10 Steps To Buy A Business Successfully

Deciding to buy a business often arises from various circumstances. Whether you've recently sold a business, find yourself unemployed, aim to replace or generate a new income stream, or simply yearn for independence from working for others, the decision is a pivotal step towards business ownership. The business buying steps below are typical for most businesses although it can vary from business to business and from country to country.

1. Research & Education

Research & Education are the two most starting cornerstones of a successful business venture. Evaluate different business options, from startups to franchises and existing businesses. Learn the intricacies of the business buying process, acquire the necessary knowledge for success, research the competitive landscape of the industry and understand the complexities involved in managing and growing a business. There are many organisations who provide Industry Research materials for you to make informed decisions. For example, buying a Newsagency may have been a great business opportunity in the past, but due to the emergence of digital news outlets it may not be a good idea to buy a Newsagency business at this day and age.

2. Set Yourself for Success

No one ‘Plans to Fail’, but there are a lot of people that ‘Fail to Plan’.  You must plan for the right skills that are required to run a business successfully – no matter how inconvenient or boring it might appear. The list can be very long depending on the type of business, but some of the important skills where competency is required are Perseverance, Dedication, Time Management, Conflict Management, Negotiation, Active Listening, Leadership, Financial Management, Taxation, etc.  These skills are essential for you to successfully function in your business and it’s highly recommended to acquire these skills. For example, if you build good negotiation skills then you can probably save a lot of money when you effectively negotiate with your suppliers. There are plenty of paid and free online resources available to enable and empower to you take the right steps.

3. The Right Business for You

There is no ‘Perfect’ business. Choosing the right business with the right budget requires a thorough self-assessment. Determine the type of business that aligns with your strengths and weaknesses. Establish investment criteria, set desired results, identify any potential restrictions, and carefully evaluate your experiences and interests to find a business that resonates with your goals.

4. The Search

The search for the perfect business involves exploring various avenues. Engage with experienced business brokers, leverage online databases for businesses on sale, connect directly with sellers, scan newspapers and trade publications, explore other media channels, and seek recommendations from friends, family, and business contacts to widen your options.

5. Business Broker

It’s not mandatory but you can also engage a business broker to help you find a suitable business for you. There are business brokers like National Business Sales & Valuations, who can also act a Buyer’s Agent to find you the right business for a fee. In the quest for the perfect business, engaging with experienced business brokers plays a pivotal and positive role. Business brokers are seasoned professionals who bring a wealth of knowledge and industry insights to the table. They act as valuable intermediaries, connecting buyers with businesses that align with their goals and preferences.

Business brokers have access to a wide range of businesses for sale and can provide buyers with a curated list of opportunities tailored to their specifications. This not only saves time but also ensures that buyers are exposed to businesses that genuinely match their criteria. If you clearly articulate your needs then most business brokers will be able to provide you with options.

Moreover, business brokers contribute to a smoother transaction process. They facilitate communication between buyers and sellers, helping both parties navigate negotiations effectively. Their expertise in deal structuring and understanding of market dynamics can be instrumental in securing favourable terms for the buyer.

6. Potential Acquisitions

Upon identifying potential acquisitions, initiate the process with discretion. Sign non-disclosure agreements, prepare insightful questions for sellers and intermediaries, meet with sellers to gain a deeper understanding, review financials and pertinent documentation, conduct comprehensive research, and gather essential information to make informed decisions.

7. Making an Offer

When ready to make an offer, enter negotiations with the seller. Engage a legal professional to navigate the complexities, draft a Letter of Intent, Heads of Agreement or a comprehensive Offer to Purchase Agreement, including all conceivable contingencies, and secure the deal with a deposit. In addition to a legal professional, the buyers can also benefit by engaging an experienced Business Broker who acts as a Buyer’s Agent to complete the negotiation with the vendor/seller on their behalf. The cost of engaging both professionals might be higher but not engaging professionals can lead to a much higher costs for you in future.

8. Removing Contingencies

After the offer, proceed to remove contingencies. Sign the Contract of Sale, involve a CPA or accountant for due diligence and financial reviews, ensuring a thorough understanding of the financial health and obligations associated with the business. Please note that sometimes the Due Diligence (DD) can commence before a formal Contract of Sale is signed and it’s absolutely at seller’s discretion. After Due Diligence (DD), you should be very clear about the real value of the business and its future earning potential.

9. Settlement

During settlement, manage the transition seamlessly. Handle lease assignments, conduct trial periods if applicable, make the final payment to the vendor, transfer contracts, address legal matters, manage business licenses, facilitate utility transfers, and oversee employee transitions.

10. Running the Business

Post-acquisition, transition smoothly with the seller. Conduct meetings with employees, suppliers, and customers to establish a positive presence as the new owner and set the stage for a successful business venture.

If you have followed the above instructions and successfully acquired a new business then we congratulate you on your business journey.

If you require assistance to sell, buy or value a business then please contact one of our professional brokers at [email protected] or call +61423610444.