Is There a Best Time to Buy a Business?

June 2019

If you’re looking to buy a business, you should always look at the process strategically. Just like any other kind of business decision there are factors you should consider which will inform your choice.

There are certain questions you should always ask the seller, some questions you should ask yourself, and certain information you must always check before making any commitment.

So, here’s a rundown of the major points you must think about to help you acquire the business you want with the potential you’re looking for:

Clearly define your goals

Buying a business is a huge step. So, make sure that you know what kind of business you are looking for, and what you are passionate about. Otherwise, the whole process will just make you more confused.

Do you want a certain location? Or are you flexible about this particular aspect? Remember too that, even if the business is not tied to a specific location, its geographical position may still have an impact.

For instance, it may determine the cost of any raw materials, your own shipping costs, or the available labour pool. In addition, you may also find the location has tax implications you’ll need to explore.

Be clear about the size of your prospective business. Consider whether you’re looking for a small, family owned enterprise, or something on a much grander scale. If you go big, you’ll not only be looking at higher prices, you’ll also find that the business of transition may also prove to be more complex.

However, you may believe that the higher profits you gain will offset other considerations.

Consider your personal circumstances

Will your work be primarily in a fixed location, or is there lots of travelling involved? And will your new career mostly revolve around a nine-to-five schedule, or do you anticipate working lots of unsocial hours? Many business owners are always on-call. So, are you completely OK with that?

This is, therefore, a lifestyle decision. As such, it may depend on factors like your age, the age of your family, any other dependents and commitments you may have. Think about how involved your partner will be in the business. In a nutshell, be sure you are in the right place in your life to take on the responsibility of a business.

Consider your financial circumstances

When buying a business, you must be crystal clear that it will be a good match for your acquisition budget and has the potential to meet your ambitions and future financial goals.

This analysis is rarely as straightforward as it may seem. So, you might need to employ someone with the relevant financial expertise to clarify the picture, especially as regards future growth potential.

The current financial health of the business will also determine whether or not you can obtain favourable terms for any ongoing business finance you may require. At all costs, you must avoid getting into debt pursuing business dreams which just don’t stand up to scrutiny.

Find the right business

Any business you purchase must fit well with your skills and experience, your personal passions and your lifetime goals. So, what are the sectors in which you already have knowledge and experience? Evaluate whether you have any hobbies which you want to develop into a career. Or there could be a burning ambition you have which may inspire you to develop a new business career.

For example, if you have enjoyed working as a retail manager in a store, that positive experience may be enough to encourage you to take the next step and buy your own shop. You can then use the ideas you had as an employee about how to improve the basic business idea to ensure that your own venture is a success.

Do your due diligence to inform your approach

However attractive the features of any prospective business, it must stack up as a viable commercial project. This procedure is so important to your own future prospects as an entrepreneur that you would be well advised to secure professional help with the task.

While the valuation of any listed business will tell you what it may be worth, only your own due diligence team can confirm whether or not it is a good business going for the right price. And equally important, your team can also help you to establish that the target business is in good commercial health with no serious flaws.

By Matthew Hernon, an Account Manager at Dynamis looking after Business Transfer Agents and Franchises across BusinessesForSale.com and FranchiseSales.com. 

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