Many people find buying an established business difficult and daunting. The buyer will have a better chance of completing the transaction successfully if they are able to understand the steps and do the planning and preparation. A proven and well-tested process will reduce stress associated with the chartering of new territory and eliminate many of the unknowns and risks that can often lead to a business acquisition being canceled.
- PERSONAL ASESSMENT
Introspection is the first step to buying a business. This should include a thorough and honest assessment of each candidate’s strengths, weaknesses, skills, and likes and dislikes. This will help narrow down the choices for the most logical and profitable business venture.
What skills, talents, and experiences do you have that will help you succeed in your role? Which types of businesses can benefit from these qualities behind the helm? These are some of the questions you should ask during your introspection phase:
- Which type of business would you like to run? Do you prefer to be the owner/manager of the business or have a team of managers?
- How many hours can you dedicate to your business? Owning a small business is not something you can do from 9 to 5. It is important to decide how much time you have available to manage your business. Are you looking for a B2B company that is open M-F from 8-6pm, or would you prefer something more flexible that is open late and/or on weekends?
- Are you a salesperson who is able to meet clients and be the face of the company? Or are you more suited for a managerial position and managing the business behind the scenes with a sales team in place?
- Do you need a business that allows you to travel for several days?
- Are you more interested in the service or distribution industry?
- Are you a holder of any certifications or licenses that would allow you to operate a specific business? Are you ready to get the credentials necessary for ownership, if required by the target business?
- What are the things you enjoy most? What are the things you don’t like to do? It is best to look at businesses that are in the same industry as the buyer.
These are just a few questions that can help an individual determine the type of business they are most suited for. They also help narrow down the list of potential enterprises that the buyer’s skills, abilities, and passions could be used to leverage.
- DEVELOPMENT CRITERIA
Once you have identified the type of business that will suit your needs, the next step is to write down and define your investment criteria. It is important to match the investment criteria with your resume and transferable skills if you plan on applying for bank financing. These are the investment criteria:
- How much can you afford to purchase the business?
- Which is the best geographic location for the business that you are looking to buy?
- Which type of business do you want?
- Manufacturing
- Wholesale/Distribution
- Service
- Retail
- Web-based
- Which industry should the company be located?
- What is the management structure? Owner managed or team-managed?
- The size of the business. Referring to:
- Revenues
- Profits/Earnings
- Employees
- Numerous locations
