The entrepreneurial lifestyle is seductive; come and go as you please, make all the decisions and answer to nobody, but it takes a lot of time, money and hard work.
If you’re thinking about buying a business, there’s a few things to consider before taking the plunge.
Are you suited to running a business?
You must first weigh up the pros and cons of being an entrepreneur and decide whether it suits your life goals, personality and skill set.
Are you a good leader? Are you the type of person who can motivate not only yourself, but also your staff? Would you feel comfortable, conversely, disciplining or making staff redundant if required?
Are you happy to bear the burden of making decisions that could bring failure as well as success?
A glance at these questions is enough to put many people off.
Many entrepreneurs thrive on being in control and the challenges associated with running a business. You, however, may prefer the security, paid holiday and structure of PAYE employment.
Which kind of person are you?
What are your strengths and weaknesses?
Take your strengths and weaknesses into account. Do you really understand them?
Try to acquire a business that will showcase your strengths and not expose your weaknesses – which areas do you excel in?
If you have prior experience in a particular industry, then that’s a major advantage. If you don’t, then you will need to be particularly thorough in your research and, maybe, consider finding a business partner who does have a background in the trade (though there are risks as well as benefits to having a business partner, especially if it’s a friend).
And it’s not just the specific industry that a business partner could help with. For example, finances may not be your area of expertise, but you know someone with an accounting background – they could make the perfect partner.
Talk to any business owners you know and use industry resources, such as the Federation of Small Businesses (FSB), Gov.uk’s section on starting and running businesses and associations and periodicals dedicated to your chosen sector, to prepare yourself for what will be involved.
Are you prepared to take risks and buy a business?
More than anything, running a small business is certainly not for those scared of taking risks. Even in the best circumstances, running a small business requires perseverance and, most importantly, guts.
As the owner, all major business decisions require your involvement and the final say is down to you, so you need to be comfortable making those ‘make or break’ decisions.
If you are the type of person who is easily troubled by shifting circumstances and financial instability, then it may be wise to reconsider your career options.
And if you have a family, it goes without saying that you should consult them over what will be one of the biggest decisions of your life.
Can you raise the finance?
It is crucial that you understand your finances and your ability to leverage a business purchase. Assess your financial circumstances; are you in a position to buy a business without jeopardising your family’s lifestyle?
Think about how you will raise finance; what options are available to you?
Are you willing to tolerate a period with minimal income or, in the worst-case scenario, no income at all? There’s no guaranteed salary with entrepreneurship, but at least by buying a business, unlike starting one from scratch, you can inherit an established income.
Consider the economy. Getting a loan will be tougher during a recession and you’ll probably need a larger deposit.
What kind of business do you want to buy?
You might have a dream business idea in mind or you might simply want to be your own boss. Whatever your motivation, most business owners live and breathe their business, so it’s extremely important to be passionate about the business you own.
Concentrate on your personal interests as much as the financial benefits; running a business is about more than just cash flows and profit margins.
Do you have the patience?
You should never rush into a decision. The buying process can take anywhere between six months to 18 months or even longer.
It’s simple: if you don’t feel excited by a business for sale or the sector it operates in, don’t buy it. Only extremely lucky entrepreneurs find their ideal business immediately, so don’t let the lengthy process discourage you.
And it doesn’t stop there. Once you have found your business, you will then need to conduct due diligence and thoroughly research your industry, looking at competitors, suppliers, legal requirements and more.
It will take a great deal of time, energy and patience, but buying your own business is your opportunity to do something you love, and such opportunities don’t come around very often.
Melanie Luff is online journalist for BusinessesForSale.com, the market-leading directory of business opportunities from Dynamis. Melanie writes for all titles in the Dynamis Stable including PropertySales.com and FranchiseSales.com.