Buying a Business? What You Need to Consider

Buying an existing business can be a really good way to get into the business world without all the hassle of trying to start from scratch, or it can be an opportunity to expand your current business by getting into a different market or purchasing a competitor. 

But before you leap into buying a business there are a lot of factors to take into account. Getting advice online can be tricky and some of them may not apply to you. That’s why we turned to the experts from Crunch, an online accountants service in the UK, and they gave us these great tips when buying a business.

Buying a Business? What You Need to Consider

• Are you buying a franchise? 

There are all sorts of different rules and complications when it comes to buying a franchise from someone else so you will need to make sure you fully understand all of the implications before you part with your money. 

• How much do you have to invest? 

You need to think about how much money you are prepared to invest in the business, particularly if you are thinking about buying a business which is struggling, to turn it around. There might be other costs outside of the purchase price to consider too, like ongoing premises costs and staffing costs, so make sure you have considered all of the budgetary implications. 

• How long are you prepared to wait? 

If you are thinking you can just buy a business overnight and carry on you need to think again as buying a business can take a very long time so you need to bear that in mind. The process itself can also be costly with fees due to solicitors and accountants and other professionals. There might be staff in place and contracts in place so all of these aspects can take time to sort out and resolve. 

• Ways to buy a business without money

If you don’t have lots to invest in a business there are other ways you can look to buy, such as leveraging the assets you will be buying, to raise capital against them. You can apply for finance in this way. 

You could also look to form a co-op with other investors, bringing all your available funds together to buy the business between you. However, you need to be careful to make sure all the contracts are water tight and the partnership agreements are all very clear and legally sound.

You could also consider buying a franchise which can be much less investment than buying a business outright and you also get a proven existing business model as a result so this could be an ideal chance to buy with an already successful brand.

• Do I need to buy my business name?

You might want to rename the business you are buying or you might have a business name you’d like to have, before actually being ready to set up the business. Either way you don’t need to pay for a business name as such. 

What you need to do is check that it’s available and there isn’t someone else already trading under the same name – you can check this with Companies House and then if you want to preserve the name as yours you can register with them under that name but make the company dormant until you are ready to proceed. 

• Are you buying from a friend or family member? 

It is common to sell businesses within families or to friends but it’s important to make sure any transaction is done properly. With family transactions it’s important to understand any tax implications. 

It’s also important to take employees into account in case the family member buying the business is seen to be treading on the toes of any deserving employees who might have been expecting a promotion. 

You need to ensure all staff are kept informed throughout the changeover when handing a business across to a family member, to avoid rumors and misunderstandings during the process. 

Buying an existing business can be a great way to start out as an entrepreneur without all the uncertainties of a brand new start up and as long as you do your research and make sure everything is legally checked over it can be a straightforward process. 

It’s important to be prepared – have your finances organised so you know how much you can invest and where it’s coming from – before you start looking around for a business to buy. 

You also need to bear in mind costs of the acquisition such as legal fees and ongoing costs for the business as well as the actual purchase price when preparing your business budget. 

It’s also important to be realistic when it comes to the timetable for securing your business purchase as it might take a lot longer than you first realize, particularly if there are staff involved and existing contracts with customers or suppliers in place which might need to be concluded or bought out of.