Buying a business can be hugely rewarding. It can also have a number of advantages over building a business from scratch - for example:
- Less risk - when you’re buying an existing business, provided it’s a sound business, it will usually come with an established customer base, established business systems and processes, trained staff, and an existing reputation and market position. When you’re starting your own business you need to develop all of these things from scratch, so it typically requires more time and effort as well.
- Easier to obtain finance - potential lenders can see there’s an established business so they know what they’re dealing with and it lessens the risk for them.
- You could be generating income from the beginning - with a new business it may take some time before income starts to flow through.
- You can focus on growing the business from the start, rather than simply trying to ensure your business idea is viable.
However, it’s not without risk and the above benefits assume you’re buying a solid, well-managed business - so it’s essential to do your due diligence properly. That means doing a thorough assessment of the opportunities, any potential risks or problems, and the value of the business.
Getting the due diligence process right can help ensure you pay a fair price for the business. It will also provide essential information for your business planning, and help set you up for success.
This article describes the key things to consider when you’re buying a business. But before you even start looking at the business, take a step back and consider whether owning a business is the right path for you.