the financial department, including the Chief Financial Officer and Finance Operating Officer;
  • Your obligations as a Director;
  • Assistance to companies on complying with their ASIC reporting obligations (e.g. Director or shareholder changes, allotment or transfer of shares);
  • Assistance in settling shareholder disputes; and
  • Business acquisitions and mergers including due diligence.