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Tips on Buying a Business; things you should do and know before buying any business.



TIPS ON BUYING A
BUSINESS 

signature on sales contract

Buying
a business can appear to be an easy way to secure an income and enjoy the
freedom of self-employment. However there are good and bad businesses for
sale and sometimes certain types are not for you, or they’re simply not
viable.

In
this section, we plan to road test different business types so you can
obtain the right information.

When
buying an established business the following tips are very helpful:


1.

Always have an accountant check the figures. They can very quickly tell
you if they don’t add up.


2
.
Check the trading hours and if they’re long – say, seven days a week
– there should be enough profit to afford staff. There’s nothing worse
than buying a business in some great location only to find you’re
working longer hours than you were before.


3
.
If stock is involved, always make sure it’s in good condition and not
out-of-date or damaged.


4
.
If the business owns plant and equipment, make sure it’s also in good
working order, is well maintained and not too old.


5
.
Make sure the business you want to buy is something you want to do.
Don’t just buy it because it seems to be a good deal. Remember you do
have to work in it and if it’s something that doesn’t really appeal to
you, you’ll be stuck there for some time.


6.
If you’re dealing with a large number of customers as in the case of
retail, you need to be a people person. If you have a problem dealing with
people, stay out businesses with high customer contact.


7.

If the business is in a busy holiday location and you saw it at peak
operation, remember that it may be busy during that time and very quiet
the rest of the year.


8
.
Make sure you have a solicitor look at the lease. Some are extremely
complex and there could be any number of tricky clauses that you don’t
understand and that may trap you.


9
.
Make sure the lease is transferable and has some time to run with an
option to renew. It would be very bad to buy a business with only six
months on the lease and no option. That’s a very quick way to be out of
business.


10
.
Check with the local council to see if there is any development planned
for the site, or in the vicinity, which could be competitive.


11
.
Talk to other business operators in the area. Find out how trade is and
what they think of the business you would like to purchase.


12
.
Avoid buying a business where there is too much competition or a price war
going on.


13
.
Find out how long the business has been for sale. If it’s been on the
market too long, there may be a problem.


14
.
Make sure you don’t pay too much for the business. Your accountant can
you help to understand what a fair price is. Also be cautious if it
appears too cheap; that too normally means there is a problem.


15
.
Check to make sure the owner doesn’t have more than one business.
Sometimes the figures could include other business interests and the one
you’re interested in may not be performing as well as it appears.


16
.
Be cautious about going into partnerships. Sometimes your best friends can
become your worst enemies.


USEFUL TIP

To find out ways
to prevent running into business difficulty, as well as to know your
options if and when you do, check out this website offering
free information
on a range of business related finance issues
.