Buying A Business

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.

Read More