Are you Ready to Pursue Your Passion?
You’re finally ready to embrace your entrepreneurial spirit and pursue your passion by owning your own business, but not just any business.
You’re ready to build a business that you’re passionate about—that allows you the freedom and independence to utilise your skills, talents, and expertise.
Taking that first step and branching off on your own can be a bit daunting, to say the least.
In many cases, buying an existing business in your field of interest can be an excellent way to bypass some of the added challenges of starting a business from scratch. After all, why reinvent the wheel if you don’t have to?
As long as you perform due diligence, you can find yourself acquiring a business that already has a loyal customer base, steady cash flow, and a solid reputation.
Finding the perfect fit
Small businesses play a significant role in the Australian economy. In fact, they employ almost half of Australia’s workforce and makeup one-fifth of the nation’s gross domestic product (ASIC). The continued growth and vitality of the small business sector have become an integral part of the Australian economy.
As you begin your journey toward becoming a successful business owner, it’s important to be thorough and take the time to address every detail of the process. So as you get started looking at various businesses for sale, ask yourself the following questions:
- What is my budget?
- What type of capital is required, and what risk is involved?
- Why is this particular business for sale at this time?
- What is the general reputation of the business in that location?
- Is the business currently turning a significant profit?
- What does the overall market look like with regard to the business?
- Is there potential for future growth and/or expansion?
These questions may seem a bit obvious and even a little simple. However, the answers to them will provide you with key information that will either have you running for the hills or ready to sign on the dotted line. All this is important when you have decided you are ready to pursue your passion.
Taking the leap to pursue your passion
Once you’ve found the business that fits the criteria you’re looking for, it’s time to dive in. It’s time to start a complete and thorough due diligence. This will give you peace of mind as you proceed and help you uncover any hidden surprises before it’s too late!
The following are just a few of the areas you should research before taking the leap into ownership:
Location and customer demographics
Determine if the current location lends itself to passing traffic and walk-in sales. If it doesn’t, then you will need to develop a specific marketing campaign to raise awareness and generate excitement about the location.
Inventory and assets
Request a full list of current inventory and assets. You need to know what is included in the sale to ensure the business can function with existing equipment. Also, be sure to ask for a depreciation schedule from the business owner’s accountant. This will help you ascertain the age of the current equipment.
Obtain copies of current leases, insurance policies, employment contracts, and any other legally binding agreements with customers and suppliers. Any restrictive policies must be carefully analysed by legal counsel for any restrictions that could hamper your ability to do business.
No business should ever be purchased without a thorough examination of its finances. The financial statements will tell a story about the business that will make your decision much easier.
Obtain copies of sales records to determine the best-selling product lines and to identify potential opportunities to streamline the types of products being sold. Study the cash flow cycles to find which months have the strongest sales, and then use this knowledge to help you plan for the future.
Debtors and creditors
Long-standing debtors may be a sign of unhappy customers or a fragile selling market. On the creditor side, any outstanding creditors may have account restrictions in place or be spreading a bad name about the business due to non-payment of purchases.
For a new owner, inheriting staff can be both a positive and a negative. Current staff can be instrumental in keeping the business operating smoothly during the transfer of ownership. They can also provide great ideas on how to improve the business, as well as give insight into what’s worked in the past and what hasn’t. However, inheriting disgruntled staff can lead to poor customer relations. Do your best to get a feel for the overall staff morale. This will help you prepare to make any necessary changes when you become the owner.
Again, buying a business can be overwhelming. To alleviate some of the stress, enlist professional help from a trusted broker, accountant, and/or business advisor. You don’t have to go through this alone, and the more advice you have from a variety of professionals, the more confident you will be in your decision to commit to a final sale.
Remember your passion
Don’t lose sight of why you began this journey toward independence! Owning and running a business is hard work and takes endurance to push through the obstacles to achieve success. Truly loving what you do every day will be the fuel you need to keep going when things get tough.
To set yourself up for a financially sound future, be sure to find what you love and pick a business that matches that passion. Being passionate about what you do will increase your job satisfaction, enthuse your employees, and impress your customers.
Preparation is key
One final note: When you decide to pursue your passion, even if you’ve worked in this particular industry for decades, owning a business takes significant planning and preparation.
Thorough research will help you make an informed decision. So take the time to compile valuable information about the business you want to purchase. From location to competition, the more leg work you put in, the more successful you will be.
“The opinions expressed by Smallville Contributors are their own, not those of www.smallville.com.au"
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