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More Answers You May Need About Buying Business
I want to buy a business… or do I?
You’ve decided you want to buy a business. There’s a number of reasons why you might want to do this.
- Have some capital that you want to invest, but you don’t have the time to get a new business off the ground
- Have identified a struggling business that you think you can turn around, for example by bringing your own expertise to it
- Already run your own business, and want to grow through acquisition, for example of a competitor or supplier
Buying a business can be a sound investment – But not every business is an attractive investment proposition.
There are some important factors that you need to bear in mind before you take the leap.
- Buying a business can be an extremely lengthy process. It’s crucial that you set aside enough time for due diligence
- It’s likely that any business you buy will have existing contracts in place, for example with suppliers, and you will likely have to honour or renegotiate these
- Buying a business will almost certainly involve paying for professional services such as lawyers and accountants
- Even with the most extensive due diligence conducted, businesses can have hidden problems that you might not grasp until you are ‘on the ground’
- If the business you are buying has existing staff, you will need to ensure that you have them on side when the purchase is made
Have you made sure that you’ve considered all of these potential problems before you take the leap?
Strapped for cash? How to buy a business with no money...
So buying a business seems attractive – but what if you don’t have the capital to begin with? Luckily, there is a range of alternative finance options that could help you buy a business with no money.
- Leverage your new assets. When you acquire the business, you will own its assets. You can use this to your advantage in advance. In some cases, you may be able to approach banks or other lenders and ask them to provide finance against the assets you want to buy. However, make sure that you are clear about any liabilities, and that these are taken into account when applying for finance
- Form a co-op. The co-op model is enjoying a resurgence, and can be a good way to buy a business with limited funds. By banding together with other investors, you may be able to buy a stake with a significantly lower outlay. Remember, however, that you’ll need a watertight partnership agreement with the other investing parties
- Look at franchising. Buying into a franchise can be another great way to buy an existing business infrastructure with limited funds. There’s a huge range of franchisors across the UK and beyond, and many of these can present a valuable opportunity to plug into a brand that’s already successful
How to buy a business name
While you're thinking about buying a business, you might also be thinking about names. This might be the case if you already have an idea but you're not quite ready to get started on your project.
There's a common misconception that you need to 'buy' a business name. This isn't strictly true - business names themselves aren't normally traded in this way. However, if you want to reserve a name so that you can start trading under it in the future, your best bet is to register a company with Companies Registry using that unique name. You can search the records from Companies Registry to make sure that nobody has taken it already. You'll then simply need to register a company with at least one director and at least one share issued. If you want, you can make the company dormant until you're ready to trade.
Are you ready to get started?
Whether you buy a business or company, you will need experienced and professional assistance.
Getting advice at the outset could very well help you to avoid difficulties later on.
Contact FiNSEED to assist you. Questions? Call or Email us.
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