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Buying a Business? Reality bites! Judging by the huge response to our marketing initiatives a large number of New Zealanders dreams of owning their own business. However, only about one out of 12 “buyers” that we interview actually buy a business. Many have unrealistic expectations. • Owning your own business can be hard work – probably harder than you worked for a boss. You may have many job functions from general management to cleaning the kitchen. • Many facets of the business will be new to you. What is simple and automatic for the old owner may be challenging for the new owner until they have settled into the systems and operations. It is important to maintain good relations with the vendor and learn everything possible in the training and transition period. • Tom Cruise in the movie “Jerry Maguire” famously said: “Show me the money”. Serious buyers need to know how much they can invest and where it is coming from – and banks are not a great source of finance for SME. • Patience is required. The buyer may have to “Kiss a lot of frogs” before finding the right opportunity – and needs to be ready to jump when that right business comes along. • There are not many bargains out there. While price will vary a bit from value most businesses sell around fair market value – where the willing seller meets the willing buyers. • You need the courage to make that “leap of faith” when the time comes to commit. Yes, there is always some risk in buying a business. That’s why the return on investment is so good and the growth opportunity so great. • An internal audit is a “must” : do I have the skills to run this business? do I have the personality and the work ethic? do I have the support and understanding of my spouse, partner or family? • Buyers – and sellers too – should seek professional help. Included in your team should be a lawyer and an accountant (both with an understanding of SME) and a professional business broker who will assist you and protect you. In 47 years of selling businesses we have seen so many success stories. When is the best time to buy a business? Anytime! With grateful thanks to my good friend and mentor, Tom West and the Business Brokerage Press). |
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