If you are reading this article then you are either someone with clear ambition to start a business or someone that potentially is on that journey already and looking for some guidance or tips. If you browse the internet you will see lots of different experiences from people where they have purchased a business and it’s not turned out exactly as they wanted therefore preparation is key to ensure you don’t have issues down the road. Some point so consider are the following:
No doubt you will have set yourself a budget in this area and you won’t want to exceed it. How to know if a fair valuation is put on a business can be a difficult task and there is a lot to take into consideration. One of the recommendations we would strongly advise is that you purchase the business previous account data. This can be done for a very small fee on many different sites and they will give either a summary or more detailed breakdown of the company accounts (depending on how much you have spent on the docs). Some different sites even give you things like the credit ratings on the company (which can also be a good indicator of their previous financial position).
Although the financials clearly play an important part in the valuation of the company, there is also the reputation of it that needs to be taken into account. This could include its ethical position on different items. Can you imagine purchasing a company based purely on its valuation then realise it was conducting business in an unethical way? You would have to remedy this immediately but there could also be backlash from previous business conducted (and even legal action). In addition to this, it’s always good to hear what the customers have to say about the business and get some good advice. Watch out though for those review sites that “star” the company. Do you think that all those people actually give 5 stars or do you think the business itself (or people associated with it) could maybe have influenced some of the scoring?
Where to Look
If you want to buy a business online, this is probably the easiest way to get the best transparent information about it. Otherwise you could consider getting some business specific magazines. Online you can filter by the type of business you are wanting, price range of that business, location of it and some other details. It all becomes pretty easy and there will then be options for you to contact the seller. Some business sales online sites even do auctions. As such, if someone is looking for a quick sale they may auction it. This is definitely something to look out for a see if you can grab a bargain! Finally, you can always go to a specific company that specialises in buying and selling business – biggest fallback on this option is that there could be a price allocated to this.