What to Consider When Buying a Business
/Buying a business can be a complicated and daunting experience. For many people, it is typically a once-in-a-lifetime event, making it even more important that it is a favourable experience. To ensure success, Travis Kellett, Broker from Bridgepoint Business Brokers has compiled this important information for you to consider.
What is the best type of business to own?
That depends on you. Most buyers want to own a profitable, well-managed business in an industry that holds a personal interest to them. Others may look for opportunities that offer turnaround potential, where they can apply their special skills. In general, there is no industry that is particularly better than another. However, there are specific businesses that are more successful than others - even in the same industry.
Assess your readiness to buy a business
If you want to be on your own, make your own decisions and don't want to worry about job security, then owning your own business could be a good fit for you. Yet, it can be a major lifestyle change. It often requires long hours and a total commitment to all the business' needs and challenges. You can find yourself watching every detail to ensure success. A business purchase also requires a serious financial investment that always deserves comprehensive research.
Partner with trusted advisors
By partnering with trusted advisors such as business brokers, lawyers, and accountants, you maximize the probability of success as these people bring experience to the transaction. They can offer solutions that will mitigate issues that may seem insurmountable on your own and they have the capacity to scrutinize acquisition opportunities diligently from many vantage points.
Well connected business brokers are often aware of businesses currently for sale in the community that are not listed or publicized, and can be a source of high quality information on these opportunities.
Financing the purchase
Most purchasers use business financing and personal loans to finance a portion of the purchase price. In some cases, the seller is willing to work with the buyer to finance a portion of the purchase price. The buyer is still required to make a down payment and be sure that adequate working capital to run the business is available.
An experienced business broker can influence a deal structure that is compatible with the financing available in the marketplace, increasing the chances of a viable deal. A business broker can assist buyers with sourcing and arranging competitive financing, further contributing to the likelihood of a successful deal.