Buy an Existing Small Business

Buying an existing business can mean it is profitable from day one and that you will not have to go through much of the set up stage. The cost for this of course is that you will need to have access to capital to buy an existing business.

How much should you pay?  There are different formulas for various industries and generally there are guidelines within an industry. You most certainly should have your own valuation of the business done and the figures scrutinized by an accountant. You will also want to see  back up information for the figures supplied.

Depending on how much you are paying of the business, financing considerations are very important. You will need to think about it very carefully if you are going to borrow and put your house or other assets at risk .

You will also need to consider the loyalty of the customers. Were they loyal to the business or the previous owner(s)? Will they stay your customers? How your purchase contract is worded is very important to cover questions like this one.

It you are buying a business that has employees  consider their loyalty and their skill level.

Understand the overheads you are taking on. If there is stock involved  what is the expected time in turnover.

This can be a viable way to become a business owner but in summary my message is “do your homework”.

I have also been this route. My husband and I bought into a business years back and it was a very successful business. We worked hard and were rewarded.

4 thoughts on “Buy an Existing Small Business

  1. Adam Robinson

    It’s very important to consider not only how good the business is doing now, but how long one thinks the business will do say 10 or 15 years from now. It has to have that competitive durable advantage over its competitors to ensure it will still be around in the years ahead.

    1. Sue Post author

      Thanks for the comment Adam. Yes how long will the business last? In these fast changing times that is something very important. Imagine if we had bought a video shop?
      I can think of many examples really.


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