Key steps to successfully buying a business

Things to think about pre buying

Buying a business is major investment decision, so it is critical you prepare yourself properly for this process so that you make the right decisions along the way. Here are some tips:

  • Work out how much time you must commit to fully investigate what opportunities are available. Commit to a deadline and be disciplined in your search efforts.

  • Get your financial position established early. List your assets and liabilities and assess your net worth. Any funder you approach will require this information.

  • Establish with absolute certainty how much of your cash you are prepared to invest.

  • Don’t look at businesses you can’t afford. As the majority of business purchases involve an element of funding, understand how much cash you have and how much funding you can raise and only look at businesses in that range.

  • Educate yourself on the buying process to ensure you have the knowledge to buy the right business. Properly prepared, well informed buyers are the ones who acquire the good businesses, the others get the lemons.

  • Talk to business brokers, tap into their database of businesses that are available and get a clear understanding of the value of any businesses you are interested in and how that value was arrived at.

Understanding how different business appraisal and valuation methods work will help you in determining your offer price for a business.