In this guest post, Greg Kells, founder and Broker of Record at Sunbelt Canada, shares everything you need to know about buying businesses.
Investing in your future can lead you down many different paths. After much research and personal reflection, perhaps you have concluded that buying a business is your next right move. Even if you don’t know much about buying companies. But your entrepreneurial spirit doesn’t let that stand in your way.
The truth is there are many things to consider when purchasing a company. Personal, financial, and outside factors all come into play. While your confidence has led you to this conclusion, pushing forward can be met with resistance and confusion. Working with experienced professionals can make all the difference, which is why you might consider making an appointment with a business broker.
A business is a long-term investment. While considering the potential future of this company, you’ll also need to consider your path to lead it there. Exploring the possibilities will help inform you if this opportunity will succeed.
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What are Your Goals as a Business Buyer?
Are you considering putting the term business owner next to your name on your business card? Working out your goals can put into perspective what you are looking for and lay out a plan that will make all the difference before your sign on the dotted line.
Dedicate time to identifying key goals that you have in mind. Are you looking to grow a company to more employees, enhance its online presence, or introduce technologies that make everyday tasks easier? Develop a strategy that best aligns with the companies you are looking to buy. Don’t forget to consider your current duties, lifestyle, and financial obligations. This strategy should gear more personally and consider business details and your own.
If you are stumped on where to start, try coming up with broad questions. For example, consider what you want to achieve when you own a business. How will you get there? What skills will you need? After you come up with these answers, focus on how they relate to the type of business you want to buy.
Each industry and sector sets its sights on profits but has different operations on how to get there. Set three, five, seven, and 10-year goals that align with what you have already discovered. These don’t have to be profit-focused. Perhaps they are awards or more company-specific. These details will help get you into the mindset of a business owner and begin looking at the company as an extension of you rather than just a potential opportunity.
What are the Implications?
A life-changing purchase always comes with implications. If this is your first experience in business buying, there are a few considerations you will need to take into account. Most notably, your lifestyle will be altered as a business owner. You’ll likely find yourself busy, dealing with constant meetings and concerns. The company’s needs can affect your personal life, and, as a result, your family may see less of you. You must set boundaries and ensure that your family gives you some grace while you find your footing.
Moving forward, there will be sacrifices you need to make for the good of the business. These issues will not be easy to resolve and can be overwhelming and frustrating. Additionally, you may make decisions that open the company up to more risks you feel unequipped to deal with. You’ll need to attempt to keep a positive mindset and embrace a support system that you can turn to in times of need.
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Planning to Make the Business a Success
To ensure you are set up for success, it is best to look for a business that you know can operate at a high level. Whether that’s an industry that you are familiar with or a company’s needs that match your skill set, making the conscious decision to align your capabilities with what is already in place will help ensure success.
The purchase of a business is not the same as other investments; the risk is more significant and may require additional funds even after the sale is complete. Pay attention to your finances, and consider working with an accountant. A budgeted business plan can create a plan for the future and map out potential contingencies. Before the sale, review the seller’s financing options to benchmark the possible upfront and ongoing costs you’ll need to spend.
Businesses are fluid entities that require open mindsets. While you can’t prepare for all possible outcomes, having a strategic plan can help when things don’t necessarily follow the trajectory you are hoping for. Expect the unexpected when it comes to business, but where possible, be proactive. Patience is crucial and can give you a clearer mindset to make decisions that will positively impact you. Feel confident in your choices, and the company will feel confident in you as a leader.
If confidentiality clauses or other details exist, maintain awareness of these specifics. Confidentiality is vital to many sellers, so be courteous with privileged information and avoid sharing too many details. This is especially important when discussing the opportunity with friends and acquaintances, be mindful of the information you share in case it is accidentally leaked into other social circles.
Negotiating the right deal for a business you are interested in purchasing can take time. In some cases, buyers or sellers will be more concerned with the terms and negotiations than they are about the sale price. You may be unable to secure the purchase of a company you want because you aren’t aware of the full scope of business sales. That’s where help from the professionals comes in. Business brokers who have extensive experience in the business buying and selling industry can be your greatest resource. They can also be an asset when attempting to close the deal.
Wrapping it Up
Buying a business is no easy feat.
There are many moving pieces, things to consider, and details to understand. While it can be a worthwhile investment for the right buyer, it is vital that you take the time to evaluate the level of commitment this will require from you.
Surrounding yourself with a trusted team, investing in a business you believe in, and forming a strategic plan can make all the difference.
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