To Buy or Not to Buy

To Buy or Not To Buy

To Buy or Not To Buy

Have you been thinking about starting a business…but you’re not really sure it’s what you want? Are you too young or too old, experienced in a narrow niche, leaving a dying industry and/or high-profile in your field or region? Your fastest track to career freedom may not be a new job. You may see money faster when you start your own business than when you pound pavements and blast your resume all over town.

What Are the Real Challenges?

Most people worry about insurance and tax forms. They’re important — but don’t let them stop you. The real challenges are:

  • What kind of business will you start?
  • What are your first steps?
  • How can you find the help you need?

The articles on this site will help to get you started answering these questions and helps you deal with the healthy fears faced by all entrepreneurs. You will be encouraged to look at:

  • The single most important question to ask before you begin
  • How to save hundreds of dollars in consulting and coaching fees
  • The single greatest time-waster (almost everybody does it)
  • How to develop your business intuition
  • Building on your strength
  • How to face the toughest decision of all – give up or keep going
  • What to do to replace wet blankets with supportive mentors

Do I Buy a Business or Create My Own?

You may also be wondering whether it is best to establish your own business or to purchase one from someone else, be that either a franchise or an independently operated business that is already established. I will write here about what I feel are the pros and cons for both ways of going into business for yourself, and then it will be up to you as to what you decide to do. The articles on my site are dedicated to teaching you how to do it yourself.

Purchasing a business is often a costly exercise and has no guarantee of being successful. What makes a business a success is often the one running it, the systems that they have in place, and the people that are providing the service. Let’s look at purchasing a business where the owner is more or less the only one involved in the business. Realise that it is his or her own unique personality and style that makes their business successful.

Is Your Personality Suited?

Consider then whether you have a similar personality and style. Could you cope with the same responsibilities that the current owner is taking? If you don’t have a similar personality and style, you may find that after purchasing your new business the profit quickly decreases. This is due to the fact that people liked the previous owner. You don’t fit in the same way that he or she did, and your clients or customers prefer the previous owners’ style. Therefore they no longer desire to do business with your new business. Always remember that.

Being rejected by your customers can be devastating to any new business owner who has dreams of doing well. When this happens, you’re inclined to think that you’ve been sold a ‘dud’. However, the truth is that you’re simply not able to provide the same service as the previous owner. It was the previous owner’s unique blend of traits that allowed their business to be a success. If you don’t have that same blend and use it in the same way, you’re definitely not going to get the same results. Be aware of this when looking at buying a business.

Will You be Allowed to Borrow to Buy?

Next, if you think that you can borrow money to buy a business you will need to think again. Banks know the statistics on business survival and will not lend money to people going into business for the first time. It doesn’t matter how well the business is doing. Banks will simply not risk lending their money out to people who want to buy a business.

Why? Because the business is not a tangible asset like property is. It is difficult for them to take it away from you to retrieve their money if you don’t repay your loan. Well, they could, but that would mean hiring someone to run it for them. Doing that would be too much hassle as far as they are concerned. The only way that they will lend money to buy a business is if the loan is secured against your property. Do you really want to risk losing my home just to buy a business that has no guarantee of survival?

Over-Priced for What It Is

Often too, the price being asked for a business is way over-rated in my opinion. Yes, businesses are priced according to a formula, and that formula is often one year’s net takings, but considering that it would only take about eighteen months to grow into a business if you were to build it yourself, why would you risk spending the money? It is the fear factor that sets the price of a business – your fear that you can’t do it yourself. Well, after reading the articles here you won’t feel that fear and will have no need to spend the money.

Watch out for hard-sell sales techniques used by business brokers. They make their money from being the gofer between the seller and the buyer, and they don’t really look after the interests of either party in my opinion. I have been on both ends of the experience and have never had truly honest, interested, supportive service in any of the three encounters that I can speak personally about.

Never Show Your Interest

When you are a purchaser you should never show any sign that you are interested in a business. Once you show signs of interest, you can be hooked into the deal before you realise it. You may end up spending money that you don’t need to because of your excitement and enthusiasm. Brokers have no scruples – they need to make the sale in order to put food on the table and a roof over the heads for their family. They work neither in the interest of the seller nor the buyer – they work only for themselves.

It does not matter to them that you might be unsuited to the business. It does not matter to them whether you are capable enough to handle it. All that matters to them is whether you can come up with the money to buy the business, from which they receive a commission for the sale.

Only Use a Broker When Selling

This can only work in your favour if you are the one selling the business. So I would only use the services of a broker in order to sell a business. Then I would recommend selling it well before you were desperate to sell, so that nobody can manipulate you into selling for less than what you want. Remember, in this case the broker works for you, not the purchaser. If they can’t get the price that you want tell them you’ll find another broker who can. Their commission for the sale comes out of YOUR sale price, so always remember that they work for YOU, not the buyer. The same is true in Real Estate.

Never Vendor-Finance the Sale of Your Business

Never vendor-finance the sale of your business either. Vendor finance is where you (as the owner selling the business) allow the buyer to put down a hefty deposit. You then hope that he or she repays the difference with interest over a two or three year period from the takings. You can almost bet that your purchaser is going to try to say that you sold them a ‘dud’ and will refuse to make their repayments.

Being in business is more difficult than people first expect, and this is often quite overwhelming, especially when they take over an already thriving business and are then placed in the position of having to keep up with the hustle and bustle of the goings-on in the business. They won’t have grown into it as they would have done had they developed it themselves, therefore they will often find that they cannot cope with the demands of the business and will emotionally fall in a heap and try to blame you. They may try to take you to court, and even though you have evidence to prove that the business was earning the money you said it was you are still going to have to spend money and time defending yourself, which is a hassle nobody needs or wants. Cash up-front or not at all.

Do You Know What You’re Getting Into?

The only appropriate time to consider buying a business is if you are thoroughly acquainted with the industry that the business is involved in and if the business is set-up in a way that allows you to take over without too many interruptions to the goings-on of the business. By this I mean that the one selling the business has other people in place doing the work and serving the clientele or customers. They themselves are behind the scenes managing the whole operation from the background. When they leave in this scenario, their absence won’t interfere with the relationships that are established between the service providers and the people buying the products or services. The only relationships that will need to be nurtured then will be those that you will have with your staff or contractors.

Make Changes Gradually

A good manager knows not to come into a new environment and ‘rock the boat’ in too many ways. If there are changes that need to be made they should be done gradually over a period of time so that everyone who is involved in the business – staff, contractors, service providers and customers or clientele – can cope with the changes. Too much change too quickly will break the cycle of prosperity currently being experienced by the business and could be the downfall of what is a good business that could potentially become a great business.

The only time I would instigate rapid change is if I buy a dud business at a good price. Then (and only then) would I go into the business and make dramatic change. Installing new fixtures and fittings, changing staff, and/or giving the business a real face-lift could work well under these circumstances. But I would only risk this approach if I were able to purchase the business at a rock bottom price. Also, only if I had a few years of experience behind me to know what to do.

Growing a Business is Best

It is my opinion that growing into a business is the safest approach. I always recommend starting on a part-time basis and working your way into the business. Do this while you still have a supporting income coming in from somewhere else. This way you are able to re-invest the money that you make from your growing venture back into itself. You therefore help the business to mature into an income stream that can eventually support you. And pay for the costs needed to continue operating.

Many of the businesses I write about here can begin on a part-time basis. You can eventually grow them into full-time operations. If it’s your desire to achieve this and if you remain focused, you’ll certainly be able to do so. Sometimes within twelve to eighteen months without having to hock yourself to the eyeballs to do so. Plus, the benefits of establishing yourself this way are many. You’ll gain the experience needed to cope with the business as it grows. With experience behind you there will be fewer occasions that upset you or overwhelm you and the likelihood of failing is significantly reduced. In my opinion this is the only way to start up a business. So please peruse my site and read what I have to say about how to succeed when you commence running your own business.


Free From the Gilded Cage is the education arm of the Loving Heart Foundation Australia . We teach the basics of self-employment, how to save money wherever you can, and basic budgeting skills. This is so that women can learn the skills needed to manage their own lives. So that they don’t feel trapped in a relationship with a man who is beating them up. With these skills they can easily leave him

Update: The first novel in a series of seven has now been published. Written for teenagers who don’t fit in, the story gives hope to those who aren’t enjoying school. Along with those who don’t want to go into a profession that school prepares most for. It is also the courageous account of a young teen growing up in a dysfunctional home filled with domestic violence. Read about how she manoeuvres her way through such a difficult situation.

Click here if you’d like to know more about this novel.

Click here if you’d like to be taken to the site where you can purchase this novel.