If you are looking at buying an existing business as an alternative to starting your own, it is important that you carry out extensive research and get to know the company and its industry to ensure that it is the right fit for you. You should look at important details such as the existing reputation of the business, its staff and its assets and liabilities that you would be taking on. Make sure that you have as much information as possible before proceeding with the purchase. Allow us to talk you through all the important things you should consider…
Industry knowledge
You will want to make sure that you have a good understanding of the industry in which the business operates. Research should be one of the first things on your agenda before considering buying a business, to make sure that you are familiar with the market you are entering. This involves identifying business competitors and what has helped those competitors become successful. Analyse current and past trends within the industry to see you your business could align and how you would build them into your business plan.
Business reputation
One of the most important factors of a successful business is its reputation. What level of service has it been providing for existing clients? What are the businesses strengths and weaknesses according to customers? Search review sites that the business is listed on, such as Google Business Profile, and review recent feedback as well as the overall online reputation of the business. If the business is well recognised and highly recommended, you will likely gain a ready-made, loyal customer base that you can build upon. Having to repair the businesses reputation could require further investment and a change in strategy, so you should consider this before proceeding.
Existing staff
You should assess the current workforce to decide whether they fit with your vision for the business. Existing employees can be valuable assets as they are already experienced and trained within their specific role, so it may be worthwhile to keep them. If you are making any changes to their employment conditions, or their contract, they must be informed, and it is important to get their consent to avoid any issues further down the line. You should also keep them updated on any structural changes to the business to help them adjust accordingly.
Assets involved
When liaising with the existing business owner, you should clarify what assets are involved in the purchase. They should provide you with a detailed list of all the assets included in the sale of the business. This could be physical items such as vehicles, the lease of the premises, office furniture and computers, or intangible items such as intellectual property, so you should make sure this is protected and will be under your control.
Other due diligence
The previously mentioned steps are all part of carrying out due diligence before you complete the purchase of the business. As a result of this, you will hopefully gain an idea of the value of the business, and if you are paying a fair price. You should also check on validity of licences and permits to make sure that the business is following all rules and regulations before taking it over.
Prepare a business plan
One of the final steps of the process before you proceed with the purchase is to come up with a business plan. This will allow you to have a process in place for when you complete the takeover of the business. You can make sure that you will be well prepared for the first few months, and you have targets to aim for. This will help you decide if this is the right business for you. If you decide to purchase the business, you can use it to keep track of progress and make any necessary adjustments depending on if things are going according to plan.
You should consider all these factors to make sure that the business you are looking at buying is right for you. Once you have completed this due diligence, taking control of the business and the early stages of takeover can be the toughest. You will want support from qualified accountants to help you carefully manage your finances. This is where our experts at Omer & Company come in. We can support you with important tasks such as bookkeeping and managing tax returns, so that you can focus on running your business. If you would like to discuss your plans with us, give us a call on 020 8850 0700 or email info@omeraccountants.co.uk to find out more.
