While buying a business has to make sound financial sense, your decision won’t rest entirely on how well the figures stack up. It’s important to spend some time considering how your own skills and experience fit into the picture. Be honest about your strength and weaknesses, as well as about the factors that may influence your decision – how much time you have to devote each week to running the business, for instance.
If you pick a business that perfectly aligns with your expertise and expectations, you could be standing on the threshold of an exciting future as an entrepreneur. Choose poorly and you could be lining yourself up for a fall.
Does it capture your imagination?
People are naturally drawn to those businesses that chime with their own interests. It’s no bad thing to turn your passion into a profession, so if you excel at baking bread or styling flowers, you may well be ready to make the leap into a bona fide business. Beware of buying a business that will require you to upskill to a high level in a short time, though. Just because you love food, doesn’t mean you’ll be a successful restaurateur.
Does it meet your expectations?
While you have to make sure that your skills and experiences make you a good fit for your prospective business, the business also has to be an equally good fit for your lifestyle expectations. If you hate working evenings and weekends, you probably won’t enjoy being a pub landlord – even if you have hospitality experience. Similarly, if you have to do the school run twice a day, you won’t want to be stuck behind a shop counter from nine-to-five.
Can you afford it?
It’s the million-dollar question. If you want to run a business your way – without the interference of banks and investors – your best bet is to bootstrap a startup or buy a small business from your cash reserves. If you are looking for finance, be prepared to present detailed business plans that follow a proven model and show how and when you’ll see a return on your investment. Either way, don’t be tempted to spend more than you can afford.
Is it profitable?
Even if you love what you’re doing, the novelty will soon wear off if you’re not earning a living. As soon as you’ve identified a business that appeals, make sure you do your due diligence on the trading accounts, so you have a good idea of current and predicted income. Consider whether a few changes – extending opening hours or increasing inventory, for instance – would increase potential profits.
Is it risky?
Everyone has a different attitude to risk: some accept risk as part and parcel of running a business, while others need to have risk firmly capped before they’ll make a move. Recognise where you stand on the risk-ometer and adjust your approach accordingly. Don’t take on a risk that makes you feel uncomfortable, even if the business appeals in other ways.
Are you well suited to the business?
This is about attitude as much as aptitude. Most businesses will require a good dollop of common sense and resilience but, ultimately, the business you choose should play to your strengths, not work against them. If you want to run a hospitality business, for example, you’ll not only need catering and management skills, but ‘soft’ skills like patience and a readiness to serve, as well as a practical approach to problem solving – and the ability to exhibit grace under pressure!
Posted on January 18, 2019 | buying a business, buying, growing a business, entrepreneur