How to buy a business

Being a business owner isn’t always about building it from the ground up, it’s possible to buy a business that’s already established. If you want to buy a business, UK buyers have a few options.

Why buy a business?

There are several advantages and disadvantages to buying a business, with the most obvious being that you don’t have to endure the stresses and strains of building it up from day one. That said, it’s not all smooth sailing.

Buy a business: advantages

The advantages of buying a business are fairly clear:

• The business is already established which gives you a proven financial track record

• The business already has a customer base

• Buying a small business can give you a close-knit and passionate team with amazing company culture

• If you intend to keep personnel, you have a ready-trained team in place

• Key documents like business plans and marketing strategies will already have been produced

• Teething problems will already have been overcome

• You have the experience of current staff to draw on

Disadvantages of buying a business

When you buy a business, it may come with some bad as well as good:

• A successful business is much more expensive to buy than a new one is to start up

• A lot of admin is needed for a complete exchange of ownership

• New ownership may cause key staff members to leave or lose morale

• The office politics of a company aren’t always apparent to outsiders – you may be adopting an unhappy team

• Contracts with current clients may need to be entirely re-written

• The seller may not be forthcoming about precisely why they are selling, so do your own research

The crux of most purchases is money. A business owner looking to sell will show the company’s best face, but it may be that the business needs a bit of TLC to get to a satisfactory level of operations, and that means an injection of more funds. Research is vital to making sure you really do want to buy a business, in some cases, starting up on your own firm may be the more attractive alternative.

How to buy a business with no money: UK options

In many cases, the buyer with the most readily-available cash will catch the eye of any business first. That said, it is possible to buy a business in the UK even when your funds aren’t as high as you may like. You could use one of the following methods to gain ownership of a company without pockets full of cash.

Go co-op

A co-op business model means you can buy a business in part, dividing the rest among other investors. The downside to this is that you will not be sole owner, and therefore never able to fully own any business decisions.

Seller finance

Sometimes a business owner will give you a loan to buy a business they are looking to sell, which you then pay back from future profit. The downside to this is that it requires a lot more admin and financial paperwork than if you just buy a business. It may also stop you from selling the business on before you have paid back your loan.

Franchise

Franchising is big business, and it can let you buy a business for a much smaller outlay. As well as that, brands that franchise are usually big names, so you’ll have prestige built-in. The disadvantage is that you aren’t independent, may have to follow strict franchising rules, and of course, a portion of profit has to go back to the brand.

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