Tips For Buyers

If you're thinking of buying a business, here are my Six tips:

1. Remember that you're buying a lifestyle and livelihood too.

Many buyers of small businesses aren't just buying assets and inventories and leases. You have to look at the fact that you're buying a job and, hopefully, a decent return on investment,"
Look at the return you are getting for the time Investment as well as the financial Investment. Obviously the more expensive the business the better return on your time will be. However you may not get as good a return on investment.

2. Get your own professional advice, and expect to hear some warnings.

We strongly, strongly advise hiring professional’s accountants & Solicitors to help you with the potential legal and financial issues or pitfalls of any purchase,
You should also expect that those advisers are going to be negative, because that is what you pay them for, to tell you everything that could possibly go wrong.

3. Get the seller to stick around for training.

In most cases, you should have the previous owner stay on during a transition period following any sale generally for a couple of weeks.
If you're buying something like a wholesale distribution company with a lot of customers, you will want to meet the customers and have the prior owner available for introductions or consultation, the handover period maybe longer than a couple of weeks..

4. Understanding that overpaying for a business may not be a bad thing.

Whilst buying the bargain will bring you more risks to your investment. You may have been looking for the perfect business, it has finally come on the market and it seems to be 20% over what other similar businesses are being sold for.

So should you ignore it and walk away? Not necessarily if the business ticks all the correct boxes and you intend to keep the business for a long time, why not get in and start earning an income. Yes it may take 6 months longer to pay off, however on the flip side of the coin, you maybe still looking in another 12 months time.

4. Do your own research on the businesses value.

Understand that there are both Financial and non financial aspects that effect a business’s value.
Talk to the Broker and ask them how they achieved the asking price in question.

5. Understand the location you are buying into.

What are any infrastructure developments in the location that may affect the business in the future (search Local Government, State Government and Federal Government
authorities).

6. Does this business fit with my goals and is it within my area of expertise?