Gold Coast Business Directory

Buying A Business: Look Before You Leap

For someone wanting to get started in business, there are many points in favour of buying a business as a going concern. This avoids, on the one hand, the stress and headaches involved in starting a new business from scratch, and, on the other, the often irksome degree of control exercised by franchising companies. However, as many business owners have discovered to their cost, it is not really a good idea to grab the first business you see advertised, even if it seems to offer excellent potential, and even if you don’t want the hassle of a lengthy search. If you buy in haste, you are likely to repent at leisure — slow down and check out a few things first.

 

First and foremost, you need to consider whether it is a type of business in which you have experience, or even an interest. This seems obvious, yet it is surprising how many people buying a business do not think of this until too late. If you are tempted by a hot dog stall because it seems to be making huge profits, but you have no experience in the food trade and hate the smell of hot dogs, you will not last long in the business.

Find Out Why The Business Is Being Sold

Once you have spotted what seems to be a suitable business, there are several things you need to look into, as many apparently attractive enterprises are not what they seem on the surface. Before buying a business it is of course essential to find out why the business is being sold. The business brokers can help you with this. The owners may simply be retiring, or they may be selling up because they can’t make a go of the business. Don’t just have a brief conversation — get to know them, have a few drinks with them or take them out to dinner. The more time you spend with them, the better you will be able to gauge how honest they are being with you. Also be wary if they don’t want to talk to you.

How Healthy Is The Business

If you are satisfied with the reasons for the sale, you then need to look into the health of the business. Take a walk around the neighbourhood and see whether there is a buzz, or whether there are lots of For Sale signs and boarded-up shops. If the immediate neighbourhood is in decline, the signs are not good that this business has a promising future. Check when the lease is up — if you have to sign a new lease agreement shortly after buying, this could throw everything into uncertainty, as the terms of the new lease could be quite different.

The Numbers Say It All

It is then time to start on the crunch work, and check out the facts and figures relating to the business – you need to do a thorough analysis of what the business is worth. It is a sad fact that many businesses for sale do provide seriously inflated figures for profits and sales in their advertising literature. Make sure you get hold of all the relevant paperwork, including the audited accounts and the financial records — if the sellers are not willing to provide the books for inspection, or if it is clear that the books have not been meticulously kept, walk away. It is advisable to employ professionals, including a lawyer and a qualified accountant, to look at the financial and other records.

You should also have professionals check the assets of the business, including property, equipment, contracts and even employees. Be very clear on which assets are or are not included in the sale, and if they are, what condition they are in. If equipment is out of date and needs replacing or upgrading, it could throw your financial projections into chaos. As well as assets, you should also of course check liabilities, such as debts. Make sure that equipment and vehicles are owned outright and are not subject to hire purchase agreements.

One Of The Key Reasons To Buying A Business Is The Customer Base

The other major aspect when buying a business online is to look at is the customer base. If there are only a few customers — some small businesses may have only one — what happens if a key customer goes out of business? How loyal are the customers and could they be easily poached by the competition? This is especially relevant if the customers have a strong personal relationship with the present owners. Carry out some discreet research to find out how strong this relationship is, and whether it would survive a change in ownership.

Buying a business as a going concern is a great way to get started, and the chances of success are much higher than when starting from scratch. However, no matter how excited you are when you think you have found your ideal enterprise, you must keep a cool head and look before you leap. As long as you are ruled by prudence and common sense, and keep emotions at bay, you have a great chance of making a wise and profitable investment.

 

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The Importance Of Working On Your Business, Not In It

Working On Your BusinessIf you are like many business owners, you feel frustrated because you realize you are too bogged down in the day-to-day operations of your company but don’t know how to free yourself from this trap. When the enterprise you set up was in its early days, it seemed natural to have a hand in every aspect of the business. However, according to management principles, if you want to grow your company, and build it into a business that will survive and keep growing, you have to change the way you do things and get out from this level of involvement.

Making this transition is sometimes described as learning to work on your business and not in it. The concept originated in a book called The E-Myth — that is, entrepreneurial myth — by a business guru who pointed out that many people who start businesses are technicians who are experts in that particular industry, and actually prefer to stay involved in the day-to-day running of the business, because they feel safer, and because they believe nobody else can do it as well. However, they are not promoting the growth of the company this way — they need to make the transition to managers, who can put the right systems in place, and then to entrepreneurs with a vision of how the company can become what they originally wanted it to be.

Entrepreneurs Or Business People

Of course, many people who start companies are in fact entrepreneurs with a vision but are obliged in the early days of their business to do everything themselves, because they can’t afford to employ staff. When they acquire more employees, they continue in this way because it has become a habit. If this describes you, you may need help in getting “out” of the business and learning to work on instead of in it — that is, stepping back and looking at where you want the business to be and how it can get there.

Small Business MarketingThe first step in making this transition is changing your mindset. You have to be ready to leave your comfort zone and unlearn many of your old habits. In particular, you have to be prepared to accept that maybe some of your staff can do some things as well as you can, and if they can’t do them quite as well, they can learn. You will never master time management and control of your business without learning to let go

The Secret Of Delegation

Your acceptance of this will enable you to take the next step, which is to delegate. If you are going to take some time out for working ON your business, somebody else has to do the work you would have been doing. If you don’t have the right people, you have to take tough management decisions — hire new people and train them. You will find delegation hurts at first, so you can begin by delegating very specific tasks. As staff prove themselves, and the business doesn’t fold, you can start handing over larger projects and wider responsibilities, and you will see people’s skills and confidence grow.

In your initial stages of a delegation, you may only be able to free yourself up for a short time — say, two hours a week. Block this time out and discipline yourself not to allow any interruptions. Use the time to focus on one specific project that has to do with the growth of your business. For instance, identify one goal you want to achieve and write down ways of getting there; think of one way you can differentiate yourself from the competition; consider ways you can improve the morale and productivity of staff through positive rewards. As your level of delegation grows and your time out increases, you will find it becomes more and more effective and productive.

The Importance Of Working On Your BusinessOnce the delegation is well underway, the next stage is to put systems in place, making it much easier for others to run every aspect of the business. Systems can address and minimize problems before they occur — if a problem arises, a tried and tested system will act as a roadmap and direct the way staff will respond to the situation. Once you have the right systems in place, based on the right management principles, the business should almost be able to run itself. This way you can finally make the transition to being an entrepreneur, as the systems do most of the managing for you.

At the end of a year, from a small and tentative start, you could notice a massive difference in the business, as well as in yourself. You have made the transition from doing to managing, and from managing to leading. Now you are finally in a position to provide the vision and inspiration that are so essential for the growth of your business — but if you look round, you will be surprised at how much it has grown already.

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