Consider these 3 factors before buying a business
So, you’re looking to take the plunge and buy a business. Perhaps you’ve already considered exactly what sort of business you want to buy in terms of location, size of premises, projected revenue, etc. or you may still be open minded. Either way, there are three factors that are absolutely critical to consider before signing the paperwork, which we have rounded up below.
1. The reason for sale
In an ideal world, you would want the seller and business broker to be as transparent as possible with you about the reason for sale, whether that’s retirement or simply looking to pursue other business ventures.
Try to dig around a little and see if there could be any additional reasons that the seller might not be so keen to give away – reviews are a good place to look. Also, those looking at cafes for sale may want to have a quick look on Google Maps at any major chains/competitors (such as a Starbucks or Costa) that could have taken a chunk of customers/revenue and led to a serious hit to cash flow.
If it’s in the local area, maybe pop in and even pose as a customer to get a feel for the premises, level of customer service and how other customers (particularly regulars) are treated. This can bring up any potential issues that you as the buyer would need to work to iron out.
If this is the case, there is the extra challenge involved of either strengthening a unique selling point or even moving premises.
2. If you have reviewed all selling platforms
Don’t just stick to one selling platform – have a browse at what is available on others. Whilst some sellers may list themselves on several sites, some may be working directly with a business broker and will only advertise on their site – such is the case with UK-based Hilton Smythe’s business listings.
Keep an eye out for any businesses who actively share that they are for sale. This does happen in a small majority of cases. Some may have a sign outside the premises with details of who to contact if interested.
Keep your criteria quite loose, too. Your dream business may be only slightly out of your budget, but may not be showing up if you have narrowed your search down too much.
3. The current state of their online marketing
Have a quick check of prospective businesses’ social media presence and website. In an ideal world, they would have a presence on multiple social media platforms, have many followers and generate huge engagement on their posts, but that is rarely the case. Often, there is a lot of work needed to give their online presence a push, so bear in mind that this could take extra time and resources.
Many new business owners like to post the news of new ownership onto their social media profiles and hopefully generate some new press, which can start to undo any negative perceptions that may have cropped up due to previous bad management.
Story by Lydia German