Ok so you’ve decided to work for yourself but does that mean you have to set up your new business from scratch? Actually, no…
At any one time there are countless existing businesses for sale in all manner of industries and if you have the money, there is no reason why you shouldn’t consider this option if running your own business appeals.
There are many reasons why a business might be for sale – the owners may wish to retire, they may be looking at starting a new venture, they may want to release cash or they may just be fed up of the business having run it for many years. Equally, the business could be in difficulties and the owners are just trying to offload it onto someone else (although businesses in this situation can sometimes offer better potential returns if you have the ability to turn things around).
The cost of a business will be based on a number of factors including the history of the business, its current performance in terms of turnover and profit, future performance and potential for growth, the reason for the sale and so on. A very basic way of valuing a business would be to work on a multiplier of the previous years profits (for example, Internet businesses are often valued at 2.5 to 3 times annual profit. Thus an online business generating profits of £50k a year may be worth £150k if sold. This is a basic and crude way of valuing but it gives you an idea.
Many people think that buying a business is expensive and to be fair, if you are looking for one with huge profits, it will be. However, there are many smaller businesses for sale (particularly in the Internet industry) which can be snapped up for thousands or even hundreds of pounds. I have personally sold website businesses for just a few hundred pounds in the past.
Buying an established business is a great way to leap-frog many of the hurdles you may have with a complete start up. You will have an existing customer base, an existing product or service and possibly a database of previous customers to market to. You may also have an existing brand and in the case of an online business, existing search engine traffic etc. Injecting new ideas into a business via a change of ownership can also be good for the customers. I have had businesses in the past which I have run for many years and have simply got bored of them. This isn’t good for me and it wasn’t good for my customers. Moving them onto someone else with new enthusiasm was good all round and if you can look at a business and see an opportunity to increase income by adding to or altering their services etc this is an excellent way of taking the business to a new level.
Going forward my own personal preference would be to purchase a good quality, established business rather than to set one up from scratch. If you are thinking along the same lines, have a look at the sites below as they may help in your search and when looking at businesses for sale: