The key to buying a good business:
Ask the right questions and uncover the right information about the business.
Why are they selling the business?
There are many reasons why a business owner might be selling; relocation, retirement, new opportunities, ill health. Whatever the reason you want to have a clear understanding of why they’re selling.
Is the business profitable?
Ask about the current trading conditions, what the current cash flow is and whether you can see the financial accounts for the past three years? The financial statements can help you forecast for the future and you can determine if the business will be viable. Normally a business broker will assist this part.
Why should I use a business broker?
A business broker is a vital part of the buying and selling process. An experienced business broker understands the market, their knowledge, experience and skills will help guide you through, making the whole process as simple as possible and achieving the best possible price.
What happens when I find a business I want to buy?
You should get in touch with one of our Sales Negotiator who will talk you through the next stage and arrange a viewing with the business owner.
What should I look for when buying a business?
It’s a good idea to review the businesses location, existing customer base and reputation before you make your decision. Do you have the right experience to make it a success, are you turning a hobby into a career?
Why should I buy a business rather than start one from scratch?
The business is up and running and it’s easier to secure finance on an existing business, also you have customers at the ready and an income from day one with a team of trained employees already in place. From day one you can hit the ground running.
How have you valued the business?
One of our experienced Regional Valuers will inspect the property, photograph the rooms and inspecting the last three years trading accounts where appropriate. We will have an in depth discussion and fact find with all partners/shareholders and owners of the business so we can come up with a realistic value of the business.
How important is due diligence?
Very important. It looks into the performance of the business and is designed to check the worthiness of the investment. The audit will look into the financials, debts, ownership, staff and premises. Also ensure there are no nasty surprises like ongoing legal arguments and unpaid suppliers.
Is there a hand over period?
Check with the owner and ask what they plan to do after the sale, they are usually willing to stay on after the business has been sold.
What skills or qualities do I need to run the business?
Find out which skills or leadership qualities are most important to keeping the business going. Ask yourself are you skilled enough to jump right in to the business or will you need training (the hand over period could come in handy here).
Can I speak to the employees regarding the sale?
Once the sale is complete you should speak with the employees and answer any of their questions regarding the sale and the future of the business. The current owner will usually tell staff a sale is proceeding and their jobs are secure.
Do I have to keep the staff on after the sale?
If the business has employees you will need to abide by TUPE (Transfer of Undertakings Protection of Employment Regulations), which provides a level of protection for the employees. Hilton Smythe can advise you on this.
Any finance options available?
Hilton Smythe Finance can assist you with any commercial finance when buying a business. We’ve helped thousands of buyers on their journey and we have secured some extremely competitive terms from lenders.
Will Hilton Smythe be there to offer support once the sale is agreed?
We are just a phone call away. If we can help, then we will.
Do you have the business I’m looking for?
Before you begin your search, you need a fairly accurate idea about what you’re looking for and how much you can afford to pay, we can then match the right business to you.
How much do you charge for your services?
There is no charge for buying a business from Hilton Smythe but the purchaser is expected to meet their own legal costs, and contribute towards the landlords legal fees if applicable.
Do I need a solicitor when buying a business?
It’s advisable to have your own solicitor, buying a business is a highly complex process that consists of a variety of steps that you will need to be very familiar with in order to carry them out successfully. You will need to be aware of what legal documents you must provide to the vendors and what documents you can expect in return. There is also a process of exchange and completion that you will need to be aware of. Please speak to us and we will find the best solicitor for you. We have a panel of specialist business transfer solicitors who offer our clients exclusive, preferential quotes.
Do I need an exit strategy?
The hope is that you’ll buy a business and have a long and successful career. However, there is a chance that at some point you’ll want to sell the business, or retire. Take a look at the business and evaluate what you’ll need to do to get the operation to a point where it is either profitable, sellable or a combination of both. Know what your exit strategy is at the start so that you can always be planning towards the future.
- Is there a hand over period? It could be beneficial for you to learn the ropes of the business from the one person who knows it the best.
- Is there any training needs (on your behalf)? Are you skilled enough to jump right in or do you need training (the hand over period could come in handy here).
- Who are your biggest competitors? Getting an idea of the competitors in the area can help you get a feel for the market and whether you can improve the business further.
- What is the stock level? For some businesses such as Retail or Food based businesses, stock will be valued at cost price which you will have to pay the seller. If there is a high amount of stock, have you considered the costs involved?
- What is the current condition of equipment? You may think you’re getting a lot of equipment with the business, but without knowledge of the condition of the equipment its difficult to tell if this is a benefit.
These are only a few starter questions so make sure you think of some questions before you go to the viewing – this will be the best time to ask the seller your most important queries.
Find your dream business today
There are a lot of things to consider when buying a business, so when you go to view a business it is important to get some of your questions answered by the seller themselves.
If you need any further information or want to talk to someone about buying a business then why not ‘Speak to the team’ and see how they can help you buy your dream business.