Buy a business

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It’s amazing how many people want to buy a business but beyond that haven’t a clue what sort. There are numerous industries with businesses you may never have considered that may suit. Having a basic guideline may assist in narrowing down your search and although you will rarely find the “perfect” business you may get one pretty close. You can prepare a “wish list” of attributes some which are essential and others which at the end of the day become unimportant to the big picture. This list would include such headings as:

Close to home - Well established - Easy to manage - Short working hours - Low staffing levels - Cash business

High turnover - Little competition - Industry specialist - Good profits - Security of lease - Specialist Industry

There may be other factors that are worthy to include, everyone’s wish list would be quite different. Once you ascertain what those essential items are unless the business that you examine has most, if not all of those essential items, be wary. That business is probably not suited to you.

Industry Sector

You must decide which sector of the industry you want to operate in:

a. Manufacturing – the actual making of the product;
b. Wholesale/distribution – acting as the middleman between the manufacturer and the retailer;
c. Retail – selling the product directly to the consuming public;
d. Service – providing advice and assistance to the previous sectors.

Financial Criteria

You need to know and understand your financial constraints. If the business is going to be your sole source of income, the minimum profit that you will need is that amount which will cover your living expenses. Unless the business makes this amount you will be in immediate financial difficulty. Most people prefer to make more profit that just covering the basic necessities of life. Consequently, decide for yourself the minimum that you expect. If you don’t have enough cash monies to purchase, you need to determine how much money you can raise and borrow. It is no use looking at a business worth $250,000 if you can only finance one up to $100,000. Even if you buy a business worth $100,000 you may not want to borrow that much. So, importantly, you must decide what your preferred price is and if necessary increase this if the right business comes along.

Some Hints & Tips

1. Take your time

Buying a business is a major commitment both financially and emotionally. Don’t make a rushed decision.

2. Do your research

Once you have decided on the most appropriate industries, research them. Find out how the industry is going, how many businesses are operating in the industry, who are the main suppliers, who are the major clientele, who is the major opposition....know your chosen market to make the best informed buying decision that you can. The more that you know about the industry, the greater will be your ability to analyse the viability of any business you look at. Information on an industry can be obtained from many sources such as suppliers to the industry, the library, trade magazines, consultants to the industry, other business owners, accountants and the Business Information & Licence Centre of the Small Business Development.

3. Improve your skills and expertise

If you need extra knowledge about an industry or general management, do a course or work in the industry. For example, if you wish to own a coffee lounge, work in one for a short period before plunging into business ownership of one. Do your Food Handling Course with a local education provider.

BUYING A BUSINESS AND THE GST

Businesses of a “going concern” do not attract GST in addition to the purchase price. If you are unsure whether the business that you are enquiring about is of a “going concern” please consult with your Accountant.

WHAT CAN LATESSA BUSINESS SALES DO FOR YOU?

* Discuss availability of current businesses for sale to best suit your personal preferences.
* Arrange for a personal inspection of the business.
* Supply all accounting details, list of plant and equipment, copies of leases, disclosure statement, permits and licenses for due diligence.
* Obtain additional information if necessary.
* Negotiate with the Vendor.
* Prepare a Contract of Sale of Business in consultation with legal representative.

CALL us NOW for an obligation FREE chat on how we can help you. 

Give us a call on 03 9781 1588 now.