An Easy Guide to Finding the Perfect Business to Purchase
Many business buyers are focussed on purchasing the perfect business; it must fit in with my current lifestyle, it must be in a specific industry, it must be well known and already have all the modern systems; I also don’t want to pay too much for it…
Many business buyers are focused on buying the perfect; it must fit in with my current lifestyle, it must be in a specific industry, it must be well known and already have all the modern systems; I also don’t want to pay too much for it…
The last point I understand. The truth is that, in business sales, the seller never gets enough and the buyer always pays too much for the business.
It is easy to fall into the trap of looking for The Perfect Business. Of course, you want the perfect location, all systems in place, only happy customers and in an industry you like. Here is a little piece of advice that has served many of our clients: there is only one reason you should buy a business; it must return in income that caters for your desired lifestyle! All the rest is noise.
When looking for the Perfect Business, you’ll be looking for a long time and eventually give up on your dream of owning a business! There is no such thing as the perfect business to purchase. However…
Starting or purchasing a business always has a risk factor. Buying an existing business is less risky because someone else has already proven that the business model works (or not). You’ll minimise the risk if you look right past all the fluffy stuff (how the business looks, the outdated systems that need replacing, the database that is declining etc). All negatives become opportunities because YOU will make the difference!
Here are four points that I would look for when buying a business.
A good business will have at least two of the following attributes:
- Skilled or well-trained staff
- Written supply agreements and/or exclusive distribution rights
- Run under management or minimal input of an owner
- The owner-operator earns significantly more than comparable employment in that industry
Once we found this business we can work on how to make it the perfect business; put systems in place so it will suit your desired work hours, upgrade the CRM system so you can communicate with your customers and making the business look pretty so you are proud to call it your business.
The beauty of the current market is that there are lots of businesses for sale that are run by the baby-boomer generation. Typically, these businesses are run a little old school and there is lots of room to implement new technologies that will make systems faster and processes easier. Now is a good time to find a business with a solid history, strong bones and with plenty of opportunities to grow without significant risk.
These are the most important criteria you need to identify before you make a purchasing decision:
- Geographical location
- Preferred industries and what industries you certainly DON'T want to be in
- Your desired level of income
- Know how much you can afford to borrow/pay
Once you have purchased the business you can shape it the way you want; a business to suit your lifestyle, a business to give you an income to enable you to achieve your financial goals and a business that can be truly passionate about and be proud of.
This could be your perfect business!