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Buying success?

How to find out if buying a business is for you

According to Barclays, 25% of all new businesses fail within their first year. However, the real test for a new business is whether it's still trading after five years. Some statistics suggest that only 20% of start-ups make it to their sixth birthday. Buying an existing business, rather than starting one from scratch, can be one way of improving your chance of success.

Quote�Buying a business is neither complicated nor unusual.�End Quote

Buying a business is neither complicated nor unusual. The internet has made the market for small and medium sized enterprises for sale more accessible, with websites like BusinessesForSale.com advertising thousands of companies for sale.

Buying an existing enterprise is not a new idea. Some big names in business have bought their way to success, often by buying good businesses and making them great. Could you do the same?

Improving what's there?

The first few years of a start-up can be notoriously difficult. Of course, if you're successful then the rewards usually make it all worthwhile, but even with the best planning in the world, much of your time will be spent trying to understand the business you have just created.

When you buy an existing business, you should be buying something that has already been through this process. This means that the tremendous energy that you would have spent on starting up a new venture can instead be used on improving an existing opportunity.

Doing your homework is essential. Research the buying process thoroughly – especially when it comes to valuing a business. You must take this process very seriously to avoid paying over the odds. Be absolutely sure you are buying what think you are.


Quote�If you are thinking of buying a pub it might be an idea to work within the sector first.�End Quote

Many business buyers who visit BusinessesForSale.com have no idea which sector or industry they want to buy into. And indecision is rife - it is not unusual for buyers to change their mind half way through the process.

Investigating three or four industries before even starting a search for a suitable opportunity is a good way to begin. This might prompt you to consider an area you hadn't previously thought about.

You must also appraise your experience and skills in order to determine whether a specific industry will suit you. For instance, if you are thinking of buying a pub it might be an idea to work within the sector first.

Know your limits

Buying a company will be one of the biggest purchases you will ever make. It is not a decision that should be rushed, so don't proceed unless you're absolutely sure you want to go through with it. You might need to be flexible - for example, it is not uncommon for people to relocate when the right business comes along.

Finally, always seek professional advice from an accountant and lawyer. Make sure you know your limits and stick to them - it's no good overspending on a business if it leaves you short of the cash you need to invest to make the company a success.

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What next?

This piece is an edited version of an article from BusinessesForSale.com. You can read the full version, as well as many other articles about buying a business on their website. (Registration required.)

Read about unusual businesses that have been up for sale, and check out our step-by-step guide to buying a business.

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