Buy a Business & Run it Successfully with These Tips
If your dream is to become an entrepreneur you don’t have the only way to start from scratch, though most people think so, because they find it exciting to implement their own ideas and building a company totally on their own. But beginning an all new company has some distinct disadvantages like problem in building a customer base, hiring employees, marketing of the new business and ensuring a cash flow – and all this without a reputation or track record. Buying an already established business, on the other hand, can offer you some unique advantages. Thus, if there is a business for sale in Melbourne, an aspiring Melbourne-based entrepreneur should try to buy it because starting anew and getting established in such a big city can be quite difficult, with an enormous competition and need of great reputation in the market.
Purchasing an Already Existing Business
In most of the situations, purchasing an already existing business is less unsafe than starting afresh. When you purchase a business, you become the owner of a setup which is generating cash flow and profits already. You get a set customer base, already built-up reputation and employees who are well acquainted with the ins and outs of the business. And you need not reinvent the wheel – founding new systems, procedures and strategies – because a successful formula for operating the business has already been implemented.
The drawback of buying a business is usually you have to pay higher price. But it is also true that raising funds for buying a business is quite easier than starting a new one. Investors and bankers find it more comfortable to deal with a business that has a proven record. Moreover buying a business may offer you precious legal rights, like copyrights or patents that can be very profitable.
However, there is a risk in everything, and an already set business too is not an exception. If you don’t take precaution, there is a risk of getting stuck with outdated stock, difficult employees or obsolete distribution techniques. To ensure that you end up in the best deal, follow these steps.
A Correct Choice
To ensure that you run the business as successfully as its previous owner was running it, you should look for a business that will be right for you. A best thing to do is to explore an industry you know and you can understand. Consider businesses which match your skills and experiences and not those which are profitable. Other factors like size of the business, location, number of employees and sales should also be considered. Evaluate the labor pool and expenses of carrying out business in that particular area, like taxes and wages, to ensure that you can accept them.
After you choose the industry and location, find out every business in that territory that can fulfill your requirements. The classified ads of the local newspaper can help you in this matter with its sections like “Franchise for Sale” or “Business Opportunities”. Even you can buy an ad like “Want to Buy” with a description of what you want.
Keep in mind that only because the businesses are not in the list, it doesn’t mean that they are not for sale. Upon talking to business owners you may find that many of them might not have put up their setups for sale, but would like to sell if you make an offer.
Taking the Help of a Business Broker
Business brokers are of immense help to find out businesses for sale. Many of them are hired by sellers and help discuss deals. If you hire a broker for buying a business, they may typically charge you 5% to 10% of the purchase cost. If you are a first-timer this is worth the price. But if you want to save money seriously, hire a broker only upon reaching a stage of final negotiations. There are many ways brokers can be taken the help of, like prescreening businesses, helping you identify your interest, negotiations, paperwork, and so on.
Choosing the right business carefully can save you from a lot of trouble and your dream of becoming a successful entrepreneur can come true.