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While many people prefer to build their own business empire from the ground up, there are those who would rather acquire a going concern, as all the hard work has already been done. However, buying an existing business does not mean it will continue to be a profitable endeavour, and with that in mind, here are a few important factors to consider when looking to buy an existing business with property.
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- Can you Afford It? – You will need to crunch all the numbers, and buying an existing business involves a lot of expense. The business comes with stock, equipment and machinery, not to mention the purchase of the property, so prior to making any decisions, do your sums and make sure you have the financial pull to cover all the costs. There is a very long list of questions to ask when buying an existing business, which is recommended reading for all.
- Reason for Sale – If someone is selling an existing business, there must be a reason for this, which is something you must determine. Of course, the seller isn’t going to say the business isn’t making money, and if that is the case, they will do everything in their power to make it seem otherwise. You might need some professional help, which conveyancing solicitors in Brisbane can provide, and once you are sure of the real reason for selling, you can make a decision based on this.
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- The Property – If the deal includes the sale of the property from which the business operates, you will need a conveyancing lawyer to carry out a series of searches on the property, which will ensure there are no restrictions or unpaid liabilities. If the property is leased, have your lawyer go through the lease, looking for anything that might be an issue. The duration of the lease, for example, and whether there are extensions allowed, are things to find out, and with the help of a good local conveyancing solicitor, you can be sure that the property is suitable.
- Study the Business – If it is making money, find out why, and if it is losing money, you also need to pinpoint the reasons for this. It could be that the business is not being managed properly, which is something you can change, but it might be that the products or services are not in great demand. You need to carry out an independent assessment of the business, and look for weaknesses, while making note of changes you would make. It is possible to turn a business around in a few months, and you need to be very sure about what it is that you are taking on. Do you have experience in this industry? If the answer is no, then hire someone who does, at least for the first year, until you become familiar with the industry.
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There are many legal implications to consider when purchasing an existing business, especially if the sale includes commercial property, and with the right legal advice, you can move ahead with a degree of confidence.
The head must definitely rule the heart when it comes to acquiring a running business, while always playing the devil’s advocate, searching for possible issues that might arise. If you feel confident in your abilities, a lot of planning and hard work should result in a successful takeover.
