Things to consider when buying a business.
- Start up Costs. Expenses you incur before your business generates income.
(a) Research expenses-market, potential customers and cost of production;
(b) Supplies and equipment, utility connections, insurance, business name registration and legal fees;
(c) Running costs. If buying an existing business ask for the financial statements prepared by accountant. Then it is a good idea to have 6 months worth of running costs in the bank when starting. Expenses such as wages, rent and purchase of stock.
- Develop a Business Plan. A Business Plan gives your business direction, defines your objectives and maps out strategies to achieve your goals. The planning process helps you learn about the possible ups and downs in the future. You will need a Business Plan to seek finance, if this is required.
- Write a Marketing Plan to help promote products and services to meet your target market. This will help you identify your target market, identify your competitors, position your brand, set specific measurable goals and time frames.
- Research what registrations are required. E.g. ABN, business name, ATO registrations for GST PAYG etc.
- When you find the right business, you will need a range of business information to value the business. You will require the following information:
(a) Financial Statements (5 years worth if possible);
(b) Details of physical assets and other assets e.g. goodwill;
(c) Copy of leases and insurance documents;
(d) Employee agreements;
(e) Supplier details (agreements and supply prices);
(f) Customer details (phone numbers; email addresses);
(g) Determine the valuation method. i.e. current market value; return on investment, business asset value, future profit of a business.
6. Engage a professional to help your business grow with support and advice.