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There’s always a lot to learn when you buy a new enterprise. For example, you have to become familiar with the systems, employees, customers and suppliers. This can take a lot of time and energy.
We’d recommend therefore that you avoid compounding this workload by having to learn about a whole new industry as well – that is, unless you are totally committed to breaking into a new one.
Instead, find a business that allows you to capitalise on your industry knowledge, as well as your skills, experience and contacts.
There are two ways to make money in business:
So don’t just think about profit; also consider how you can add value. A business with a low profit, and therefore a low valuation, might be worth more to you if there is something specific about it that you can improve.
Maybe you’re a hospitality whiz and the cafe you want to buy is in a great location, but has been run by the Addams family who have frightened off customers. Can you add value by introducing your style and flair to the operation? Importantly – if you think you can improve a business, make sure you have a plan for this prior to purchase, rather than buying it and hoping you’ll work it out later on.
* A capital gain on selling a business is not taxable
No one likes to talk about this, but every business person, at some point, has lost, or will lose, money on a business or a deal. When you’re considering buying a business, imagine losing everything you’ve invested in it. Can you handle that thought?
If you’re ok with that potential outcome, and you’ve taken our tips on board, then you’re in a better position than many others to proceed.
We always advise you talk to an independent expert before buying a business.
We’re an online accounting firm that is always right here for you, your accounting pain relief. The most advanced technology lets us work way more closely with you than a normal accountant would.
We have a dedicated team of remote accountants to take care of your business no matter where you are, so you can focus on growing your business. We take out the ‘fluff’, break down the barriers and get things done. Looking out for you is what we are all about. Get started for free today.
Sue de Bièvre
Beany Co-Founder
An intrepid entrepreneur and feminist with a penchant for disruption; spotting problems and rolling her sleeves up to fix them makes Sue tick.
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