What are common financial and legal risks, disputes and other issues you should know before buying a business?
What are your funding options when you've found a good opportunity to buy a business?
If you think raising the funds to buy a business is extremely daunting and seems totally out of reach, you're not alone.
But the good thing is there are options available for budding business owners. The best option is to apply for a business loan, but it's important to note that this is quite different to applying for a business loan if you're already up and running.
You'll have to have a clear idea of how much capital you'll need, a detailed business plan and roughly how long it will take to repay the loan. To be approved for a loan to purchase an existing business, you'll need to gather as much evidence (stats, data, financial projections, etc) to convince your lender why this venture will be profitable.
Also highlight your expertise, experience and why your're eager to take this opportunity to instill good faith that you're capable of succeeding.
Speaking to the owners out there, did you buy a business? If so what were some of the primary concerns you had, or issues you looked when choosing your company?
Very good question. Generally, the first question I always ask my clients who come to me about purchasing a business is
'how much does the business rely on the person who is selling?'
If a lot (ie all the sales go through the existing owner or customers like to talk to them and them alone) then the business relies on the owner. If you then purchase this business there is a risk that customers will not wish to transact with you because the relationship has changed.
The second question I ask is
'How good are the systems or procedures that run the business'
For example if all the know how is in the head of Norris and Norris is 72 years old and about to retire when you go in it is going to take you a long time to run the business. If on the other hand they have a systems or procedure manual it makes life easier.