Thread: Taking Over an Existing Business
01-04-2009 09:17 AM #1Contributing Member Array
- Join Date
- Nov 2008
Taking Over an Existing Business
Rather than starting up your own business, you might decide to purchase an existing one. Sometimes there are fewer risks associated with buying a business that`s been going for some time.
There can be some very good reasons why buying an existing business could be the right move for you. Remember though, that you will be taking on the legacy of the previous owner of the business, and need to be aware of every aspect of the business you're about to buy.
It will normally be easier to get finance as the business will have a proven track record.
Some of the preparatory work will already have been done in getting the business up and running.
A market for the product or service will have already been demonstrated. There is likely to be an established customer base, a proven income, and an existing - good - reputation.
A business plan and marketing method will be in place. The business will have already got proven ways of selling its products or services.
Existing employees should have experience you can draw on, particularly advantageous when you first take over the business. Also, most of the problems will have been discovered and solved already.
Some businesses that are up for sale may be having problems, such as cash flow difficulties. You should fully understand the reasons for selling, as you may need to invest quite a bit more on top of the purchase price to give it the best chance of success.
Since the existing owner(s) has worked to build up the business you might have to invest a large amount up front. There are likely to be additional costs for solicitors, surveyors, accountants etc.
If the business is run down you may need to invest quite a bit in it to get it running properly again.
You have to try to get to the real reasons why the current owner is selling up.
And, if staff are involved, will they be happy under new management?
Searching for the right business
Many national and local newspapers carry adverts for businesses and business premises for sale.
Depending on what sector you're interested in, you could look in trade journals. Find your trade association through the Trade Association website.
You could place your own advertisement. You can get contact details for most newspapers, magazines and trade journals from press directories available at your local library.
Some magazines - many of them with their own websites - specialize in buying and selling, like Exchange and Mart, Loot and Daltons Business.
Other websites also offer databases of business transfer agents. These act in a similar way to estate agents - they are experts in valuing, marketing and selling businesses. They can help you find the right business and can also put you in touch with possible sources of finance.
The National Association of Estate Agents (NAEA) is a useful place to look for trustworthy agents so you shouldn`t get taken for a ride.
Finally, ask around among business associates, exhibitions, wherever it`s likely you`ll hear of potential sales of a business.
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