As with any sales process there are circumstances to look out for where you may able to get a better deal on an existing business being sold. Some situations you maybe lucky where the business owner may settle for something less than a fair market price as a result from; for example,
- Problems between owners
A situation may arise where one or both partners need to exit the business for reasons due to a conflict between the parties. They would most likely be looking to sell hastily.
- Owner retiring
Often the owner is looking to sell, where there is an urgency to pull out, there may be poor financial books, and the products might be priced poorly.
- High overheads
If the business isn’t being run as efficiently as it could be, you have the opportunity to come in an cut wasteful expenditure, cut staff, sell cars, renegotiate lease, or lease in a cheaper area (if it doesn’t effect sales).
- Business nobody wants
This is a business that has been on the market for possibly years. Obviously you’ll have to keep an eye out for the reasons why. But it could be as simple as a badly managed/marketed business sale. There maybe details or market conditions that have scared buyers off.
- Badly run
This is a situation where the business is selling its products too cheaply, comparatively, or there are dysfunctions in the business.
Remember while looking, you need to remember buying a business has a distinct advantage over building from scratch. Buying into an established business will have proven systems, that should be turning a profit from day one.
