When to Buy a Business and Why You Need a Broker
Buying a business as opposed to starting one from scratch holds several benefits. Let us look at some of the benefits:
· Existing Business Model
You gain an enterprise that is already running. This means that you can walk in and start trading from day one. If you start a business, it takes anything from 12 to 24 months to generate the same income as that of an established business of the same size and industry within the same location. You thus reduce the time it takes to become profitable when you buy a business.
· Working Model
With a start-up, you do not have a model to base projections on and you have no benchmark for measuring performance. You will have to create the model and as exciting as this can be, it still takes time and substantial capital investment. You still do not have the assurance of success if you buy a business, but you do have a foundation for an income.
· Easier to Get Investment Funding or Financing
Considering how many business start-ups fail within the first six months, mostly because of cash-flow problems, it is understandable that investors and lenders are sceptical when it comes to lending or giving money to start a business. Instead, when you buy a business that has solid financial records, a proven track record of performance, and various assets, lenders and investors will consider the above and be more open to funding a portion of the purchase.
What Is the Best Way to Go About Finding Suitable Businesses?
Of course, you can approach business owners to see who is willing to sell, but this approach gives the owners the benefit of being in a power position. They know you want to buy a business and they can thus hike the price up.
As an alternative, you can respond to ads from owners who want to sell their businesses. You do not have to pay a broker fee if you work directly with the owner, but you do risk buying a business that is not profitable. The owner can lie about the reason for selling and may even not have books in place. Do not buy a business if you cannot verify the owner’s claims in terms of income and profitability.
The best way to buy a business is to approach a broker and explain what you are looking for and how much you can afford. The broker will help you to find a business that fits your requirements. In addition, the broker prequalifies you for a specific amount and can assist in finding suitable financing for the purchase.
The broker has already collected all the information needed and thus saves you time and money. In addition, the broker already knows what is wrong with the business and what makes it a good buy.
If you are ready to buy a business, your first step should be to approach one of our brokers to help you find one that matches your interests, location requirements, income generation goals, and more. Give us a call today to help you find and buy a business in South Africa.