The first question to ask yourself is why do you want to buy a business? Then ask yourself how you deal with stress? If you are fully committed to spending most of your waking time thinking and developing your business then go for it. Be prepared to deal with the highs and lows and make sure you have enough money in the bank to get through the tough times. This might take you a few minutes or even years to decide but as we’re all different that’s absolutely fine. When you think you are ready, let’s get going!
If you have a unique idea then it’s more than likely you’ll need to start your own business. If there is a particular type of business you think would be perfect for you then it’s time to start searching. After searching long and hard you might still decide to set your own business up from scratch as the business you have found to buy is not priced correctly and therefore the cost to build the business up over time could actually make better financial sense. So consider how quickly you want to gain a return and how long could you sustain a loss.
The web is the easiest place to start but having a chat with us directly will also point you in the right direction. There are lots websites to search such as www.daltons.co.uk, www.businessesforsale.co.uk and www.rightbiz.co.uk which will list many brokers businesses for sale and some listings that are posted directly by the business owners themselves. This is where is starts to get a bit bizarre as some listings will have an asking price, some will show turnover and a few will show a net profit. This can make judging a business very difficult but it’s essential to remember that often these sales are confidential and if everyone knew the business was for sale it could damage its future – and you would not want that as you might buy it!
Depending on the business broker selling the business and the confidentiality of the sale you may get asked to fill out a non-disclosure agreement. As a general rule these ensure you do not talk openly about the business and respect that careless comments can damage the business performance. Read them fully to ensure you agree with the contents as they are all different.
All business brokers are different so you may be allowed to see fuller accounts or a sales brochure on the business. If you have experience with accounts then you’ll know it’s best to ask for at least a few years and also judge the current performance as reported accounts can be many months out of date. If you are not a numbers person then perhaps consider letting an accountant know of your business plans as they should be able help.
If you have been given the business name then research it online and then perhaps a visit would be appropriate but remember the confidentiality and non disclosure agreement as staff may not be aware.
If after this basic research you are still interested then why not meet the owner for a coffee somewhere to ensure you are both in a relaxed neutral environment and can chat openly.
After this then you may well have further questions or wish to meet up again and even visit the premises. After this then you would be well advised to start thinking about how realistic the asking price is versus your available funds as while you never know what a vendor will accept it would be unfair to waste peoples’ time.
If you are still wanting to go ahead then it’s time to make an offer…..but before you do that you need to understand the difference of buying just the assets of the company or, if relevant, the shares. This decision will need to be based on what the vendor and the buyer want rather than just one side. There are tax implications, different legal aspects and continuation of trading terms to consider and many other factors.
Now you can see that it’s not quite as simple as you may have thought it could well be best to gather a professional team around you to advise you correctly. We’re happy to act on either the buying or selling side of a deal so just give us a call.