In this three part series we will cover the things you need to do when buying a business. ‘Part 2: The Business’ covers the business basics.
Want a refresh on ‘Part 1: You’? Click here.
4. What kind of business structure will suit you?
Before purchasing a business, it is incumbent on you to know the possible risks and opportunities associated with different business structures.
The way in which your business is structured, or the way in which you plan to restructure it, will have a marked effect on the way in which you do business.
Whether you’re going to be operating as a sole trader, a partnership, a company or some other arrangement, there are going to be variable tax rates, setup costs and other conditions particular to the structure of your business.
If you are planning on restructuring, make sure you have sought professional advice on how this is going to alter your business’s existing circumstances.
5. Have you carried out a valuation of the business?
You should get a proper valuation of goodwill and arrange an inspection and valuation of premises, fixtures, fittings and equipment, valuation of stock and work in progress.
One of the biggest dangers for first-time business buyers is skimming the surface on details like this.
You should know exactly what you’re getting when you purchase a business, and any failure to check for problems could spell trouble down the path when looking to either sell assets, or the business itself.
You should be happy with what you’re getting. If there are issues, make sure that you take these up with the vendor and ensure that necessary contractual adjustments can be made if need be.
Stay tuned for the next instalment in the series ‘Part 3: Getting Advice’.