FIVE Considerations When Buying Your First Business
Posted on October 19, 2019
While you sift through those piles of mundane papers, redundant forms, and pointless procedural tasks as you work for “The Man”, you think how life would be owning a business and being your own boss.
Now, weeks later, you have made the decision to buy your first business and enter the world of the self-employed. You have even chosen a local business and are working with a great Business Broker looking to put forward an offer to purchase. Everything seems great, but, you can’t sleep and your stewing pot stomach feels like a concoction of excitement, fear, exhilaration, fear, hope, fear, gratitude, and may other elations, but, mostly; fear. Fear of failure is a roadblock to success for entrepreneurs, but, regretting that you didn’t take that initial step to tackle your fear of owning a business is much more difficult to overcome; and it leads to resentment.
It will be overwhelming at times and each business case is unique, but, here are Five Major considerations to overcoming any lingering fears for a first time business buyer:
- BELIEVE IN IT – Buy into something that you are truly interested in and an industry you believe in. It needs to be a good fit for your interests and lifestyle as well. Below the surface of business fundamentals is a real person that requires fulfillment from their efforts. Don’t let yourself down by buying something that doesn’t fit and resonate with you.
- MAKE INFORMED DECISIONS – Line up your consultants to discuss your decision; just remember that YOU make every final decision, not your consultants. Your Business Broker, Banker, Lawyer, and Accountant will all be involved in the process so it’s best to schedule these appointments quickly.
- COMPLETE TASKS QUICKLY – Create your PRE-CLOSING and POST-CLOSING CHECKLISTS to ensure that you know what you need to do each day and then do them. Edit the list daily and ask your Business Broker for their input. Remember that if you require GST, PST, Business Number, Business License, Worksafe Account or some other output from a government organization, its going to take 10 times longer you think so do those first allowing sufficient processing time. Often the landlord is a large REIT or corporation and assigning of a property lease will require similar considerations.
- CASHFLOW IS KING – Sufficient financing to purchase the business and get through the first 2 months of operations is critical. Ensure you have enough cash and financing in place to cover everything on your checklists. Remember, on day one, your business (personal or corporate) likely has zero credit with suppliers so expect to pay C.O.D. even if the Seller currently has 30-60 day terms. Don’t forget about your lease deposit, lawyers fees, business insurance, utility deposits, first months rent and payroll for month one.
- FOLLOW YOUR PLAN – Your business plan isn’t used just to get a loan. Follow your plan. Revise or Update it as frequently as possible. Strive for your growth targets and make decisions early on as to how you will achieve them. Profit will be the bi-product of executing a well thought through plan and fulfillment will be the feeling you get at the end of it.
Business Brokers regularly work with first time business buyers and buyers who have purchased many businesses who face these tough considerations. They understand this process and the costs/benefits associated with each unique business case. Business Brokers can guide all business buyers through the entire process from the time you choose to join the self-employed to the time you enjoy your first year of profits. Don’t leave your next big business decision up to chance. Understand the major considerations as a first time business buyer and tackle your fears head on.
Remember, each business case is unique and your Business Broker will provide advice and direction during the entire process.