If you're considering purchasing your first business, it's almost certain that you'll have started the process of narrowing down the kind of business you'd be interested in buying. However, as a first-time buyer you're likely to have a long list of questions regarding the purchase process, as well as one extra question that's likely to linger in your mind: are you making the right decision?
Unfortunately, we can't answer that question for you, but we have created a short guide to help you ensure you're doing the right thing (and going about it in the right way).
1. Keep researching
If you have already done some research then the good news is that it isn't all wasted. When it comes to making such a significant financial decision, the more research the better! This may start with researching the particular industry you're interested in and working out what you may have to offer, and then move on to researching specific businesses that have been put up for sale. Do as much research as possible about these businesses before putting them on your shortlist; if an offer seems too good to be true, it probably is.
2. Stay diligent
Speaking of being diligent, this is an approach you should take throughout the purchase process. Make sure you examine everything you're doing (and everything the seller is doing) as and when you can so you can be confident you're not getting yourself into a difficult financial position. It's also worth being diligent with your own finances so you can demonstrate to potential business owners how serious you're taking your proposition.
3. Organise your finances
Organising your finances is important for two reasons: setting a budget, and demonstrating your intentions. As mentioned above, the latter will show any business seller that you're taking the process seriously and that you do really have the funds available to push the purchase through in a timely fashion. The former, on the other hand, will prevent you from making offers on the wrong business in the first place. Seek professional help if needed - remember, this is a long-term financial commitment, so your budget should be set with that in mind.
4. Negotiate the right deal
Once you know how much you have to spend, you're ready to negotiate a deal. Hopefully your favoured business already comes in on budget, but either way, you'll probably want to negotiate a lower price so you feel you're getting a good deal. However, it's worth keeping in mind that any good owner will also have done their homework and will want to achieve the highest price possible. Negotiations are a perfectly normal part of buying a business, but make sure you pay the right price for the right business.
5. Completing the sale
Even once the negotiations seem to have been completed, there are still a number of reasons why a business sale could fall through. To ensure everything is in order your side you should consider preparing your financial and legal documents in advance where possible. This approach will also help to persuade the owner of the business that you're definitely the right person for the job, and be the difference between a failed business transaction and a smooth completion.