Looking to buy a pre-existing business?
This is an easy way to get one step ahead of the rest, before you even get started. By buying an existing business, you can benefit from the business’s history and existing successes – but also failures.
The company you buy will have already trained employees, vendors, and loyal customers that can save you a lot of time and energy.If you started from scratch, you’d have to develop all of these yourself.
But before you go and purchase a business, you need to decide which business will best fit your lifestyle and be the right step towards the life you want to live.
Available businesses range from cafes, bakeries, hairdressers, and even to cleaning services. Still, the amount of options available can be overwhelming and even confusing. Especially when you’re just entering the world of business.
So, how can you narrow down the hundreds of opportunities to just one? And how can you know for certain that you’re investing your money into a business that will benefit you financially?
Here are a few steps that will help you decide which business is right for you.
Find Your Passion and Follow It
ABC recently published data claiming that 54,992 businesses closed down in Australia within one financial year.
If you want to increase your likelihood of succeeding in a world that wants to see you fail, then investing in something you’re passionate about will be your best bet.
Entrepreneur.com states that “some of the most successful entrepreneurs have attributed their vast successes to following their passion”.
Owning a business takes a lot of hard work, dedication, and sacrifice. You will most likely spend over 50 hours a week working, researching, and making tough decisions. If you enjoy and value your company and what it stands for, all that work becomes a lot more tolerable.
To increase your chances of success and ensure you build something you can be proud of, invest in a business that taps into your personal interests.
Try to physically write down a few things you’re passionate about or interested in. This will help narrow down your options and push you in the right direction. Put pen to paper, and get some deep thinking time in.
Stick With What You’re Familiar With
Now that you have written down a few things you’re interested in, start looking at which of these industries you have the most experience with or knowledge in.
Having a personal interest in your business helps, but it won’t be enough to successfully grow it.
Relevant degrees or prior work experience in a specific industry is a substantial benefit. You have already been provided with relevant training, gained useful industry knowledge, have a wealth of connections and you’re familiar with the wants and needs of your target market. By starting off with all this information, you have already saved yourself a lot of time and research.
According to the team at On Tap Plumbing and Gas, they offered this insight on choosing a business. They noted “Having worked for other small businesses you gain lots of experience and understanding as an employee. But sometimes it requires you to take the step and trust your knowledge. You can see the correlation between owners that started a venture in a similar industry to the one they came from. It usually means success”
Make sure you evaluate your business experience and skills and see which industry they would suit best.
This should help further narrow down potential businesses to buy and increase your chances of buying a business that you can successfully build.
Ask Yourself These Simple Questions
To help decide which business is the best fit for you, ask yourself a few simple, yet essential questions.
For example – How much control over the company do you want?
If you want full control and you are confident that you can handle it, then look into buying an independent business.
According to small business entrepreneur Strong Images, having complete control over the company was the biggest motivating factor for starting her company. She gives her input saying “I started a business to have freedom. Not to just have another boss. If I purchased a franchise, I’d still have a boss, and I wouldn’t be building something of my own”.
If you want the opposite and would like a bit of extra support and guidance, then consider looking into a franchise.
For example – How do you want your customers to engage with your company?
Do you want to offer them a service or a product? For example, do you want to create and sell hair care products or have your own hairdressing salon?
For the team from Shepherd Plumbing, being able to communicate with their clients and more importantly being available for clients to get in contact at all hours was necessary. They had this to say: “Being a tradesmen on call was really important to me. We all know someone thats faced an emergency and didn’t know a way out. So having a communication channel that allowed us easy contact was a must.”
But when you’re overwhelmed with choice, answering these simple questions will help narrow down your options and help you find out which industry or business model suits you best.
Conduct As Much Market Research As Possible
Market research is a critical component of running any business.
Even if you’re just trying to find out what business to buy, gathering information about the market trends and the wants and needs of your potential customers can give you a good sense of the overall business.
According to the experts at Brian Thurtell Plumbing, there was a need for tradesmen in the area they service. Taking advantage of this shortage was key, they had this to say: “We knew there was a need for the sort of work we offer around Central Coast, creating a demand, it was one of the keys to our success”
This will help you determine if there is potential growth in your desired industry or if you should consider looking elsewhere.
Research the location of the business: The Australian Bureau of Statistics states that there are over 2.1 million small businesses in Australia.
That’s a lot of bakeries, cafes, hairdressers and fashion boutiques.
Examine the market in your geographic area to ensure it isn’t overly saturated by competition.
Otherwise you will potentially be fighting for customers, which can lower your chance of growth and success, especially if this is your first business.
Research their existing reputation: Even if a business goes under new management, a negative reputation amongst the locals can still be a significant factor in whether or not your business succeeds. There are plenty of websites that can offer you an insight into the public’s opinion, such as Google Reviews, Yelp and TripAdvisor.
Research failed and successful businesses: By looking at similar businesses in your desired industry, you learn from them and determine if you’re willing to face similar challenges.
Look into new and upcoming products or services that you may be able to offer your customers.
Read up on your competitors and think of ways you can build from their failures.
Entreprenuer and business woman Ailee, from Shenko Vitality, gives us some insight into the market research she conducted and how it helped her decide on her business. Here’s what she has to say — “after researching the existing kinesiologist services in my area, I found a lot of gaps. They didn’t have experience in adjacent teachings and I did. This made me confident that I could provide a better service and made the decision to start easy”.
As you can see, the information you get out of conducting market research will be a huge deciding factor in whether or not you buy a particular company.
It can also help you eliminate a number of options if you have a long list of businesses you’re interested in. On top of performing your own market research, you should also seek advice and services from a solicitor, accountant and a business advisor.
Purchasing a business is an extremely expensive decision to make. It’s important to find out if purchasing an existing business is the right decision for you.
And on top of that, you have to make sure to purchase one that you’re willing to work on and not just give up on after a few failures. This means, finding something you’re passionate about.
Besides being passionate, your chances of success increase significantly if you stack on your existing professional experience. This means sticking to an industry you’re comfortable with and have experience in.
But the most important step, is to conduct research. Do your research on the business, businesses similar, and the market you’re looking to serve.
The best thing you can do is have a look at businesses for sale and do your own research.
Have you purchased an existing business in the past?
Comment below with your experience!