It’s believed that a whopping 21,000 new businesses opened between 2014 and 2015 in Australia alone, and although all CEOs will aspire to get their company to go from strength to strength, it’s not uncommon for a few to fall a little short of the mark. This is one of the main reasons why an owner may decide to sell their organisation; but there are many others relating to financial stability and a simple lack of time.
When it comes to purchasing a business, it’s not always easy to opt for a struggling company in the hopes of turning it around; there are a whole host of factors to consider. Here are a few tips on buying a business to help you with your decision.
How long has the firm been practicing?
This is one of the most important things to consider, simply because it can help to reduce the time that it takes to brand an organisation. If it has been practicing for decades, then the chances are that the name will already be recognised within its particular market. Buying a company that has an established reputation can help to minimise costs, but it will also offer a viable entry point to market.
What is the businesses’ niche?
It won’t make much sense to decide to buy an organisation that operates within a very small niche or exclusive market – less so if the new owner has minimal experience in the field. Before transacting, it’s a good idea to get to grips with the companies’ products, services and clientele. If the agency used to operate in a little-known market, there are only two choices; to refurbish it and present it to a new industry, or to attempt to develop its standing within its previous niche.
Don’t get locked in a bidding war
There are many companies that potential buyers would consider an asset to their own financial aims. As far as bidding goes, it’s not uncommon for costs to exceed their estimate and this is where the new buyer can lose out. Instead, define a budget and stick to it. If you are able to snap up a bargain at a lower cost than expected, all the better. It can sometimes be more beneficial to approach a business broker instead of attending an auction – as they will be able to correspond with the seller directly on your behalf.