It is not an easy thing to give up secure work and start your own business. Acquiring a business can be a good option to starting from scratch and yet another option is to join a franchise.
Acquiring a business can be more secure and less of a headache because it minimizes the hassles, the anxiety and challenges, and makes it easier to obtain cash. However on the other hand, buying a business can also have its challenges.
Background check – Do your due diligence
It is essential that you carry out a full background check of any business that you intend to buy. Are the sales what they are purported to be? Is there sufficient working capital? Are there any potential liabilities such as customer complaints, fraudulent activity, incorrect tax returns etc. that might be an issue in the future? It is important to get indemnities against such things.
What is the value of the business and how is it being valued? There can be a number of formulae used in business valuations and it is important to get the assistance of an expert in this area.
If the business involves physical premises, it is important to find out the terms of the lease. What is the term of the lease, what are the rights of renewal, what are rental rate increases based on, who pays the outgoings, what insurance (if any) is covered by the landlord etc.?
Can you cope as the owner?
Besides the finance, there is a great deal more at stake when you acquire a business. Your ability to run and manage the business and your working capacities are all under the microscope.
When you acquire the business, you should understand that the emphasis of business shifts totally upon you.
You should be certified technically and have the maturity and even the experience to run a business successfully. You must know full well that running your own company could be demanding as you may need to manage difficult staff members, unpredictability, adversity and even some failure.
The faster you can establish systems, the less complicated it will be. Having said that, you can only manage what you measure so make sure you have metrics in place to assist you with the management.
Your business plan
Having a thoroughly thought out strategic plan in place is essential for business success. This needs to be done right up front so you have a plan ready to move forward as soon as the acquisition is completed. This will help you understand your finances, focus on your customers and manage your business growth. So spend time developing the strategy and execute it in proper order.
Acquiring a business can be a good option but make sure you do your homework and engage the right advisers to assist you.