Buying your own business

Queensland Business Sales

Buying a business is not easy. Typically the local market is crowded with buyers while supply of quality business opportunities is often low. Despite this, most buyers will eventually find their match. The key point to be patient and do as much research as you can, stay within your financial limits and, most of all, ensure that you have the ability to competently operate the business you are interested in.

Show that you are keen – local business brokers get swamped with inquiries from buyers on a daily basis. Often quality listings will get snapped up quickly once they are marketed online and in the press. So if you are serious about it and establish a good relationship with local brokers to ensure that you are top of mind.

Research everything – if you find a suitable business do your homework and learn as much as you possibly can about it. Are there new competitors coming to town, research the services and products on offer, how easy is it to find industry experienced staff, is the rent fair for the location, what is a fair value for the equipment, will you need to upgrade the fit-out, are there special licences required to own the business? These basic checks can be done easily and shouldn’t cost you money – well worth the peace of mind.

Risk and return – the most common question that I get asked is “how do you value a business?” There is no black and white answer to this question. However, I suggest looking at the level of risk in the business and what the return on investment is. Obviously a buyer would expect to pay more money for a long established business over a business with only 18 months history.

However, many experienced business operators would take a risk on the newer business and take advantage of a lower asking price. This is where the risk and return scenario will depend on the buyer’s situation.

Due diligence – an absolute must! Take the time and spend the money to do a thorough due diligence on the business while the contract terms allow you to. Your investment with solicitors and accountants is normally only a fraction of the purchase price of a business yet it could save you from losing everything. It is of utmost importance to ensure that you are dealing with qualified advisors who specialise in business and commercial transactions.

Tuition – most buyers underestimate the knowledge and the role of the seller. Most sellers have years of industry experience and an intimate knowledge of clients, products and staff etc. You must take advantage of a suitable tuition period after settlement. This is not a time to arrange bank accounts and credit applications. This period is crucial to a smooth takeover and your ongoing success in the business and is the very best time to learn everything you can.