Buying A Business – Brealey Quill Kenny

If you are contemplating purchasing a business, you need to assemble information on the business for a business evaluation to be prepared. The information includes:

Copies of financial accounts, in particular, the trading and profit and loss accounts for the last three to five years.
The balance sheets for each of those years.
Details of salaries and other payment for owners and family members, paid out in each of those three to five years.
Details of rent paid for any real estate that’s owned by the business or the family members.
Copy of the debtors’ aged analysis.
Access to the financial records of the business.

There are a number of personal questions that you should ask yourself:

Is the acquisition purely a business investment? If so, what rate of return are you seeking?
Are you planning to work in the business?
Will owning and operating a small business suit your family and your lifestyle?
Have you had training in any particular business/industry?
What type of knowledge do you have in:

– market research;	– customer relations;	– budgets and cashflow forecasts; and
– preparation of marketing plans;	– employee management;	– selling?

Have you had a look at the market in which the business operates?
What are the trends in the market?
What share of the market does the business currently have?
Do you expect to increase the share of the market? If so, have you developed particular strategies to be utilised to increase the market share?
Have you prepared a list of the competitors?
Have you determined the competitors’ strengths and weaknesses?
From the process, have you been able to identify opportunities to successfully market against those competitors?
Have you identified any threats that are likely to emerge from the current competitors or potential new competitors?
Have you had a good look at the business location?
Are neighbouring businesses compatible to your business?
From where do your customers come?
Can customers obtain easy access to your business?
Are there any changes planned by main roads, railways or local council that might change the traffic flow in the area in which the business is located?
Have you assessed your strengths and weaknesses?

If you’re contemplating a business and you would like our assistance to evaluate the business, please contact us.