Tag Archive for Buying a Business

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Buying a business rather than starting up – is this a better route?

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Originally written by Jo Thornley on Small Business
To many people, becoming a business entrepreneur means setting up your own business and beginning to trade in your own right.
But while this is what plenty of entrepreneurs actually do, many others choose to buy an existing business as a means to becoming an independent business owner.
So which option is best? In reality, the answer usually depends upon your own circumstances and expectations:
Option one: buying a business
With buying an existing business, the first problem you may encounter is actually raising money for the purchase. By implication, buying a profitable business implies that it has a value. So, if you wish to take advantage of a ‘going concern’ as a source of income, you will need to be able to afford to do so.
However, even though raising money to buy any business is rarely plain sailing, you will find banks and other lenders much more likely to offer a loan against an existing business. Provided you have solid evidence that your chosen business for sale is profitable and forecast to remain in good business health, any lender should see this as a reasonable investment.
What this means is you must always ensure that any business

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7 essential checklist questions to ask when you’re buying a business

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Originally written by Jo Thornley on Small Business
Without a doubt, buying your first business can be an intimidating process. We’ve produced a checklist of vital enquiries you should make to simplify the process.
Why are they selling their business?
You may expect to hear the seller wants a different challenge, plans to retire, or maybe has health issues – all of which may stack up within the context of all you see and hear. But if the present owner is looking to exit the sector when the business income seems to be falling away, or if new entrants are starting to build their own presence in the market, these are clearly factors that will need to be carefully investigated.
So how will you judge the truth of what you’re being told? Unfortunately, you can’t really make a definitive judgement. However, an experienced due diligence team should be able to test the seller’s official position against the tale told by the financial records. So, don’t be afraid to get a professional second opinion to investigate.
What’s included in the sale?
This question encourages a response beyond a mere listing of assets. It also makes it easier for you as a potential buyer to ask to hear

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Buying and selling an online business: what to be aware of

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Originally written by Jo Thornley on Small Business
Established principles of buying and selling a business still apply with an online company – for instance, the need to dig deep and do thorough research – yet there are some differences.
The lack of bricks and mortar, for example, may make the process a little cheaper, and you may not have any significant staff employment issues to consider. Nevertheless, on the buy side or the sell side it’s mostly a matter of identifying the core issues to consider.
Here’s a rundown of what you need to take into account when buying or selling an online business.
Buying a business
Traffic
The success of an online business is measured in traffic volumes, which roughly equate to high street footfall.
But there’s good and bad traffic. So, you and your team will need to do your own analysis and verify any historic traffic data you receive. In essence, you will want to work out what percentage of the traffic generates business income.
In addition, you will want to establish that business arrives from a healthy mix of sources. Until you have such information, you can’t value the business.
Growth
As with any business, you should be able to track the figures over time.

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Buying a business on a budget: what are your options?

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Originally written by Jo Thornley on Small Business
When it comes to buying a business, there’s no need to break the bank to find the right opportunity for you. An important part of success is not over-extending yourself when it comes to your finances.
That’s why it’s important to keep in mind that there are businesses available no matter your budget options.
We give you some ideas of businesses and industries that you should consider if you’re on a budget.
Internet business
The internet has really opened up a whole world of opportunities for entrepreneurs. If you spend enough time researching, you should be able to find an internet business for sale that fits into your price range.
Of course, you will still need to do a very thorough due diligence to make sure that your investment will pay off. Make sure that you’re not just buying a website. You should be buying a functioning business that has customers and marketing and social media just as a brick and mortar business would.
You will still need to see their sales records and their profit margins so that you can be sure that you are buying a business that will bring you returns in the long run.
To value

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