For many entrepreneurs, the dream begins with bootstrapping a business from the ground up and ends in glory. But starting from scratch isn鈥檛 without its challenges 鈥� finding customers, hiring staff and getting the cash flowing can be tough without the support of an established brand.
By contrast, buying an existing business can be a less risky venture altogether. Choose wisely and you can move into a business that鈥檚 already generating profits from existing customers, benefiting from a ready-made reputation and a troupe of employees who know the business inside out. No need to reinvent the wheel 鈥� just follow a tried-and-tested formula and look for ways in which you can add even more value. And, while it鈥檚 often a costlier route, you鈥檒l find it鈥檚 always easier to secure financing on a business with a proven track record.
But what if you can鈥檛 find a business you want to buy in a sector or geographical area that suits you? Do you plump for the self-start path or just sit back and cool your heels until the right proposition comes along?
Dig Deeper
The good news is that you don鈥檛 have to wait for something to happen 鈥� you can choose to take a more proactive path. First, think long and hard about the type(s) of business that most interest you and where they should be located (if the location is an issue). Consider your own skills and experience and the size of the business you want 鈥� making sure it matches the confines of your budget. Then, simply investigate every business in the area that matches your criteria, whether or not it鈥檚 listed for sale.
Get Networking
While internet listings and classified business-for-sale newspaper ads are a good place to start, don鈥檛 be limited by what you think is available. Consider placing a prominent advert of your own in the local paper鈥檚 鈥榃ant to Buy鈥� section and start networking with any business contacts you have in the area, making sure everyone knows you鈥檙e in the market to buy. It may be worth joining networking groups 鈥� or attending Chamber of Trade events 鈥� just to put your feelers out.
Calculate a Valuation
Once you鈥檝e identified a prospect, you can consider value. Obviously, if a business hasn鈥檛 been listed for sale, it can be hard to estimate its value so you know whether or not you can afford it. Again, a broker or property agent might be able to help you with a ballpark value or you can look at the price that other similar businesses have sold for in the area to give you a guide. Consider this estimated value against the amount you have available, then draft your pitch.
Make a Direct Approach
The direct approach may work in your favour, especially if you catch a business owner who鈥檚 in the early stages of considering whether to market their business for sale. You can simply write a letter detailing your wish to buy the business or use an intermediary to do this for you 鈥� a local agent or broker may agree to be your go-between for a fee. Whichever approach you favour, it鈥檚 a good idea to prepare a buyer 鈥楥V鈥�, detailing the reason for your interest, your experience and background, as well as an idea of the available budget. This will show that you鈥檙e serious about your pitch.
Expect Rejection
While your pitch may be greeted with enthusiasm, it鈥檚 important not to get put off by the rejections that are the inevitable flip side of making a direct approach. Your bid may be dismissed outright or simply ignored. If it鈥檚 the latter, you can always wait a bit and follow up; even if you get a straightforward 鈥榥o鈥�, you can respond by leaving dialogue open should they change their mind. If the pitch is rejected because the price is too low, you always have the option of negotiating, should you be willing to spend more.
Sometimes, it can simply be an issue of timing: your approach may be welcomed one day when 鈥� had you made the same pitch a month earlier 鈥� it would have been dismissed out of hand. Get your timing right and you could bag yourself a bargain.
