As a large investment and often complex purchase, buying a business is a major life decision. There are many factors to consider from industry, location to staffing and capital and it can be difficult to know where to start when you begin your search. If you’re considering purchasing an established enterprise rather than wrangling a start-up venture, read below for tips on businesses that you should consider buying.
Buying a business with a strong or steady financial position may seem a given, but what you consider strong will vary across different business types. If you were considering purchasing a newsagency for sale versus a car sales yard, the foot traffic and per customer spend would vary dramatically, so sales volume and total sales amount alone may not be a meaningful comparison. So after you obtain these figures for the business that you are interested in pursuing, be sure to consider the context in which it operates. An analysis should also include a review of potential competitors, whether it be geographical and/or within the online space and you should also try to understand why the business is being sold in the first place.
Ideally you’ll also want to purchase a business that has decent brand power or one with scope to be improved or overhauled. A good way to get a preliminary sense of where a business for sale is currently at, is to mystery shop or deploy associates on your behalf to do so. This task will help you to gauge how busy an enterprise is and whether it’s a known entity in its current industry. Don’t forget that a lot of this information can be gleaned online through reviews, social media and even the calibre of the business’s website itself. If you or your associates get an opportunity to candidly speak to existing staff, this can also be a great fact finding exercise. Purely online businesses may seem a little tricker, but a SEO audit may also give indications of the business’s wider reputation.
You should also pursue a business within an industry that you have pre-existing contacts in or an in depth understanding of its current operation. Already knowing the product or service that you will be responsible for can be a great head start and will most likely make the first few months of business ownership a little less hectic, although it’s not essential. If you’re looking to move into an industry that is new to you, think about the networks you do have and whether there is potential for synergy of infrastructure or opportunities in areas such as office space, logistics, marketing collaborations or cross promotional advertising.
Don’t forget to engage the services of an accountant and business valuer if you’re not confident in conducting the research and due diligence that should occur when investing in a business. Even if you are familiar with the industry, it can be valuable to have a set of objective eyes look into a potential business sale on your behalf.