What to look for when buying a business
The first thing to consider is the type of business it is, if it is suitable for you, and if you are capable of running it. Consider the legal structure, the working hours, and if it can be purchased within your budget. It is likely that you will be more successful in a business that you are familiar with and enables you to use your existing skill set.
Enlist the help of professionals such as a business broker, banker, accountant and lawyer, so they can provide advice from a tax, lending and legal standpoint.
As a prospective business owner you should determine the current worth of the business and its future prospects. Some important considerations are:
- Vendor – reason for sale of business
- Sales – patterns, trends, customer base, current suppliers
- Costs – fixed and variable costs, staff costs
- Profits – analyse financial records, future cash flow and profitability
- Assets – identify and check all assets, including intellectual property and leasing arrangements
- Liabilities – outstanding debts, refunds and warranties
- Purchase agreement – review carefully
- Tax – GST, Capital Gains Tax, stamp duty implications
- Legal issues – leases, business structure.
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