When it comes to business you may ask yourself the question – Should I be buying an existing business?
Naturally, there are many reasons for an against buying an established business. There are certain advantages and certain disadvantages which can ultimately impact your investment in a business. The aim of this blog is to give you a few things to think about and the potential steps to take should you wish to buy an established business.
LOOK AT:
- Is there a clear reason as to why the owner is selling the business?
- What do the existing and potential customers look like?
- Is there the opportunity for growth?
- What is the interaction like with suppliers and is it favourable?
- Is there staff that will stay in the business?
- What is the cost (fixed and variable) ratio currently?
- Ensure that yourself and your account view and discuss the financial records of the business.
- Are there tax implications for yourself with the purchase.
- Will there be an acquisition of assets – plant, equipment, stock etc?
- Is there intellectual property to be transferred?
- Will there be a property lease or ownership as part of the purchase to be transferred?
- Are there any legal agreements for you to consider in relation to the lease?
- If there is stock, how is it managed, stored and turned over, what about the very old stock that has not sold?
- Are there debts owed on any assets?
- Ensure that yourself and your solicitor review the purchase agreement carefully.
- Discuss with your accountant the structure of the business.
- Are you going to be a partnership? Discuss the creation of a partnership agreement with your solicitor.
- Can you identify if there are things that haven’t worked for the previous owner?
- Create a business plan with your business adviser and a marketing plan to tap into the potential growth of the business.
Have you thought about franchising or is the existing business a franchise? Here it is important to ensure that the franchise agreement is looked over by your solicitor along with everything else mentioned.
Financing is also another aspect – How are you financing the business and is the new business viable enough to pay back your debt? How much will it all cost?
There is a lot to consider when you are buying a business so make sure you speak to Eleven Legal and ensure you don’t miss anything vital along the way.
