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.