For many entrepreneurs, buying an established business can more appealing than starting from scratch. It is often quicker and easier and can be a successful fast track to becoming your own boss. On the other hand, it requires serious time and effort to find the right one, and the costs involved can be substantial. 

What are the steps involved in successfully buying a business?

1. Get professional advice

The first step is to seek help. As you navigate your way through the negotiation and purchase, professional advice can be invaluable. Solicitors and accountants can help you identify high-risk areas to avoid any potential pitfalls along the way.

2. Do your research

Before settling on a business, it is wise to conduct some initial research. A rigorous buy-side due diligence process will enable you to determine whether or not a company is worth buying. Will it help you achieve your objectives? Does it fall within your price range? Find out as much as you can about the sector or sectors you are interested in, as well as crucial information such as the best time to buy. Make a shortlist of a few different businesses to keep your options open in the initial stages of the process.

3. Perform an initial valuation

A preliminary analysis of the business will uncover some key facts to help you in the acquisition process. Start with some basic questions such as why the business is for sale and whether it has long term prospects. Assess the company’s reputation and talk to existing customers, suppliers and partners. Above all, be discreet. Company staff may not yet be aware the business is for sale.

4. Arrange finance

Depending on your financial situation, there are numerous options available to finance your purchase of an existing business. You may be fortunate enough to have the necessary capital at your disposal, but if not, don’t panic. Alternative finance options include financing through a lender, leveraging your new assets, or forming a co-op with other investors. 

5. Make your offer

The time has come to make your offer to the business owner formally. The devil is in the detail, so make sure your offer is comprehensive and covers all angles. Ensure all communication at this stage is backed up in writing in case of disagreement down the line.

6. Negotiate the deal

This is the crucial step, where the terms of your purchase are ironed out. Don’t be afraid to walk away from the negotiation if you don’t like the way things are heading. It is often better to walk away with no deal at all than a bad one.

7. Complete the sale

Even once the negotiation is complete, and terms agreed upon, it is not yet over. Certain conditions still have to be met. Financial statements must be verified, and leases, contracts and finances transferred.

Taking on an existing business is by no means easy, especially if you are a first-time business owner. With hard work and proper due diligence, you will be on track to succeed in no time.