HOW TO BE AN ORGANISED BUYER
- Seek advice from your bank or finance broker about what your borrowing capacity will be. Business lending can sometimes be very difficult to obtain so be prepared in advance. Knowing you have the finance behind you can make your position stronger when negotiating a purchase price.
- Decide on who you are going to use as a solicitor and accountant. Many buyers do not consider the important role that a solicitor and accountant have when purchasing a business. You should be prepared to seek professional advice prior to buying a business. Your accountant can assist with due diligence as well as helping advise on the best entity structure for purchase. Many buyers do not realise that you need to have the correct entity structure set up and ABN / ACN details available for the Contract of Business Sale. It's critical that you speak to your accountant about the business purchase as early as possible. Not having the correct entity structure setup can cause lengthy delays which sellers find incredibly frustrating. Your solicitor also plays an important role reviewing the contract and writing any special conditions that may be required as well as assisting with any requirements for an assignment of lease if applicable. Your solicitor and accountant play CRITICAL roles when purchasing a business so it's essential for buyers to be familiar with who they are using and also what they will charge for their services.
- Consider the total amount of start up capital required to fund the purchase. You will need to budget for more than just the purchase price. There are other additional expenses such as stamp duty, bank loan application fees, legal fees, accounting fees, landlords may also require bank guarantees as part of leasing requirements. You should review initial cash flows required to keep the business running until you receive your first customer payments.