Thinking about buying a business? While it’s an exciting opportunity to take charge of your future and step into being your own boss, before you jump in, it’s worth taking a step back to make sure you’re making the right move.

An established business can come with great perks like a ready-made customer base and a proven track record. However, it can also bring challenges, such as inherited debts or outdated processes. To help you get it right, here are five key steps to take before signing on the dotted line.

1. Are you ready to run a business?

Let’s start with you. Buying a business might sound like a dream, but are you prepared for what it takes? Running a business is hard work and demands time, effort, and a solid plan.

Here’s what to ask yourself:

• Do you have the skills to take over and grow this business?
• Are you ready to dedicate the time it needs to thrive?
• How does this fit with your personal goals and lifestyle?
• Can you comfortably afford the upfront and ongoing costs?

Running a business isn’t a part-time hobby; it’s a full-time commitment. So, if you’re nodding along, that’s a great start! Despite what the business broker or seller is telling you, there is no such thing as a business that runs straight out of the box. There will always be a learning curve for you, plus some skeletons to find in the back of the business’s cupboard.

2. Finding the right fit

Not all businesses are created equal, and not all will be the right match for you. Take the time to explore options that align with your skills, interests, and lifestyle.

Ask yourself:

• Is this business in an industry I’m passionate about?
• Does it have a strong reputation or the potential to grow?
• Is it in the right location for its customer base?

Finding the perfect business is finding one that feels like the right fit for your goals and aspirations.

3. Do your homework

You wouldn’t buy a house without an inspection, so why would you buy a business without doing your research? The more you know, the better equipped you’ll be to make an informed decision.

Here’s how to dig deep:

• Speak to employees, customers, and nearby businesses to get a feel for its reputation.
• Look into its market position. Is it thriving or just scraping by?
• Google the business name and the names of the directors of the business. Make sure you go beyond page 1 of the search results.
• Check online reviews and public records for any red flags.
• Check its records on Companies House. 

However tempting, don’t skip this phase! Getting the full picture now will save you headaches later.

4. What’s it worth?

Before you make an offer, you’ll need to understand the value of the business. This isn’t just about what it owns; it’s about what it’s capable of.

Consider both the tangible assets, like equipment and inventory, and intangible ones, like its customer relationships and brand reputation. Hiring a professional to assess the value can help ensure you’re paying the right price and are not missing hidden opportunities.

5. Do your due diligence

Once you’ve got your eye on a business, it’s time to dig into the details. This is where you do a deep dive and uncover any potential risks and make sure everything checks out.

Here’s what to look at:

• Licences and permits: Are they up to date and transferrable?
• Contracts: Will you need to renegotiate agreements with landlords or suppliers?
• Finances: Review tax returns, sales records, and cash flow statements from the past three to five years.
• Insurance claims: Where has the business needed to claim? And is this within normal expectations for the sort of business you are buying?

While this step might feel overwhelming, your due diligence is your safety net. You don’t want surprises after the deal is done, so the more you do now, the more confident you will be that you’ve made the right decision.

Ready to take the leap?

Buying a business is a big decision, but with the right preparation and guidance, it can also be incredibly rewarding. Remember, take your time, ask plenty of questions, and surround yourself with trusted advisors who can help you along the way. Need help? Contact us today to help you navigate all the essential stages of business without the stress. We´ll help you avoid the most common mistakes so you can make confident financial decisions.