Buying a small business isn’t a decision you’ll take lightly. It’s a big responsibility and there are many factors to consider before making an investment, including the following key points:
- Is it a quality product?
You need to ensure you invest in company with a quality product or service and existing team of employees. Read online customer reviews carefully, do your own small-scale market research by interviewing peers, friends and family, and analyse the quality of the company’s current team. Is there trust among employees? Are there clear objectives and a vision that they all understand?
- Is there a niche to build upon?
It’s key to invest in something unique but there must still be room for growth. Ask yourself, where can I add value? Your investment should only build upon the current core of the business and product excellence must continue.
- Is there chemistry?
The relationship between the buyer and seller is important. Buyers need to be sensitive to the fact that it can be an emotional experience for a seller to hand over the reins of a small business he or she may have built from scratch. It’s their ‘baby’ and they will be probably miss it. Crisis management/internal PR tactics may need to be used to reassure remaining employees and to keep them on the new management’s side. For example, could you offer long-term employees shares in the company?
- Are you using the right financial help?
Use corporate finance advisers and solicitors you can trust before making any big payments. Take your time to do your research beforehand. Contact other entrepreneurs who have made successful small business investments and ask them for their recommendations.