Things to Consider Before Buying a Business

Risk Tolerance.

Running a business is about making decisions and taking a course of action with an uncertain profit outcome. The more uncertain the anticipated profit level is, the less likely to be achieved, the more risk involved. Everyone has a different tolerance to business risk. Low business tolerance risk is often demonstrated by procrastination, demanding and overly analysing information from business sellers and delay in decision making in the hope of finding a business with few risks and a low price. Competition for such a business would be fierce, pushing the price up. Owning a business is about taking risks. If a business buyer has a low tolerance for risk, maybe business ownership is not for them.

Decision Making.

Business is about making decisions. There are good decisions and bad decisions. Generally, the difference between a good decision and a bad decision is how much thought and effort is put into understanding the possible outcomes of the decision. But, when a decision is made, there is progress. Far worse is when there is no decision. Then there is stagnation.

Financial Capacity.

Business owners operate businesses. They are alert to people in their business representing themselves as customers, but without the financial ability to buy. Business sellers will be seeking some assurance as to the financial capacity of a prospective buyer to buy. Business sellers are not really interested in discussing their business affairs with those without the capacity to actually buy. Business buyer would place themselves in a far better position to buy if they have sorted their buying capability before engaging with business sellers or their representatives.

Location.

Generally, experience shows us that most business owners would want to live within 30 to 40 minutes travel of their business premises. There are likely to be opportunities within that travel distance. Whether or not those opportunities meet the personal preferences of prospective buyers is another matter.  It may well be that re-location will be a necessary step for a business buyer.

Time Frame.

The business sales market is a market. And, as with all markets, opportunities arise and leave, and prices rise and fall on a continual basis. After the decision to seek an opportunity to buy, the search begins. By the time an opportunity has been found and acquired, many months may have passed. There are lots of things influencing our lives. Age, family, friends, interest etc.  All weight into the decision to buy a business and pose an important consideration in when to buy a business.

Confidentiality.

Businesses have private and personal information and documentation. Not only does the private and personal nature of a business relate to its owners, its employees, customers, suppliers and other 3rd parties such as accountants, solicitors and landlords. Business buyers should be aware of the provisions of Confidentiality Agreements. They commit business buyers to meet certain obligations.

If you need more information or help, please talk to me

Graham Long

0428-649-791