Buying an existing small business is easier and far safer than starting a new one from scratch. It’s a great opportunity to hit the ground running with a brand which already has a well-established model of operation, an existing customer base, supplier agreements and goodwill associated with the business name. Deciding what small business to buy and who to buy from is a crucial decision that will determine your success. It can be a daunting process, so it’s important that you’re well informed.
Before buying an existing small business, you should critically analyse the environment you’ll be operating in. Some of the things you should consider early on include:Location
- Business image
- Existing/potential customer base
- Marketing strategy
- Relationship with suppliers and distributors
- Any existing lease, mortgage or other financial arrangements
Why is the Business Being Sold?
The motivation of the seller is the most important factor to consider. You should critically examine the state of the business and determine whether there are any ulterior motives. Are they selling to regain losses from a failure of the business? Do they have a negative reputation? Is there a poor outlook for the business in the future? Are they retiring? Or perhaps they’re looking to expand through franchising or a similar partnership agreement.
You should be weary of purchasing individual businesses that have a dubious outlook or entering large scale franchising agreements. Both can end up being costly and stressful. Large scale franchising is notorious for lacking support, having hefty fees and exploiting individual owners.
Another option is a small business support platform, which uses an extensive network of products and services to provide an established business model to prospective business owners. These businesses are supported by wholesale supplies, training and marketing services.
Which Industry is Right for You?
Prospective business owners often make their decisions based on the sales growth, profit margins and overheads of a particular industry. Remember that you need to enter an industry that your skill sets are suited to. While you can always get some training, it’s far easier to buy a business that provides products or services you’re familiar with. In short, don’t buy a computer repair business if you don’t know the first thing about repairing computers.
Consider the Potential for Success
Thoroughly research the market you want to enter, as well as your potential main competitors. Consult industry experts to get a feel for current and future demand for the business’s products or services and make a logical consideration about the value of your investment. For example, don’t buy a restaurant on a street where several other food and beverage businesses have failed.
In today’s volatile and ever-changing business environment, using a small business support platform like Saver6 is the safest, most efficient and effective way of entering the world of small business. Saver6 works by allowing prospective small business owners to choose a successful business model that suits their skill set, ranging from industrial cleaning to solar panel installation. We then provide support with equipment, supplies, training, accounting and marketing services. This allows you to focus on the everyday running of the business, improving its overall effectiveness.
Unlike franchising, this model is built on establishing a healthy, collaborative relationship that encourages mutually beneficial success and growth. If you’re interested in this innovative and rewarding pathway to owning a small business, get in touch with our team.