Buying a Business – The First Steps

So you are thinking of buying a business? Congratulations. With redundancies still rife in the UK, more and more people are coming to the conclusion that maybe – just maybe – it’s better to head your own business instead of relying on other people to bring in the money. From that moment that you decide to buy a business, it’s just an idea. There are so many questions buzzing around your head. What are the advantages? What’s in it for me? More to the point, what are the potential problems? What you need to do is sit down and consider the following key issues:

What sort of business do you want to buy?

You will need to focus on what sort of business you would like to buy into. Draw on both your past work experiences and your interests. You may well want to buy a business that you have great knowledge of but have little or no experience of working in that sector. Make sure that you are fully capable of running the business you want to buy into. You need to be absolutely confident that you can make it a huge success.

Do you want to buy a business or a franchised business?

There is a difference. A franchised business will have several chains across the country, and will probably have a well-known brand name. This is a good advantage when it comes to buying into a franchise. People return to a business time and again if they recognise and trust a brand name. You will also have greater support. If you are going into business for the first time, then this could be a considerable plus point, since the franchisor will be there to “hold your hand” as it were. The franchisor will normally deal with training, marketing and will be able to provide you with clients the moment you begin work. There will also be other franchisees to turn to for advice and support.

However, the downside is that you are still technically working for someone else rather than running your own show. If you own your own business, it is up to you how you proceed, and if there are any changes that you wish to make, then you are free to do so. A franchisor, however, makes the decisions. The other downside, of course, is that, in very rare cases, the franchise, for whatever reason, can go out of business – whether it’s affected by management issues or other franchisees rocking the boat. As I said, these are very rare cases, but you need to take all this into account when making your decision.

Do I have enough money?

Buying a business or a franchise will, in most cases, require a hefty sum. Look at how much money you have. If you have been made redundant recently, you may have received a sizeable payoff. You may have inherited money. Or you may find that you already have the means to buy a business. If not, however, then all is not lost. You can visit your bank to apply for a loan to buy the business. You will need to draw up a convincing business plan, outlining your expectations and profit margins. In the case of a franchise or a well-established business, banks will look favourably upon this, but as long as your plan has enough credibility, then this may still work. But make sure that you have enough money to proceed – if you are buying a business, you will also need to pay for surveyors, lawyers and accountants.

Is there a risk in buying a business?

This is where you need to do considerable research. Make a shortlist of the businesses that you are interested in. When you have whittled them down, find out all you can about them. What sort of track record do they have? Have they made the business a success? Or are there any incidents or problems that may prove a problem? You need to weigh up all the pros and cons and most importantly assess the risk factor when buying a new business – in order to make sure that you don’t buy a business White Elephant.

Will I be happy with the new business?

That’s one of the most important criteria that you need to consider. Will buying a business fulfil your career dream? Will it allow you to progress and allow you to develop your skills to the point where you achieve your goal? Will your chosen business allow you to do these things? Buying a business will be one of the most important things that you do in your life, so make sure that you get your choice spot on the first time.