Are you thinking of purchasing a business?
Whether you run multiple businesses or whether you are wanting to run a business for the first time, the good news is you do not need to start your business from scratch!
There are many existing businesses which you can purchase and takeover from the existing owners; here are our top ten tips for doing so:
- Know your area
Are you interested in a particular type of business? Whether it is a hobby, a skill or a business based on your current career, it is important to know how your business will work, the current market and who your customers will be. Make sure you do plenty of research into the area if you are unsure how the particular business you are interested in works.
- Shop around!
Once you have decided on the type of business you would like to purchase, remember you have a choice. There is more than one business in that area for sale, so be sure to compare as many as possible before deciding which one to purchase.
- Research other similar businesses
It is important to know your competition. Research other businesses in the area; look at the prices of their product; how can you set your business apart from the others?
- Ask questions and investigate
When negotiating with the vendor, do not be afraid to ask questions! How does the business operate? Are they making a profit? Most importantly, ask for evidence of their accounts.
- Ask for employee details
Has the business got employees? Under employment law, you will be obliged to take over the employment contracts with the purchase of the business. If you do not want to keep the staff on completion, you may be subject to claims by the employees. You need to obtain full details of the employees and evidence of employment contracts.
- Agree a timescale with the vendor to ensure you work towards a completion date
You want to take over the business as soon as practicably possible once you have made your offer and signed the contract, make sure the vendor is aware of this and works towards a similar timescale. This will ensure the transaction completes smoothly.
- Decide how your business will be operate
Do you intend to take over the business as an individual sole trader, with a partner or as a company? You may need to consider a partnership agreement with your partner or you may need to set up a company. If it is your first time purchasing a business, you will need to be aware of implications of different business structures, how to set this up and your potential personal liabilities to the business. It is also necessary that you take tax advice before completing the purchase.
- Is there property involved – are there obligations to the landlord?
Is part of the business a shop or a restaurant? Does it operate out of a premises? It is highly likely that the vendor will be the tenant of a lease. You will need to also take over the lease on completion. This will result in you having direct obligations to your landlord, you may need to pay rent and there may be other obligations in the lease you will need to be aware of.
- Shadow the vendor
Once a completion date is approaching, liaise with the vendor to shadow them in the running of the business for a week or two prior to completion. This will allow you to understand how the business operates and will ensure a seamless takeover.
- Instruct a solicitor
All of the above tips may seem quite daunting especially if you are purchasing a business for the first time. The most important tip we can give is to simply instruct a solicitor. We will ensure that your interests are taken care of and that all of the above is in hand.
Get in touch
If you are thinking of purchasing a business or restructuring your current business, get in touch with our Commercial Property solicitors in Leeds, Wakefield and London on 0113 244 9931 or click here to get in touch online.