The global pandemic made people ask themselves questions regarding their plans. It made them be more introspective and assess their mental health, happiness, and stress levels.
And many have decided that having your own business is the way to go. Especially during these tough moments everyone goes through, knowing that you are your only boss can be a relief, a breath of fresh air.
If you want to build your own business, you might want to think twice. Building a business from scratch might sound like the perfect dream, but there are so many things you need to take care of.
Which may, in turn, delay the whole process and come with anger and frustration. Buying a ready-made business is a better option, as you skip those first steps that seem to be the most difficult of all.
Well, if you have decided to buy a ready-made business, you need to pay attention to some steps. Even though you might think that all people that want to sell their business are honest and sincere, you need to make sure that you are making the right thing.
Some people might sell their business because they want to move out of the city or need money. But others might sell their business because it has some hidden skeletons in the closet.
There are some guidelines you need to follow to make sure you do not buy a ready-made business that does not bring any profit and is doomed.
Experts from Topbritishessays advise novice entrepreneurs to go through these steps to complete a successful transaction and make the best decision.
Find a Business
Well, the first thing you need to do is to find a business that is for sale. You may have a wide variety of options, as many businesses have been closed up during the pandemic. And many of them have the potential to become successful, only if the right investments and changes are made.
So, you will see plenty of businesses that are advertised for sale. But finding the profitable one, the one that has the better financial prospect, might be more challenging than you think.
You firstly need to get familiar with the industry. If you choose a domain you are familiar with, it will be much easier for you. Then, take a look at the cash flow of the business and see if you notice something that is not right (the cash flow should be positive or one that holds potential).
Next, you should put yourself in the shoes of a consumer and try to anticipate if they will enjoy the business or not.
If there is an idea that sounds good but has no potential for the target audience, maybe it is not such a good idea. If you see yourself enjoying it, then maybe it is worth the shot.
Either way, besides all these things to check and think about, you also need to check the customers’ portfolio. Make sure that one customer is not more than 20% revenue. Because if that client is leaving, your business might start to drown.
The business you want to buy should have a growth plan. How are the founders seeing the future? What needs to be changed to achieve their goals?
Have they set any actions and goals set for the progress of the business? When buying a ready-made business, it is not enough to come with financial support.
There has to be a will in the other ones too. Because these two combined can lead to the success of the business.
To find a business that ticks all these will be challenging and difficult. However, make sure you check all of them to not be fooled.
Where to Look For?
You may wonder which is the best place to look for selling businesses. There are many options to choose from, but of course, the internet is the first of them. There are online platforms and broker websites where you can find some businesses for sale.
Next, local attorneys or business brokers could surely help you, as they are updated with the latest changes in the industry.
Moreover, the ones that sell their business might be their own clients, so you kind of go directly to the source. You can also ask friends or check franchisors. But you will surely find some businesses that have great potential.
Assess the Value of the Business
If you have found some options to choose from and a business that seems the best of them all, the next step would be to assess the value of the business.
Knowing what is worth it before actually buying it is essential. Even though it scores high on all the points previously mentioned, you still need to check its worth with a professional.
However, hiring a professional to evaluate the worth of the business can be expensive. And if you do not want to spend money on this, you can search for guidelines online.
Because the evaluation of a business highly depends on its domain of activity, you might need to read quite a few materials to make sure you make the right choice.
Make an Offer
If everything goes right up to this point and you decide to buy a specific business, then the next step is to make an offer. There are selling ads that make the price public, but other business owners prefer to wait for an offer from the buyer.
Either way, you would want to negotiate the price and this step usually takes longer. This is because there will be a back-and-forth discussion and negotiation process until you reach an agreement.
You will need to make an offer, send it to the seller, and then wait for an answer. A few terms and conditions might need to be discussed and other things set.
You also need to think about the business’ assets. Do you want to buy them or not? This will be another term you need to agree upon with the seller.
This phase of the process might take some time, as buying a ready-made business is a huge and important step. Here you will also discuss what type of sale you prefer.
Some buyers prefer a stock sale, mainly for tax purposes. If you choose this option, you will likely get a discount too.
Letter of Intent
After you have decided and agreed upon the buying terms, the wisest thing to do is to write a letter of intent. Here you need to include all the terms discussed previously, as well as your intent for buying the company.
Even though this may sound old-school, this letter sent to the seller gives you exclusive rights to buy the business for 90 days.
You are the only one allowed to buy that business during that time frame, and both you and the seller need to follow the terms agreed to complete the transaction successfully.
Complete Due Diligence
When you express your intent to buy the business, you will be granted access to general documents and an overview of the operations within the business.
This information can help you make sure you made the right decision. But when you complete due diligence, you will get access to the financial and legal information about the business.
You need to fill in a series of documents to complete due diligence, but it is an extra step you need to take to not be fooled.
Finish the Transaction
Finishing the transaction is the last step you need to go through to buy a ready-made business. If you already have all the money, then the transaction will be smooth.
If you need to borrow the money, then the whole process might be slower. Getting a loan takes time, so you need to make sure the seller waits for you and understands your position.
Buying a ready-made business is not something that comes without risks. But it is much easier to buy a ready-made business than to build one from scratch. To make sure you are not fooled in the process, you need to follow some guidelines.
Make sure you go through all these steps to make sure you make the right decision, the business is on an ascending trajectory, and it is worth the money.
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