Buying a business isn’t something you should do lightly. One reason for that is the sheer amount of regulation involved, particularly in certain industries.
So, can anyone buy a business? The guide below takes a look at some of the FAQs potential business owners could learn from, touching on experience, regulatory hurdles, debt, finance and more.
Should You Buy a Business as a Beginner?
One of the most common questions asked is whether buying a business is a good idea as a complete beginner. Perhaps you’ve never owned a business before and would like to move away from a regular job and do something more exciting.
Unfortunately, the sensible answer is that this is normally a bad idea, and for several reasons:
- Your competitors will be at home in the industry and know far more about it than you. While you’re still learning the ropes, they will be implementing strategies you haven’t even heard about.
- You may fall foul of regulatory issues unless you hire outside help like a broker or a lawyer. This represents a significant hurdle to entry to the market.
- Buying a profitable business is expensive. You will have to work through initial costs and/or debt from the acquisition until the business can make you significant money (an issue you may not face should you start your own business).
As brokers, we would advice you to think very carefully before buying a business as a complete beginner.
Should You Buy a Business or Start Your Own?
What may make more sense is to start your own business. Starting from scratch presents costs of its own, but it’s possible to slash these costs by taking a lean and agile approach.
So, if you’ve never run a business before? Start your own and see how it goes. If you’ve run lots of businesses in your time, buying one may be the better idea.
Do You Need a Licence to Buy a Business?
You don’t need a licence to buy a business from somebody. But you may need a licence to run it.
Take a pub as a simple example. You need a licence to be able to serve alcoholic drinks. According to Gov.UK, premises licensed to sell alcohol must have a designated premises supervisor, and that supervisor has to have a personal license. Other businesses that require licences include childcare, pet breeding, gambling services, taxi driving, running a business that serves food and lots, lots more. If you don’t have one of these licences/can’t employ somebody who does, then you shouldn’t buy a business in that industry.
How Can I Buy a Business with No Money?
It is possible to buy a business with no money. It’s common for mergers and acquisitions to be made on the basis of finance. There are several forms of finance you can use: bank loans, crowdfunding campaigns, seller finance and more. Like all forms of finance, finance for buying a business depends on your credit, and you may be turned away by lenders based on your credit history.
Whether finance is the right option for you depends on your circumstances. As a specialist off-market broker, our job is to find, vet and approach businesses for potential buyers, not to advise on finance decisions. This is a decision to be made with the utmost care, preferably with the assistance of a financial advisor of some kind.
Can You Buy a Business with Bad Credit?
It is possible to buy a business if you have bad credit, in one of two ways.
One way is to buy a business outright. If you have enough money in the bank to meet the seller’s asking price, then bad credit (and good credit, for that matter) is immaterial. This, of course, is not an option for everyone.
It may also be possible to find finance through a more accepting lender. Be careful, though, as lenders for people with bad credit will likely charge a high interest rate.
Can You Buy a Business When You’re in Debt?
Again, it is possible to buy a business outright if you have the money in the bank to do so. When paying outright your credit rating and/or debt have no bearing on the deal.
What will be more difficult is to find finance for your acquisition. Not only will it be more difficult, but it’s likely not a good decision either (although this depends on your unique circumstances). Talk to a financial advisor to ascertain the best course of action.
Buy a Business Through Chelsea Corporate
If you’ve never bought a business before, doing so through a dedicated specialist broker like Chelsea Corporate will save you both time and stress.
Our particular speciality is in off-market sales. An off-market sale is where a business is bought and sold without ever officially being advertised. We can identify and approach these businesses on behalf of our buyers, letting them into a hidden market through our exclusive database. We vet each one of them for its profitability and sustainability. The businesses we give our buyers access to are available nowhere else but through us.
To learn more about what we do, contact us today over the phone at +44 (0) 20 3011 1373. If you prefer, reach out through our contact form or email us at info@oldchelsea.fusionanalyticsworld.com.