I have a friend (to preserve his privacy, we will call him Terry).

You may think this story sounds familiar; you may even know a Terry in your life.

 

Terry worked for three companies in the same industry his whole life. He found that as he got older, whilst his career progressed – It wasn’t very fulfilling. One day, though, Terry’s world changed when his company made the decision to downsize and move all operations to another site in a different capital city.

 

Upon reflection, Terry recalls that moment in time as both the most terrifying and yet most energising time of his life. Today, Terry is a successful entrepreneur and if you met him you would never believe that he worked in a large company answering to a boss, for many years. This doesn’t come easy and there are a few key points that the first time small business owner needs to understand when buying a small business.

 

Here are Terry’s tips for purchasing or starting a small business are:

1. Focus on something you enjoy doing and have a passion for; when you love what you do, you will never ‘work’ a day in your life.

 

2. Do your research! Learn as much about your chosen industry as you can. At Wilson’s Business Broking, we often have prospective buyers jumping from one business to the next, with comments such as “That sounds easy, how much do they want?” and “I could do that, how much does this business make?”.

I prefer to sit down with prospective buyers and try to get to know who they are and what makes them tick. People are going to be more successful in business if they have a natural connection to a certain area or personality trait that is linked to that industry. Do you like working with your hands?

Are you an introvert or extrovert? Do you enjoy being in the public eye, or would you rather be a quiet achiever?

 

3. When looking at a potential business to purchase, look for historical stability as well as growth prospects. Good businesses have a track record of stable revenues and net takeout for the owners. Also, recognise the value of working fewer hours for a reasonable return.

 

4. Surround yourself with experienced people who fill the void of your knowledge gaps. Accountants, other family members, industry groups, trusted advisors. Pay for the best advice you can afford and listen to it.

 

5. There are other things that also help, including formal learning, setting strategic goals, employing business coaches.

Get systems in place for your administrative work, play to your strengths and employ people to fill the gaps.

The truth (as many of us know) is that a small business is hard work and it can be very challenging; but also very rewarding, both emotionally and financially.