As business brokers, we like to believe that there is a buyer for every business, if it makes a profit. How long it would take to find a buyer and how much they are prepared to pay for it depends entirely on how the business is presented, how the business is marketed and how the business is valued.
Most potential business buyers are looking for the perfect business when they start their journey. Let me be straight up; You will be looking for a long time and eventually give up on your dream of owning a business! There is no such thing as the perfect business to buy. However…
Any business has pros and cons in buying, mostly defined in the risk involved. Some attributes make the business more valuable and there will be aspects of the business that carry more risk. This could be when you have only been in business for a short period of time, meaning that the performance hasn’t been tested over time. This could be an added risk to a purchaser.
A good business purchase with minimum risk will have at least 1 of the following attributes;
- Skilled or well trained staff
- written supply agreements and/or exclusive distribution rights
- Run under management or minimal input of an owner
- The owner operator earns significantly more than comparable employment in that industry
There is a risk of buying a business that has all of the above (arguably deemed ‘the perfect business’). Some of these businesses already have all the systems and processes in place and therefore probably run at the peak of their performance. Paying a premium could be risky if there limited possibilities to improve the business.
The beauty of the current market is that there are lots of businesses for sale that are run by the baby-boomer generation. Typically, these businesses are run a little old school and there is lots of room to implement new technologies that will make systems faster and processes easier. Now is a good time to find a business with a solid history, strong bones and with plenty of opportunity to grow without significant risk.
These are the most important criteria you need to identify before you make a purchasing decision:
- Geographical location
- Preferred industries and what industries you certainly DON’T want to be in
- How much income you need
- Price range to purchase a business
Once you have purchased the business you can shape it the way you want; a business to suit your lifestyle, a business to give you an income to enable you to achieve your financial goals and a business that can be truly passionate about and be proud of.
This could be your perfect business!
Written May 2017 by Rudy Kokx – LINK Northland NZ
For further information about this article, contact your nearest LINK Business Broking office at:
