Decide to Buy

Start thinking about buying an established business if you want to avoid immense risks involved in starting one. Not everyone wants to start a business from scratch, and buying a business with infrastructure in place lets you focus on building it up, as opposed to getting a new business off ground. This is not to say that it’s easy to buy an existing business; it’s a fairly complicated process throughout which you need to know exactly what you’re doing.

First off, decide that you do want to buy before you begin your research. This way you will look at options more carefully. A particular business may not be exactly what you’re looking for, but if you’re sure that you do want to buy, then you won’t brush it off immediately, without first considering how you might grow with it. Vested Business Broker’s deals with a wide range of businesses and will surely help you make up your mind quickly.

Talk to people in your life who are likely to be affected by venture. Let them know hours that you are likely to have to work and risks involved. You might need their support if you initially go through a rough patch.

Using a Broker

It would be more prudent to use services of a broker in buying your business. All important groundwork in terms of research would already have been done. And, you can focus on finalizing deal.

A broker will handle all those complicated negotiations which you may just find too much to handle. And, when things turn unpleasant you can leave it all to your broker.

Brokers are supposed to have systems in place to take care of deals. The sale is usually a time of some stress for both buyer and seller, so having someone to put everything together and take care of paperwork is very helpful. You will appreciate a broker’s services as it will allow you to concentrate on getting a worthwhile deal, and not have to worry about whether all documents -and there are a lot of them- are in order.

Of course, your broker will charge you a substantial commission, but it will all be worthwhile if you get deal you want. Vested Business Brokers can be counted on to take care of nitty-gritty that ensures a successful deal.

Business Essentials

Once you figure out your particular area of interest, think about size of business that you want to buy, location of prospective sellers etc. Know your financial resources so that you don’t waste time looking at businesses that are beyond your reach, even if you have always fantasized about being a ship-builder.

Identify your strengths. Are you good at sales? Operations? Look out for a business that is in a position to benefit from your particular strengths.

Once you’ve identified a business that you want to buy, make contact with seller but hire professionals i.e. accountants, attorneys, etc. to take care of different aspects of purchase. Using Vested Business Brokers services would surely help you narrow down your search and identify all expertise you might need to close deal successfully.

Allow yourself a gut instinct about seller and business. Feel free to ask why they want to sell business, and evaluate your decision based on their reasons. It might just reassure you that you should go ahead with deal.

Company Valuation

There are many methods of valuing a company, and it is up to seller to decide how to go about it. Make sure price is a fair representation of how valuable company is likely to be to you. It is obviously disadvantageous to you if a non-performing company that is heavy in assets is priced based on net value of its assets.

The asking price is negotiable. Even in a situation where seller is firm on her price, enquire as to method of valuation and challenge it if you think it leaves you with an unfair deal. While negotiating, be prepared to challenge seller with facts and statistics.

One of great mysteries of “open” competitive tendering process is that each of us has experienced defeat. What mystifies us is that there must have been a mistake – we had best solution. Of course we did. So did other three unsuccessful tenderers as did, we hope, successful one!

So, consider this hypothetical tender, which simply asks for a proposal to “make following equation true by only adding one line to it”:

I X = V I

Simple enough. Prepare your team to consider what is being asked. Review all documentation to ensure that nothing has been overlooked. And prepare your tender. You do this, and your tender response is simply:

I X (does not equal sign) V I

Compliant. One line added to equal sign to make equation true and correct. Clearly winning tender – or is it?

As with all projects and activities, there may be many approaches that could be implemented to lead to same minimum requirements. And this is good and vitally important if we genuinely seek solutions that create long-term sustainable benefits. Still, we can do more than just meeting ‘minimum requirements’ to ensure compliance.

We all have a responsibility to ensure that we challenge thinking that is presented in design, tender documentation, donor policy etc, not just to prepare a response that ‘meets’ stated requirements. If we did not do this, then tendering process would simply come down to a price comparison, which does not necessarily translate to best solution to problem.

So who is “we” to take all this responsibility? Is it us as individuals? Is it managing contractors? Agencies? Clearly, it is all of us in whatever role we are adopting as it relates to a tender or activity in question.

The tendering process should remain directly connected to activity’s implementation and its results. So during preparation of submission some key questions need always be asked:

•Why are we doing this •Who are we targeting •Where will any impac be realised •How will we know •How would we measure it

And there are probably many more, all of which have something in common – starting with end in mind.