Buying a business can seem scary, but it doesn't have to be an intimidating process. The key to this is to give yourself time to understand the buying process first. Here’s a rundown of the procedure from a buyer’s perspective.
Step 1. Know what you want
Part of your pre-investment preparation must include thorough research. You may want to work with animals – but are you aware of the routines you must commit to?
Want to run a trout farm? But what do you know about water and environmental regulations?
If you have a genuine passion that’s all part of the fun, however, without that real spark you’ll soon lose the drive to build the kind of business you always wanted to own.
So, if you want to run a campsite in the depth of the British countryside, just be sure you can still see yourself there in five or ten years, and that you also have some clear thoughts about what your future may look like.
See also: Business start-up guide - Campsite
Step 2. Financing
No business can succeed without an effective finance and investment strategy. If you plan to purchase a business using an inheritance, redundancy settlement for example, setting out a detailed budget is an essential first step.
And if you still have to acquire finance, then planning becomes even more important.
So, any lender you approach will want to see a detailed business plan showing exactly how you intend to turn your venture into a successful business.
In some rare instances, a seller may be prepared to offer a purchase finance arrangement as part of the deal.
Step 3. Due Diligence
Having found your dream rural business now is the time to dig down below the surface.
This is also the moment your vendor will want confirmation you are a serious buyer. You will be asked to sign a confidentiality agreement. Only then will you gain access to sensitive, but vitally important, financial records and data about the company’s trading history.
As this is the focal opportunity to uncover anything disingenuous or that may devalue the business, it is recommended you seek professional advice from an advisor such as a lawyer or broker. They may be able to see something that you would overlook and save you from a potentially harmful deal.
This is also the time when you can begin to negotiate on specific details of the business valuation in order to reach an agreement on the value of the business.
Step 4. Making your offer
After negotiations following your due diligence, you should then be able to come to a mutual agreement about the selling price.
Once this is agreed, you can begin to set the exchange in motion – which includes both formal sale contracts and meeting your new staff.
Step 5. The handover
To ensure there are no late surprises, your negotiations should also include conversations about the handover.
Some handovers may be the subject of a comprehensive document that both seller and buyer have agreed, but on other occasions, the seller may be happy to offer their services to guide you through running the business.
Always clarify the handover to avoid any last-minute misunderstandings, which may impact on running your new business.
This would also be an opportune moment to review the detail of your marketing strategy for the new venture.
And here, your aims will be to attract a new clientele while also reassuring old customers that the business is still going as strong as ever.